RESOURCE Volume 7, Issue 7
Mining, renewable energy and oil & gas worldwide
‘S
REPORTS LIVE FROM
GLOBAL NETWORK
BEST OF
GOLD AND CLIMATE CHANGE REPORT: JOHN MULLIGAN
EDITORIAL
puts forward a selection of mining companies that have thrived during this tumultuous year
W
Jacob Ambrose Willson Editor
Executive Team Editor Jacob Ambrose Willson Content Director (APAC and Americas) David Hunter Creative Director Hugo Currie ICT Director Stuart Clark Managing Director Simon Curran Contributors John Mulligan (World Gold Council) 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. Disclaimer: The opinions expressed in this publication are not necessarily those of the publishers. Whilst every effort is made to ensure accuracy the publisher and editor cannot be held responsible for any inaccurate information supplied and/or published. Copyright: The copyright for all material published in this magazine is strictly reserved.
Anderson Murray Media Fulham Green, 69-79 Fulham High Street, Main Reception, Bedford House, London SW6 3JW | Tel. +44 (0)207 148 5630
here to start with a year like 2020? The rapid spread of COVID-19 triggered an international public health crisis and decimated the global economy while drastically altering almost every aspect of modern living, from globe-trotting travel to the simplest of social interactions, such as shaking hands.
gold mining sector’s progress towards reducing carbon emissions in line with the Paris Agreement, written by its director of market relations and climate change John Mulligan. The gold industry was of course a major beneficiary of the unprecedented macroeconomic uncertainty brought about by COVID-19, peaking at record highs of US$2,068 per ounce in August, compared to $1,519 at the start of the year.
The resources sector has been in no way spared from the all-encompassing impacts of COVID-19, with mines around the world forced to close during the peak of the pandemic’s first wave in the second quarter.
We have tried to emphasise the strength of this sector in 2020 by republishing five gold miners that have featured in the magazine throughout the year. Each company spotlight reveals a story of rapidly improving fortunes in the high price environment.
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Most mining operations soon reopened in the second half of the year after carefully adopting new health and safety protocols centred around ‘social distancing’. Meanwhile, corporate head offices pivoted to WFH (working from home) to reduce transmission of the virus. This neatly brings us to the first feature in our ‘best of 2020’ issue. The pandemic necessitated the cancellation of almost the entire annual calendar of international mining conferences, but Mines and Money quickly recalibrated its service to a purely digital format. RGN subsequently partnered with Mines and Money to provide live online updates from its innovative web-based shows, which connected the mining industry with investors at regular intervals throughout the year. You can read RGN’s review of Online Connect December in this issue. We also include a summary of the World Gold Council’s report on the
Elsewhere in the issue, we return attention to Bushveld Minerals - who are at the forefront of the vanadium-based energy storage industry, Latin Americafocused copper explorer Josemaria Resources and Kogi Iron - who are delivering Nigeria’s first integrated iron ore and steel production facility. Finally, there is Gensource Potash – a company which reminds us of the importance of mineral fertilisers in global food production. We believe the 10 companies featured in our best of issue reflect the dominant themes that emerged in the resources sector during a truly unprecedented year of social, economic and health-related upheaval. I’d like to extend a huge thanks to all our featured companies, contributors and readers over the course of 2020. Season’s greetings and here’s to a safer and more prosperous 2021!
Jacob Ambrose Willson jacob@resourceglobalnetwork.com
a j r
CONTENTS MINES & MONEY
NEWS
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6 Global resources news Our selection of mining, oil & gas and renewable energy stories from the last month 10 2020 in review RGN’s editor reflects on an unprecedented year of wild peaks and deep troughs in the commodities sector
ASSOCIATIONS 14 Mines and Money Mines and Money cements its status as the premier digital conferencing provider for the mining sector
COLUMNS BUSHVELD MINERALS
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28 John Mulligan (World Gold Council) A new report examines gold mining’s energy transition and climate impacts over the next decade
BEST OF FEATURES 38 Bushveld Minerals At the forefront of the burgeoning vanadium market
SUPERIOR GOLD
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50 Superior Gold Strong fundamentals in place for this Western Australian gold producer 64 Gensource Potash A pioneering vision for the future of the global potash market
JOSEMARIA RESOURCES 78 Josemaria Resources The latest large scale resource project to be delivered by the Lundin Group
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94 Argonaut Gold North America’s next mid-tier gold producer 106 Hummingbird Resources More significant news flow from one of West Africa’s most exciting gold firms 124 Kogi Iron Maiden iron ore and steel production in Nigeria to accelerate industrial development 136 Kirkland Lake Gold Meet the best performing mining stock on the TSX and TSXV in 2020 150 Wesdome Gold Mines Building Canada’s next midtier gold producer
HUMMINGBIRD RESOURCES
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164 IMPACT Silver Corp Continuous silver production in one of oldest mining districts in the Americas
EVENTS 174 Events Our pick of the top mining, oil & gas and renewable energy events happening around the world in the months to come
WESDOME GOLD MINES
150
NEWS
ENDEAVOUR AND TERANGA COMBINE TO CREATE WEST AFRICAN GOLD GIANT
Endeavour Mining and Teranga Gold have agreed a merger deal worth US$1.86 billion that will create a global top 10 gold producer with plans to make a secondary listing on the London Stock Exchange. The TSX-listed miners had earlier confirmed talks were taking place on a potential merger, which would consolidate a collection of gold assets across West Africa, including producing mines and development projects. Despite an initial jittery response from investors, the tie-up will provide Endeavour shareholders with 66% of the combined entity, with Teranga’s receiving the remaining 34%.
Teranga will also get three seats on the board to Endeavour’s seven. Endeavour will pay a 5.1% premium for Teranga’s shares. “Teranga had a very strong run over the past 12 months, so we’re not trying to buy cheap – we’re just trying to make the right deal that satisfies both sets of shareholders,” said Endeavour CEO Sébastien de Montessus. The merged company will boast average annual gold production of more than 1.5 million ounces with production costs of around US$850 per ounce. The deal resembles Endeavour’s second major acquisition this year after it bought Semafo in March.
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NEWS
Mining, oil & gas and renewable energy news from around the world IRON ORE PRICE CLOSES IN ON EIGHT-YEAR HIGH, BOOSTING AUSTRALIAN PRODUCERS
The iron ore price has continued its meteoric rise of late, surging by 5.8% during trading on Monday December 7 to US$145 per tonne – its highest level since March 2013. The upward price movement has been driven by two factors; supply side issues out of Brazil following the release of reduced output forecasts by key iron ore producer Vale SA, and strong demand emerging from China. Iron ore port stocks in China – the world’s biggest buyer of the commodity, at roughly 70% of demand – have contracted for three consecutive weeks to December 4, in an indication of growing deficit conditions in China.
And on the supply side, prices have been buoyed by Vale’s recent forecast announcement. The Brazilian mining giant expects to miss a previously lowered 2020 target of at least 310 million tonnes of iron ore. The perfect storm of rising Chinese demand expectations and lower supply from a key global supplier have boosted Australia’s three largest iron ore producers – BHP, Rio Tinto and Fortescue Metals Group (FMG). FMG has made the biggest gains this year, with chairman Andrew Forrest seeing his company’s stock rise by 90% since January. The iron ore price has also increased by 56% to be the best performing commodity of 2020. 7
NEWS
BIDEN’S $2 TRILLION INFRASTRUCTURE PLAN TO BUTTRESS METALS PRICES
US President-elect Joe Biden’s pledge to spend $2 trillion on infrastructure is expected to support base and battery metals prices, as the world’s biggest economy embarks on a metalintensive ‘green revolution’. The details of the much-needed green infrastructure plan will be debated in Congress over the coming months on the back of multiyear highs for industrial metals, which have been boosted by an economic rebound in top metals consumer China and optimism around COVID-19 vaccines. “Biden’s $2 trillion proposed green stimulus would undoubtedly be positive for metals demand… (but) the election outcome means our base case view is that Biden will have to rein in his green spending ambitions,” said Jumana Saleheen, chief economist at consultancy CRU Group. Some of the proposals in the plan include providing subsidies for electric vehicle (EV) purchases, adding 500,000 new charging stations and converting 500,000 school buses to zero emissions. The charging stations and that number of battery electric buses would alone require nearly 200,000 tonnes of copper according to Jefferies, while renewable energy requires an estimated five times more copper than conventional sources.
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NEWS
Mining, oil & gas and renewable energy news from around the world CHINA’S TIANQI LITHIUM TO SELL AUSTRALIAN UNIT TO NICKEL FIRM IGO LTD
Chinese mining giant Tianqi Lithium will receive a sorely needed cash boost after agreeing the sale of 49% of its Australian unit to nickel-gold firm IGO Ltd, for a sum of US$1.4 billion. Through the deal, IGO – Australia largest independent nickel producer – will assume a 24.9% interest in the Greenbushes lithium mine in Western Australia and a 49% share in the Kwinana lithium hydroxide plant South of Perth. Greenbushes, which is 49% owned by US-based lithium giant Albermarle, is the world’s largest and lowest cost hard rock lithium mine with an output of 764,000 tonnes of spodumene concentrate in 2019.
The deal comes as a boon to Tianqi after it announced last month that it might not be able to repay $1.9 billion of debt due on December 28. The firm has been plagued with balance sheet issues since it acquired a $4.1 billion stake in Chilean miner SQM in 2018. Lithium carbonate prices have dropped by more than 70% since the acquisition. “This transaction also facilitates a recapitalisation of our balance sheet that will position us strongly for the expected recovery in the lithium sector,” Tianqi founder and chairman Jiang Weiping said.
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2020
The year 2020 started with the identification of a flu-like virus emerging out of China. Within months it had escalated into a pandemic, sparking a worldwide public health emergency. By mid-year the global economy was in tatters as entire populations were quarantined for sustained periods to reduce person-toperson transmission of the deadly COVID-19 virus.
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In Review
the widespread shutdown of all major business sectors (including mining) around the world in the second quarter. The subsequent injection of huge monetary stimulus to prevent total economic collapse boosted ‘safe haven’ gold investment to record levels.
A truly unp
many precious metals producers delivered record revenues this year while maintaining balance sheet responsibility – a lesson learned from the previous bull market. The near-term future remains bright for firms exposed to gold and silver.
So, how has the commodities sector fared throughout this year of shocking developments that have led to seismic - and probably permanent - changes to the very functioning of societies and the global economy?
The bull run reached a crescendo in August when the gold price hit US$2,068 per ounce, before cooling off in the last quarter of the year. Gold’s little brother silver enjoyed a similar meteoric rise in 2020, nearing $30 per ounce before settling at the $24 mark by year-end.
Another key trend emerging out of the pandemic was an acceleration of the global transition to low carbon energy. Even the oil majors are leading the charge into clean power after crude prices crumpled to historic lows in April, with the long-mooted ‘peak oil demand’ moment already reached in 2019 according to BP.
Well, the gold price was already on a gallop prior to
Thanks to a supportive macroeconomic environment,
This hastening shift away from environmentally degrading
Record gold prices
precedented year produces wild peaks and deep troughs in the commodities sector fossil fuels has placed an even stronger spotlight on the plethora of strategic metals needed to sustain the world’s growing energy demand. US President-elect Joe Biden pledged to kickstart the energy transition with a $2 trillion ‘green infrastructure’ plan, following his election victory over Donald Trump.
Energy metals in focus Copper - perhaps the single most important metal to the world’s hopes for a green future, owing to its extensive usage in a range of clean tech applications from wind farms to solar plants and electric vehicles – made a strong recovery from the COVID-19 crisis to reach a seven-year price high in December. Meanwhile, the lithium market rebounded as EV sales hurtled to a record annual figure. Tesla – whose share price has risen nearly 600% this year – told investors it will enter the lithium mining business during its highly anticipated Battery Day in September. The clean energy giant also lifted the nickel mining sector with its plans to build high nickel
content batteries moving forward.
when employees were deemed safe to return.
Elsewhere in the industry, iron ore made an impressive late dash to become the best performing commodity of 2020, with Australia’s top three producers – BHP, Rio Tinto and Fortescue Metals Group - the major beneficiaries of rising global demand projections.
Our 2020 ‘best of’ issue puts forward 10 companies from across the industry that we believe have excelled in their commitment to all stakeholders in these uncertain times, while also delivering consistent returns to their investors. Thank you to all our featured companies, contributors and readers over the course of the year - stay safe and see you in 2021.
All of the above serves to paint a very rosy picture for the sector going into the new year, especially given the extraordinary levels of disruption faced by all levels of the mining supply chain throughout a tumultuous 2020
A strong COVID-19 response Overall, the mining industry can hold its head high with regards to its reaction to the COVID-19 pandemic. Companies from the junior end of the spectrum right through to the majors moved to protect their people and communities, providing relief packages where they were sorely needed and Jacob Ambrose implementing COVID-19 safety protocols across mine sites
Willson Editor j
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Mines and Money cements its status as the premier digital conferencing provider for the mining sector
Mines and Money Online Connect cemented its status as the premier digital conferencing platform for the mining sector after its three-day December event welcomed 3,675 attendees from 119 different countries. After delivering a series of hugely successful online events earlier in the year following the COVID-19 outbreak, Mines and Money attracted a record number of attendees, with 471 active investors among them – a 30% rise on its inaugural global event in September. The latest Online Connect featured 89 expert speakers from across the global mining sector, project updates from 120 mining and energy companies, keynote panel discussions, mining pitch battles and Mines and Money’s ever popular 5@5 video sessions. Each attendee’s own unique portal for interacting with potential business partners was also open 24 hours a day over the duration of the event.
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EVENTS | MINES AND MONEY ONLINE CONNECT
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Mining pitch battles Mines and Money’s highly competitive mining pitch battles once again proved to be one of the most entertaining offerings on the agenda, with a series of commodity-based heats taking place throughout the week. The contest pits a selection of executives from junior mining companies against one another in a series of corporate updates presented in front of a ‘dragon’s den’ of investor judges and the live Online Connect audience. On day one, a gold and precious metals heat took place, with four global companies – Cassiar Gold, Cabral Gold, Banyan Gold and Silver Tiger Metals – competing for a hypothetical $1 million investment handed out by the judges.
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CEO Alan Carter was voted
Nouveau Monde Graphite and
the winner of the first pitch
Strategic Resources. Nouveau
After each company presenter
battle. Day two brought the
Monde came out on top after
was suitably grilled by the
battery metals round, which
a tight contest. Finally, day
investor panel, Cabral Gold
was contested by FPX Nickel,
EVENTS | MINES AND MONEY ONLINE CONNECT
three saw White Gold Corp CEO
Keynote sessions
Vice Minister for Mining
David D’Onofrio triumph in
Mines and Money was pleased
Affairs & Mineral Resources
the second gold and precious
to host a keynote session from
Khalid Al-Mudaifer delivered
metals pitch battle.
the Kingdom of Saudi Arabia
a detailed presentation on the
on day one of Online Connect.
Kingdom’s plans to transform the mining sector.
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“Saudi Arabia now offers
editor Neils Christensen. The
A number of keynote panels
mining investment
two discussed the current
took place throughout the
opportunities supported
gold market in depth during a
show, with two of the most
by promising geological
20-minute session.
interesting expert discussions taking place on day three.
prospects, enhanced access to
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data and robust regulations.
“There are so many reasons
First, a four-person team
Together we can build a world
to buy gold, it’s almost like a
took on the loaded topic of
class mining sector based on
buffet, said Kaplan. “When
geopolitics and its impact on
strategic partnerships and
gold pops and goes over
commodity demand.
a strong mutual benefit,” he
US$2,000 per ounce, that’s
said.
when the big money will
Triple Flag Mining Finance
come in and you’ll see 10-fold
founder and CEO Shaun Usmar
Another keynote ‘fireside
multiplication in some gold
shared his lucid thoughts on
chat’ took place on day two
equities.”
the influence of geopolitics
between Electrum Group CEO
in the energy metals space:
Dr Thomas Kaplan and Kitco
“Metals are now energy.
EVENTS | MINES AND MONEY ONLINE CONNECT
TRIPLE FLAG MINING FINANCE FOUNDER AND CEO SHAUN USMAR SPEAKS DURING GEOPOLITICS KEYNOTE
And one thing we know is
has dominated for some time.”
that energy is political,” he
even billions of dollars, the principals of the business like
declared. “To control your
Later in the day, another high
to get on the ground and see
energy supply chain is one of
calibre panel considered the
the assets before they buy
the great games nations and
likelihood of an explosion
them. That hasn’t been able to
statehoods play in projecting
of M&A deals in the mining
happen for most of this year.
regional and international
sector next year, following
I’m expecting as things open
power.
a bottleneck caused by
up in 2021, we’ll see some of
COVID-19 in 2020.“I think we
these deals that have been
“In the uncertain and volatile
have seen a real bottleneck
building in the background
environment of 2020, we
this year,” said Denham Capital
start to get launched.”
are seeing governments
Management director Justin
attempting to replicate China’s
Machin.
model of state capitalism,
5@5 returns Mines and Money has been
particularly in the strategic
“In mining when you invest
running its weekly 5@5
minerals space, which China
hundreds of millions or
sessions – five industry experts at 5pm – since just after the
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5@5 ONLINE CONNECT EPISODE 1
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world went into lockdown in
restrictions on travel and large-
The first 5@5 Online Connect
March, and it would’ve been
scale gatherings throughout
was hosted by RK Equity and
remiss of the organisers not to
2020. In particular, the
featured a range of companies
include the popular webcam-
sessions have proved effective
from the battery metals sector,
based series within the
in providing a platform for
including European Metals
agenda.
mining firms to communicate
Holdings, Savannah Resources
their latest updates to the
and First Cobalt Corp.
The interactive meetings have
investment sector during the
helped the global mining
current situation.
RK Equity’s Howard Klein
sector stay connected during
struck on optimistic chord
this unprecedented period of
when discussing the global
EVENTS | MINES AND MONEY ONLINE CONNECT
Nickel. IBK president and companies rerated.” These
CEO Mark White revealed that
sentiments on Europe’s
the investment firm helped
emergence as the new
Canada Nickel go public last
dominant hub for the
year and is helping SPC’s IPO
lithium market were echoed
process.
by Keith Coughlan and David Archer of European Metals
Later in the show, New Age
and Savannah Resources
Metals CEO Harry Barr told the
respectively.
audience about the company’s 100% owned undeveloped
“Europe is now the largest
primary palladium deposits in
producer of EVs in the
North America and its lithium
world but has no current
division in Manitoba, Canada.
production of battery grade
“Both contain excellent
lithium. With the emphasis
exploration prospects,” said
on developing local supply
Barr.
chains, we have a lot of catching up to do,” said Coughlan. Meanwhile, Savannah CEO Archer said: “We believe lithium market, which has
this part of the Portugal
suffered with depressed prices
will become a leading lithium
since the giddy highs of early
producing region in Europe.”
2018.” Overall sentiment in
The company is developing a
the lithium sector has greatly
spodumene lithium project in
improved, largely driven by
Northern Portugal.
Europe,” he proclaimed. The next 5@5 was hosted by “Europe is the new China
IBK Capital and featured three
in the sector. Lithium 3.0
of their portfolio companies:
started over the summer,
Canada Nickel Company,
when we had a number of
New Age Metals and SPC
“In the current COVID-19 world, Mines and Money really stepped up to the challenge and delivered a well-organised and functional platform to meet with potential investors – Well done!” - Patrick Donnelly, Trilogy Metals VP corporate communications and development
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EVENTS | MINES AND MONEY ONLINE CONNECT
The final 5@5 on day three
the course of the December
The next Online Connect will
featured another smattering
edition of Online Connect.
take place from January 27-
of exciting company
Away from the presentations
29 and will be the first show
presentations and subsequent
and discussions on the live
to concentrate on a single
analysis by leading mining
feed, 2,539 video meetings
commodity class. Please go
investors, including Synergy
took place over the three days
to the events pages of this
Resource Capital managing
- a 15.5% rise on the preceding
issue to register for Mines
director Paola Rojas. Visit
show.
and Money’s precious metals-
Mines and Money’s YouTube
focused digital event.
page to view all the episodes in
RGN would like to thank
full.
the Mines and Money team
Another great show concludes
for filling the void left by the cancellation of its usual calendar of physical
Once again, Mines and Money
conferences around the world,
delivered a seamless package
not just in December, but
of edifying content over
throughout this most unusual year.
arj
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Gold and climate chang A new report examines gold mining’s energy tran 28
By John Mulligan (W
GOLD | JOHN MULLIGAN (WORLD GOLD COUNCIL)
ge: The energy transition nsition and climate impacts over the next decade
World Gold Council)
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To mitigate the potentially catastrophic impacts from climate change, the global economy needs to reduce its CO2 emissions to net zero by 2050, in line with the Paris Agreement. This requires all industries to rapidly reduce their dependency on energy derived from fossil fuels. Climate-conscious investment groups have been particularly vocal in calling for more clarity from all sectors regarding their detailed plans to contribute to emissions reduction and climate stability. The World Gold Council has previously identified that 99% of the greenhouse gas (GHG) emissions from the gold sector are related to gold mining operations. We estimate around 75% of those emissions are associated with the generation and consumption of electricity. The gold mining sector’s ability to reduce its emissions in line with Paris targets will therefore largely depend on its capacity to change how it sources and uses power and fuels.
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In our previous research, we outlined a potentially accessible and cost-effective pathway for gold mining to meet climate targets. To achieve a climate target limiting global warming to ‘well below 2ºC’ will require the industry to reduce GHG emissions by 80% by 2050. If a ‘1.5ºC’ target is adopted, it will likely require a GHG reduction of 92% by (or shortly after) 2040. In our new analysis, produced in collaboration with energy and mining specialists at Wood Mackenzie1, we have sought to examine in more detail a key part of that pathway, the decarbonisation of power, and how that might allow the gold mining sector to reduce its emissions at a sufficient scale and speed. Recognising that action is needed over the next decade if net zero carbon targets are to be feasible, the report evaluates the impacts of reducing gold mining’s power emissions against 27% and 46% emissions reduction targets by 2030, which would put the sector roughly on schedule to meet targets consistent
with less than 2 ºC and 1.5 ºC, respectively, by 2050.
The greening of the grid Our analysis shows the significant impact local electricity grids have on gold
GOLD | JOHN MULLIGAN (WORLD GOLD COUNCIL)
John Mulligan John is director of market relations and climate change lead at the World Gold Council, leading its climate change research programme and its associated engagement activity with stakeholder organisations. Additionally, he contributes to the organisation’s wider insight and communication outputs to improve understanding of the whole gold supply chain. John has written extensively and comments regularly on gold market dynamics, investment strategy and sustainability issues. John joined the World Gold Council in early 2005, working initially on investment research and investor outreach. He has worked in or around the financial markets for over 25 years, including senior roles in business development, product management, trading systems and market analysis.
mining’s overall emissions. Of the 158 gold mines we examined, grid-sourced electricity represented 57% of their annual energy consumption. The substantive role of coal-fired power in the grids in some mining regions
results in a high level of emissions intensity passed on to connected mines. But many grids are rapidly transitioning to greener power sources and the mines connected to them will benefit. The average carbon-intensity of grid-
Additionally, John has previously consulted on research, business analysis and knowledge management projects for a range of clients, from SMEs to supranational organisations. John has degrees from the University of Sussex and Birkbeck College, University of London.
aj
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GOLD | JOHN MULLIGAN (WORLD GOLD COUNCIL)
sourced power for the mines we examined is expected to fall 20% over the next decade.
The changing ‘asset mix’ Several high-emission mines in our sample are expected to close or experience a substantial reduction in production levels over the next decade. The consequent emissions impacts are significant, resulting in a 19% reduction in emissions intensity across our sample. Of course, the active life of some of these mines may be
extended if reserves allow and the gold price outlook renders them potentially economical. However, we expect the longer-term preference to be for the development of lower emissions intensity mines, supporting the ongoing reduction in sectoral emissions.
Recent announcements Our analysis of recent gold mining company announcements to move to
lower carbon power sources indicates that they are increasingly planning to utilise renewables in a substantive way (often as part of a hybrid power-sourcing arrangement), with solar photovoltaics as the currently preferred renewable energy source. These initiatives will likely reduce mine site power emissions by an average of 20% and, in some cases, by over 50%. Their overall impact on the sector’s power emissions is a reduction of around 6%. If, however,
33
these early stage actions by those at the forefront of the energy transition are adopted more widely, we estimate it would result in an at least an additional average fall in power emissions of 9%, allowing gold mining emissions to approach the 1.5ºC climate target.
34
Renewables and climate targets Our analysis of the initial steps by gold mining companies to decarbonise power, and the implications if these actions are duplicated, alongside current trends in the energy landscape, suggest industry
alignment with the ‘well below 2ºC’ climate target is very feasible. Achieving alignment with the 1.5ºC target will likely require further actions, including additional improvements in energy and operational efficiency, but there is considerable flexibility in how different gold mines
GOLD | JOHN MULLIGAN (WORLD GOLD COUNCIL)
might seek to reduce carbonintensive power sources. For example, our analysis suggests that the increased use of renewables to replace the following: • 55% or more of direct fossil fuel generated power, or
• 30% or more of grid supply, or • 20% of both grid and direct fossil fuel-based supply should enable the gold industry to align itself to the 1.5ºC climate target and a net zero carbon future.
1. Wood Mackenzie’s analysis is based on an examination of the power consumption of 158 mines located in 31 countries and owned by 31 major gold mining companies, representing around 55% of global annual LSM gold production. 2020 World Gold Council. All rights reserved. For informational purposes only. Sources: all charts and data – Wood Mackenzie
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BUSHVELD
At the forefront of the burg
MINERALS
geoning vanadium market
2019 was another busy year for South African vanadium producer Bushveld Minerals. The London-listed company cemented its position as one of the world’s largest vertically integrated primary producers of vanadium – a unique metal with properties that have traditionally fed the steel manufacturing sector, but more recently its applications have been realised in the emerging energy storage sector. Bushveld added a fourth vanadium asset to its diversified resource base in South Africa’s Bushveld Complex with the acquisition of Vanchem in November 2019. Bushveld also undertook a Transformation Programme at its operational Vametco mine which resulted in record production outcomes in 2019. The company also made progress towards its goals in the exciting vanadium-based energy storage industry, in the shape of investments in Original Equipment Manufacturers (OEMs) redT-Avalon and Enerox.
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Integrating Vanchem
refurbishment and ramp-up programme at Vanchem which
In November 2019, Bushveld
will eventually boost steady
announced it had completed
state production to 4,200 mtV
the acquisition of Vanchem – a
per annum, supporting the
primary vanadium processing
company’s long-term goal of an
facility with a beneficiation
8,400 mtV annual production
plant capable of producing
rate.
various vanadium oxides, ferrovanadium and vanadium
The Vanchem acquisition
chemicals.
serves to diversify Bushveld’s mining and processing
“The acquisition is consistent
footprint in South Africa,
with the company’s long-term
while also creating operational
strategy of acquiring existing,
and business case synergies
low-cost scalable brownfield
between the Vametco, Vanchem
operating assets in South Africa
and Mokopane facilities, all
to expedite the development
of which are located within
of the company’s significant
relative proximity and
and high grade resource base,”
connected by road and rail.
says Bushveld’s CEO Fortune Mojapelo.
Bushveld’s lofty ambitions in the global energy storage
Vanchem adds around 960
space are also well served by
metric tonnes of vanadium
the Vanchem acquisition. The
(mtV) to the group’s current
existing chemical plant at
annual production from the
Vanchem provides additional
Vametco mine, which produced
feedstock options for vanadium
a record 2,833 mtV in 2019.
electrolyte manufacturing, the most expensive component in
In addition, Bushveld has
vanadium redox flow batteries
embarked on a five-year
(VRFBs).
MINING | BUSHVELD MINERALS
41
Plugging in to energy storage
market, on account of their
hours of energy daily and
unique features that give
flexibility that allows for
Through the Bushveld Energy
them an edge in large scale,
capturing the multi-stacked
platform that was launched
stationary and long-duration
values of energy storage in
in 2016, the company aims to
energy storage applications,�
grid applications.
capture a share of the rapidly
explains Mojapelo.
emerging energy storage
42
While VRFBs not only benefit
market, where VRFBs present
These advantages include:
the burgeoning renewable
a compelling proposition
Long lifespan cycles with the
energy sector, perhaps more
in providing long duration
ability to repeatedly charge/
significantly, the technology
storage solutions.
discharge over 20 years with
helps make existing power
minimal degradation, low
systems more efficient through
“VRFBs are well positioned
cost per kWh when fully used
load balancing and other
to take a significant share of
at least once daily, scalable
forms of grid savings.
the stationary energy storage
capacity to store four to 10
MINING | BUSHVELD MINERALS
“Research from Navigant
to capture approximately 18%
Bushveld is well positioned
forecasts that the size of the
of the market, which equates
to capitalise on this huge
energy storage market will
to approximately 20GWh of
projected vanadium demand
reach US$50 billion within
demand and nearly $10 billion
from the VRFB sector thanks
the next 10 years, which
in revenue in the coming
to its globally significant
represents a growth rate of
decade.
resource base of 550 million
58% a year to exceed 100GWh of capacity by 2027.
tonnes (100% basis) grading “In addition, approximately
1.58-2.0% V205 in magnetite
5.5 tonnes of vanadium is used
and its low cost, flexible and
“While multiple technologies
for per MWh, which means
scalable primary vanadium
are expected to be successful
that in 2027 vanadium use in
processing facilities at
due to their unique technical
VRFBs could be between 50
Vametco and Vanchem.
and cost advantages and
and 80,000 mtV.”
suitability to local conditions,
“Bushveld’s vertical integration
Navigant expects flow batteries
strategy and synergies across
43
its assets provide flexibility
The platform will allow
for the group to deliver on the
the company to mobilise
entire vanadium value suite by
additional third-party
being able to produce various
financing to support VRFB
vanadium feedstocks that can
manufacturers’ efforts to scale
be converted into electrolytes
up their capacity.
for VRFBs.”
Downstream investments
The first action made by Bushveld under the VRFB Investment Platform was to
Bushveld further underlined
provide a US$5 million loan
its ambitions in the
to support the merger of UK
downstream vanadium-
energy storage provider redT
based energy storage sector
with US VRFB manufacturer
by establishing a VRFB
Avalon Battery Corp.
Investment Platform to lead investments in this space.
“This investment is in line with the company’s strategy of
VRFBs are well positioned to take a significant share of the stationary energy storage market, on account of their unique features that give them an edge in large scale, stationary and longduration energy storage applications” Fortune Mojapelo, CEO Bushveld Minerals
44
building a leading downstream
In addition to the redT-Avalon
vanadium-based energy
investment, Bushveld joined a
storage platform.”
consortium for the acquisition of another VRFB OEM before
The interim funding creates
the end of 2019, in the shape
an investment into a scaled-up
of Austrian firm Enerox – a
VRFB OEM with the potential
pioneering company with over
to become a leading, global
10 years’ experience in the
battery energy storage systems
production of VRFBs.
supplier, and gives Bushveld preferential supply rights to
“Bushveld’s participation in
the new company for at least
this investment expands our
two years.
VRFB investment platform, demonstrates our belief in VRFB technology, and helps
MINING | BUSHVELD MINERALS
grow both the VRFB and the
was completed and tendering
Energy aims to address Africa’s
overall vanadium market,� says for its construction is now
greatest obstacle to faster
Mojapelo.
in process. Bushveld is also
growth and industrialisation:
adding a financial product to
Reliable electricity supply.
In addition, Bushveld is
the electrolyte and rolled out
building a 200MWh vanadium
the first vanadium electrolyte
In 2019, Bushveld Energy
electrolyte production
rental contract in June 2019 in
announced the development
facility in the East London
the US with Avalon.
of a 1MW mini-grid at
Industrial Development Zone, together with the Industrial Development Corporation to supply local and international VRFB projects. In 2019, the EIA for the site
Project development with energy storage
the Vametco mining and processing facility. The mini-grid combines 2.5MW of solar PV generation and 1MWh/4MWh of
With its dedicated project
energy storage using VRFB
development team, Bushveld
technology, co-located at the
45
Bushveld Minerals’ strategy: Building a sustainable cash-generating, high-grade low-cost platform with a production of 8,400 mtV pa Leveraging its production platform to build a leading stationary energy storage player participating in the vanadium redox flow battery value chain through the supply of electrolyte, project development and ownership of VRFB technology The Group’s vertical integration strategy and synergies across the assets provide flexibility for: Sourcing feedstock, which can mitigate capital requirements in a volatile pricing environment Final products, which can help to maximise sales depending on product demand dynamics Enabling the Group to deliver on the entire vanadium value suite while being in a solid position throughout the vanadium price cycle
BU S HV E LD M IN E RALS AT A G L A N C E
STOCK TICKER AIM:BMN
MARKET CAPITALISATION
US$220 million (as of December 17, 2020)
a j
46
Vametco mine and processing
The opportunity for energy
facility.
storage in South Africa is even more significant. The country’s
The project will demonstrate
Integrated Resource Plan 2019
the technical and commercial
specifically seeks novel ways
capability of hybrid mini-
to improve grid reliability
grids using solar PV and VRFB
and access to power over the
technology, while reducing
long-term, with a dedicated
the mine’s dependence on the
allocation of over 2,000MW for
power grid and cutting its CO2
new energy storage.
emissions. The project could also be scaled up further to
This includes the recently
provide a larger amount of
announced 350MW/1400MWh
energy in future.
Eskom battery programme
MINING | BUSHVELD MINERALS
that is part of an even larger
in 2019, Bushveld believes
Over the next 12 months,
World Bank Energy Storage
the long-term outlook for the
the company plans to unlock
initiative. On top of that,
market remains strong.
multiple synergies across
significant opportunities
the Vametco, Vanchem and
exist in the soon to be
With its unrivalled asset base
Mokopane assets, and will
restarted Renewable
in South Africa and its rapidly
continue advancing Bushveld
Energy Independent Power
expanding interests in the
Energy’s position in the
Procurement (REIPP)
stationary energy storage
growing VRFB market.
programme.
sector, Bushveld finds itself
A bright future
in an excellent position to continue building a fully
Despite vanadium prices
integrated vanadium company
retreating from an
in 2020 and beyond.
astronomical three-year run
47
AFRICA. IN THE PALM OF YOUR HAND.
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49
2-3 FEBRUARY 2021 | FREE ONLINE EVENT
Presented by:
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SUPERIOR GOLD
Strong fundamentals in place for this Western Australian gold produ
50
MINING | SUPERIOR GOLD
ucer
51
Superior Gold is a Canadian gold producer that owns the Plutonic Gold operations, comprised of the Plutonic underground mine, central mill and the Hermes open pit projects, in the tier one jurisdiction of Western Australia (WA). The Plutonic mine has been in continuous production since 1990 and has produced over 5.5 million ounces of gold during this time, making it one of WA’s largest historic gold producing mines. TSXVlisted Superior aims to produce 80-90,000 ounces of gold in 2020, which would provide the base for the company to ultimately deliver its stated goal of producing 100,000 ounces per annum through the addition of satellite open pit operations.
52
MINING | SUPERIOR GOLD
Superior made the difficult
Going underground
decision to sacrifice short-
The five-year plan outlines
term results at the Plutonic
a number of ways in which
operations in order to ensure
Superior will optimise the
its long-term success, posting
Plutonic underground mine
a revised annual production
in order to achieve average
target of 80-85,000 ounces
production from underground
following weaker production in
alone of 70-85,000 ounces per
the third quarter.
annum up to 2024.
The company recovered in
Superior will increase
Q4 to meet its revised annual
efficiencies by focusing on
guidance with 83,035 ounces
four mining fronts instead
of gold produced over the 12
of eight under the previous
months ending December 2019,
mode of operation. In order
although by then the focus had
to achieve this, Superior will
shifted to a freshly devised five-
boost development rates from
year plan for the underground
600 metres per month to more
life of mine (LOM) starting in
than 800 metres per month.
In the second half of 2019,
2020.
Other parameters outlined “We identified some issues
in the five-year plan include
in the middle of last year but
a stope grade of 3.5-4.5
if you look at our quarterly
grams per tonne, all-in
performance, we’ve gradually
sustaining costs averaging
been working towards
less than US$1,100 per ounce,
overcoming those challenges
and a commitment to spend
and setting ourselves on a path
US$6.5 million per year on
to the profitability that we saw
exploration at Plutonic.
back in 2017,” says Superior’s president and CEO Chris
“The five-year plan is all about
Bradbrook.
ensuring that the development
53
in front of us will enable us to maximise grade and enhance flexibility. The ultimate cost reduction is always achieved by maximising grade, because our underground mining costs remain pretty constant, so a reduction in unit cost per ounce is all about improving the grade.” The total underground resource is substantially larger than the quantity of mineralisation included in the LOM, and the expectation is that the ultimate mine life is longer than the five years covered by the LOM.
Corporate reshuffle The company’s five-year plan is a result of detailed analysis and work completed since Superior appointed Keith Boyle as chief operating officer (COO) in April last year. Boyle’s appointment was enacted by Superior in 2019 after determining that the company needed an extra layer of operational expertise and oversight.
54
MINING | SUPERIOR GOLD
“We are in a tier one jurisdiction and we have got one of the biggest gold systems in WA, which is Australia’s biggest gold producing district. We also have infrastructure that allows us the expand rapidly and at low capital” Chris Bradbrook, Superior Gold president and CEO “Keith brings an extra level of operational skill that allows us to focus and keep on track. As part of our new focus, we also added a new general manager last September, Alan Breen. He has got excellent international experience but it was Keith who became the catalyst for the upgrade of the entire operations team.” While bringing in new corporate direction last year, the company has maintained its focus on keeping general and administrative (G&A) costs down. In fact, G&A costs per ounce have remained among the lowest among its peer group since Superior went public in February 2017.
55
“Everything has a per ounce cost, including management and that has been a mantra of ours since I started the company,” Bradbrook proclaims. “That’s what we wanted to do, so that culture is very much ingrained in Superior.”
The open pit opportunity Alongside the new plan for the underground mine at Plutonic, Superior expects to be able to add ounces to its production through the addition of several open pit deposits. The company started commercial gold production from the Hermes open pit in March 2018 but suspended operations in May 2019 ahead of its new five-year plan. Superior is currently working on the optimisation of its open pit resources, including the Hermes deposit, which will CHRIS BRADBROOK, PRESIDENT AND CEO
56
MINING | SUPERIOR GOLD
potentially be combined with the Hermes South project to create a single operation. A resource update for the open pits is expected towards the end of the first quarter or the beginning of the second quarter. “It’s not just the Hermes pit, there are a number of pits which will be included once we finalise the resource update. We expect to put out a revised plan for the open pits soon which will look at adding around 20-30,000 ounces per annum from open pit resources. Considering our 70-85,000 ounces underground target in the LOM, you can see that those combined could get us over 100,000 ounces sustainably.” Currently, it is anticipated that production from the Plutonic East/Perch pit could commence during the second half of 2020, once final mining permits have been received. Other near-term open pit resources include
57
It’s about thinking big and making sure that wherever we drill, we find mineralisation. We think this is a large system and there is a good possibility of finding additional resources. We will be targeting the favourable mafic volcanic host rock and the key structural settings.”
the Salmon and Workshop
Superior’s chief is keen for
deposits.
the company to look for other
Further resource growth
Plutonic-type targets in the area.
Superior is also chasing near
“It’s about thinking big and
surface and underground
making sure that wherever we
reserve and resource
drill, we find mineralisation.
growth this year and is in
“We think this is a large system
the process of creating a
and there is a good possibility
five-year exploration plan to
of finding additional
run alongside the five-year
resources. We will be targeting
underground mining plan.
the favourable mafic volcanic host rock and the key
Most of the easy-to-reach near
structural settings.”
surface resources at Plutonic
58
have already been identified
Meanwhile, underground
according to Bradbrook, but
resource expansion has been
MINING | SUPERIOR GOLD
a key focus for Superior
limited exploration and
results as pleasing and said
since it took over the
development to date.
Superior will continue to
Plutonic operations, and this
release drill results in some of
commitment to underground
In December 2019, the
the other key areas of the LOM
exploration has been
company announced positive
plan, including Timor, Indian
underlined in the company’s
results from this area which
and Baltic, in the near future.
five-year mining plan.
illustrated the potential to extend the LOM plan to well
Filling the mills
Back in October, COO Keith
beyond five years. Highlights
Superior is also undertaking
Boyle revealed that Superior’s
of the drill results included: 1)
a calculation of a new global
immediate underground focus
26.0 g Au/t over 5.55 metres; 2)
resource for the Plutonic
would be on establishing four
210.0 g Au/t over 0.60 metres;
mine, the results of which will
key mining fronts, which
and 3) 13.2 g Au/t over 6.7
ultimately be incorporated into
would make the area between
metres.
a longer-term plan. Crucially
the Indian and Baltic zones an
for the company, it has access
area of significant interest, as
Following the announcement,
to a second mill within the
it is a zone which has received
Bradbrook described these
Plutonic premises, which
59
60
MINING | SUPERIOR GOLD
will allow it to easily ramp
company, Bradbrook appears
up should extra resources be
enthusiastic about Superior’s
discovered.
future.
The second mill has a capacity
“We are in a tier one
of 1.2 million tonnes per
jurisdiction and we have got
annum and is currently on
one of the biggest gold systems
care and maintenance but
in WA, which is Australia’s
can be brought back online
biggest gold producing district.
with minimal capex spend,
We also have infrastructure
according to the company.
that allows us the expand
Bradbrook believes the
rapidly and at low capital. I
possession of an additional
think we are extremely well
mill is a key differential for
placed in the current gold
Superior in the gold space.
market.”
“The gold price is very impressive right now. If we are in a prolonged period of high gold prices, you want to be able to deliver the maximum amount of gold into that. Most other companies don’t
SUPE RIOR G OLD AT A G L A N C E
have the capacity to do that, whereas we do. We can add more ounces into a strong gold market very quickly and with minimal capex.” STOCK TICKER Considering the strong fundamentals – such as a high gold price and operating in a strong mining jurisdiction
TSXV:SGI
MARKET CAPITALISATION US$30 million (as of March 24, 2020)
j
– underpinning the
61
THE VERTICALLY INTEGRATED PRIMARY VANADIUM PRODUCER
Bushveld Minerals’ vision is to grow into a significant, low cost and vertically integrated company comprising of primary vanadium production, electrolyte manufacturing, development and deployment of Vanadium Redox Flow Batteries in the energy markets. Our value proposition includes: •
Compelling commodity market anchored to steel with burgeoning demand from energy storage market
•
Largest primary vanadium resource base of ~550Mt with a grade 1.58-2.02% V₂O₅ in magnetite
•
Post the completion of the Vanchem acquisition Bushveld Minerals will own 2 of the 4 operating primary vanadium production
•
Bushveld Minerals will offer a diversfied product offering for the steel, chemical industry and energy storage market
•
Bushveld Minerals vertical integration strategy into energy storage provides a natural hedge to vanadium price volatility as well as a
processing facilities, with capacity to scale up production significantly
diversified revenue stream
5 Harries Road, Illovo Edge Office Park 2nd Floor, Johannesburg, Gauteng 2196 | info@bushveldminerals.com | www.bushveldminerals.com @BushveldMin_Ltd
Bushveld Minerals
GENSO POT
A pioneering vision for the futu 64
MINING | GENSOURCE POTASH
OURCE TASH
ure of the global potash market
65
Gensource Potash is an innovative pre-production company in the potash industry with a plan to operate in a markedly different manner to the incumbents of the global fertiliser market. The TSXV-listed firm’s business model rests on two core ‘pillars’ – the first is to be a small, efficient and environmentally sustainable potash producer and the second is to be vertically integrated from mine to farm. Gensource’s vision is to ‘achieve food security by supplying the world with a key macronutrient at an affordable cost within an open, transparent and sustainable environment’. “We think our vision represents the way potash will be done in the future,” says Gensource’s president and CEO Mike Ferguson. “Our method is clean, efficient and we have the end-user, the farmer, in mind. It’s focused on what the market needs rather than what’s best for the producers of the product.”
66
MINING | GENSOURCE POTASH
Gensource aims to ultimately
K+S subsequently brought the
create a series of small-
large-scale solution potash
scale and environmentally
mine into production in May
sustainable potash production
2017 and the US$4.5 billion
facilities referred to as
project (later renamed the
‘modules’, with the Tugaske
Bethune mine) is expected to
Potash Project in Saskatchewan,
produce 2.86 million tonnes
Canada being the first module
(Mt) of potash per year by 2023
to be developed by the
and that could still be ramped
company.
up further to 4 Mt per year.
Skin in the potash game
“It was a conventional solution
The Gensource team has
large potash project that
worked in potash production
required a lot of money and
for several decades and
time to develop and construct.
developed a collective
The global potash industry has
insight into the workings
been, at times, a true cartel,
of the industry, focusing
but nowadays is more properly
particularly on market-focused
described as an oligopoly.
mining method and a typically
improvements.
“For this reason, it’s been very In fact, the core team at
difficult for outside players to
Gensource is the same one
enter the fray, regardless of
that led a company called
whether they can afford to pay
Potash One from 2007 to
the billions of dollars required
2011. This Canadian firm
to develop the large tonnage
developed the Legacy potash
projects.
project in Saskatchewan until it was acquired by German
“While we were still
fertiliser manufacturer K+S
developing the Legacy project
Aktiengesellschaft.
at Potash One, we started to develop these ideas of small-
67
scale, efficient production. After selling the project, we reconvened within Gensource to implement those ideas around entering on a small scale with environmentally friendly mining practices. That’s the story of how we formed Gensource.� While new participants continue to find it difficult to break into the established oligopoly of potash producers, Gensource has also identified other weaknesses in the potash market, including inefficient and environmentally damaging production methods, and a lack of integration among supply chains. Gensource’s pillared approach aims to address these issues. First, the production of small modules will allow the company to start small and ramp up into additional modules as the market develops. Second, its production method is remarkably more efficient and environmentally friendly
68
MINING | GENSOURCE POTASH
than conventional potash mines. And third, a vertically integrated mine-to-farm structure will directly unite the potash supply chain all the way to end user.
Right sizing production Gensource’s first module from the Tugaske project will produce 250,000 tonnes per year of potash – a significantly smaller operation when compared with the Legacy project developed by the team in their former roles. The Tugaske project will use a selective solution mining method along with industry-standard cooling crystallisation processing, both of which are driving the project’s unprecedented levels of efficiency and environmental sustainability. In contrast to traditional solution mining, which uses fresh water to dissolve potash and salt underground,
69
70
MINING | GENSOURCE POTASH
selective solution mining uses
product become insignificant
need for surface brine ponds,
brine to only dissolve potash
and subsequently, it ends up in
for either tailings or cooling.
from underground caverns.
large tailings piles next to the
Selective solution mining also
The result is a significantly
operation.
uses about a quarter of the
more efficient extraction,
water per tonne of product
lower capex and opex, no salt
“These huge piles of salt
compared to normal solution
tailings and no brine ponds.
then need to be encircled
mining activity.
with control dykes or ponds, A typical potash operation
which represents a significant
“Overall selective solution
produces almost two tonnes of
environmental issue because
mining lets us be small and
excess salt for each tonne of
over time ponds leak, and you
it puts us at the forefront of
product produced, according
have brine migration down
the whole industry from an
to Ferguson. This is such a
to groundwater sources. But
environmental perspective.�
large volume that the minor
with our method, we leave
secondary uses of the by-
no salt tailings and have no
71
Full environmental approval
At the local community level,
In fact, having demonstrated
its smaller scale compared
the Tugaske’s negligible
to the 10 existing potash
environmental impact to
operations in Saskatchewan.
the local regulator, the
All of these mines are much
TSXV:GSP
Saskatchewan Ministry of
larger, often employing more
MARKET CAPITALISATION
the Environment, the project
than 2,000 construction
was granted full government
workers over a period of up to
approval without the need
five years and hundreds more
for Gensource to produce
long term at the project site
an Environmental Impact
during operations.
G E NS O UR C E POTAS H AT A G L A N C E
STOCK TICKER
US$25.5 million (as of April 22, 2020)
abj
Assessment (EIA) – an unprecedented feat in the global potash sector.
72
the Tugaske project has also been warmly received due to
MINING | GENSOURCE POTASH
“The local communities in
period of less than two years,
Saskatchewan are made up
with only 42 people employed
A direct link with the market
of small towns that can have
permanently at the site.
Gensource’s most recent
as few as 50 people in them.
project milestone was
If you show up with 2,500
“Our size and the
the capture of German
construction workers for five
environmentally sustainable
conglomerate HELM AG as
years and 500 more people
aspect of our project have
offtake partner for 100% of
working there permanently,
been enthusiastically
the production from Tugaske.
you can imagine it almost
embraced by local towns
Following the announcement
obliterates the community.”
and local governments as
in January, HELM is also
something that really fits in
expected to become an equity
However, in the case of
to the community, instead
partner in the project.
Gensource’s Tugaske project
of dominating it,” Ferguson
there will be only 200
proudly asserts.
construction workers over a
“They plan to be a future owner of their own supply
73
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AnBoundenergy.com info@anboundenergy.com | +1 (403) 475-1570 74
MINING | GENSOURCE POTASH
chain, which is a key business
begin as early as Q2 this year.
tenet to Gensource – to create
The company estimates a two-
that streamlined supply chain
year construction period, with
in the potash world. We are
plant start up and first potash
working with HELM and one
production slated for mid-
other financial partner and we
2022.
are in the middle of the debt
“We think our vision represents the way potash will be done in the future. Our method is clean, efficient and we have the market in mind” Mike Ferguson, Gensource Potash president and CEO
The lead bank that Gensource
The start of something bigger
has mandated for the senior
The Tugaske project resembles
can grow to suit the market.
debt financing is KfW IPEX-
just the tip of the iceberg for
It allows us to grow in small
Bank out of Germany – a world
Gensource and its radical plans increments to meet the
class lender according to the
for the global potash market.
requirements of the market,
company. Ferguson reveals
“The bigger business plan is
rather than what happens
that Gensource expects to
all about becoming a new and
now with large multi-billion
announce project financing
independent producer in the
dollar investments that bring
milestones by late second
potash industry and doing so
multi-million tonnages to
quarter of this year.
by starting small.
the market, which negatively
finance due diligence process.”
impact supply chains and With all environmental
“We are starting with one
prices.”
approvals in place and a
module, but we plan to expand
bankable feasibility completed
this with a second module that
Herein lies Gensource’s novel
back in 2017, the Tugaske
would bring our production to
proposal for the future of the
project is essentially ‘shovel-
500,000 tonnes per year. At the
global potash industry – small,
ready’, and the fulfilment of
same time, we could start an
expandable production, more
project financing is the last
entirely new project under a
like manufacturing than
hurdle that Gensource must
new JV company, operating in
mining, using environmentally
overcome before construction
the same project area and of a
sustainable methods
can begin.
similar small scale.
while establishing a direct connection between the
This means that construction
“The idea is that these things
production facility and the
of the Tugaske project could
can start out very small and
global fertiliser market.
75
Building a Multi-Asset Mid-Tier West African Gold Producer
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Permitted Mill and Tailings Facility
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78
MINING | JOSEMARIA RESOURCES
JOSEMARIA RESOURCES The latest large scale resource project to be delivered by the Lundin Group
79
The Lundin Group was founded by Swedish oil and mining entrepeneur Adolf H. Lundin over 40 years ago and is today comprised of 13 publicly traded companies dotted around the global resources sector. In the beginning, the Group was driven forward by Adolf’s passion for natural resources and his desire to supply the world with key commodities. In order to do this, he quickly learned that you need to find large, high quality resources and bring them into production wherever they are to be found in the world and no matter how unfavourable the jurisdiction might appear to be.
“The Lundin Group modus
the business, the Lundin Group
operandi is to find tier 1 assets
has production out of Norway,
that benefit local communities.
Canada, Nigeria, France,
We’re not scared to go to any
Malaysia and Iraqi Kurdistan.
jurisdiction, as long as the local country wants to do it
“In Argentina, we’ve had ups
together. This belief has taken
and downs but my father went
us across the world,” says
there in the early 90s and
Adolf’s grandson and current
found success and we never
president and CEO of Josemaria
left. Overall, it’s a Group where
Resources, Adam Lundin.
a lot of people came together
A truly global resources group
who were passionate about making the world a better place and doing that through
The poster child of the
the extraction of natural
Group’s success in the mining
resources.”
sector is Lundin Gold, after it brought into production the
The Lundin Group’s early
multi-million ounce Fruta del
success in Argentina goes back
Norte gold mine in Ecuador
to the discovery of the Veladero
– a jurisdiction that precious
gold deposit in San Juan
few Western companies had
Province. The project was soon
explored in prior to Lundin’s
acquired by Homestake Mining
discovery.
after fighting off a hostile bid by Barrick, who ultimately bought
Elsewhere, the Lundin
Homestake to get their hands
Group has been involved in
on the prized deposit. Veladero
developing one of the largest
has remained one of the largest
copper-cobalt mines in the
gold mines in the world over
Democratic Republic of Congo
the last two decades.
through Lundin Mining, which
ADOLF H. LUNDIN, LUNDIN GROUP FOUNDER
80
currently operates mines in
On the back of this divestment,
Brazil, the US, Portugal, Chile
the same Lundin Group
and Sweden. On the oil side of
exploration team decided to
MINING | JOSEMARIA RESOURCES
81
stake some ground on the Chile-Argentina border, not far from the Veladero deposit, at the turn of the century. The subsequent exploration campaigns yielded three grassroots discoveries – one being the Josemaría coppergold deposit in 2004. The three discoveries are in the same land package and are located within 15 km of each other, but have since been spun into three separate companies within the Lundin Group. “Josemaría is currently the most defined project. We feel we’ve found the boundary of the resource, so the view now is to get something into production and maybe we can later tie in the other two deposits to form a district that will allow us to be mining here for 50+ years,” says Lundin.
Faith in Argentina In years gone by, international mining companies have been wary of investing in
82
LUKAS AND ADAM LUNDIN WITH ARGENTINA PRESIDENT ALBERTO
MINING | JOSEMARIA RESOURCES
an emerging market like Argentina, especially while some of its provinces receive low rankings for attractiveness as a mining jurisdiction. However, it has never been the remit of the Lundin Group to be put off by warnings of this nature. As we have already learned, if a project is large and of a high quality, the group will commit to its development. In the case of San Juan Province, where Josemaría is located in the shade of the resplendent Andes mountains snaking through Northern Argentina, mining is entrenched in the political and economic fibres of the region. “San Juan is where we made the Veladero discovery, so it has producing mines and they understand mining and how it can help benefit the local economy. Before Veladero came into production, San Juan was one of the top five FERNÁNDEZ (MIDDLE), JAN 2020
poorest provinces in Argentina
83
and now it’s one of the top five
At the federal level, Lundin
wealthiest, because of those
and his father Lukas managed
royalties and benefits attached
to arrange a meeting with
to the Veladero mine.”
President Alberto Fernández during a visit to Buenos Aires
In addition, Josemaria’s
in mid-January. “To be able
experience working with the
to meet the president at short
different layers of government
notice and get in front of key
in Argentina thus far has been
government officials shows
overwhelmingly positive.
their willingness and their
On the provincial level, the
want to get mining going.
company has been in close contact with the minister of
“This is their resource. We
mines for San Juan Province,
are happy to help put it into
who was recently appointed
production but they will be
federal minister of mines,
biggest benefiters, followed
reporting directly to the
by our shareholders,” Lundin
president.
asserts.
J OS E M A R I A RES O U R C ES
Entering a new era
AT A G L A N C E
Following the publishing of a robust pre-feasibility study (PFS) at the end of 2018, Josemaria made the decision to plough on with the bankable and full feasibility studies. And so, last year became a
STOCK TICKER
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MARKET CAPITALISATION
US$87.2 million (as of April 2, 2020)
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transformational year in the development of the company and the project. The company’s name was changed from NGEx Resources
MINING | JOSEMARIA RESOURCES
85
86
MINING | JOSEMARIA RESOURCES
(the original entity that made the three discoveries) to Josemaria Resources and Adam was brought in to head up the refreshed organisation, along with several other additions to the board and management team. “We strengthened the board by bringing in Paul Conibear, the previous Lundin Mining CEO. We have Ashley Heppenstall, who is former Lundin Petroleum CEO. We also brought in Ron Hochstein who’s currently running Lundin Gold.” Adam’s father Lukas is also on the board of directors alongside Jack – Adam’s brother and Lukas’ son. Alongside the familial connections, the board retained the services of renowned geoscientist Wojtek Wodzicki - who made the initial Josemaría discovery. “I think it’s important to keep that continuity,” Lundin adds. Christina Batruch rounds off Josemaria’s experienced board
Spotlight on
Adam Lundin
Adam Lundin was appointed president and CEO of Josemaria Resources in September 2019, succeeding Dr. Wojtek Wodzicki, who had been at the helm of the company for over 10 years. Adam is the grandson of Adolf Lundin, the man who founded the Lundin Group over forty years ago. Following in the footsteps of his grandfather and father, Adam chose a career in natural resources and has accumulated several years of experience in capital markets and public company management across the sector. Working across the Lundin Group, Adam is also CEO and a director of Filo Mining Corp and a director of NGEx Minerals and Africa Energy Corp.
87
“We have big camaraderie in the Lundin Group. All the companies are independent from one another, but we learn from each other and we’re always there to support each other”- Adam Lundin, Josemaria Resources president and CEO
88
team and is responsible for
Going back to the 2018 PFS,
helping guide the company’s
Lundin was pleased with
sustainability strategy.
the anticipated economic metrics for the Josemaría
On the management side,
project, particularly the capital
Ian Gibbs was brought in as
expenditure (capex) estimate
chief financial officer owing
of US$2.75 billion. This may
to his previous project finance
seem like a large figure in
experience from the oil side
comparison to Josemaria’s
of the Lundin Group and
market cap, but this is a large
with Lundin Gold. With an
scale project that requires
extensive history across global
large scale investment.
engineering companies, Arndt Brettschneider, VP Projects,
Furthermore, Josemaría’s
was also recruited to lead the
production profile is also
feasibility study.
attractive. The operation will
MINING | JOSEMARIA RESOURCES
produce 125,000 tonnes per
Lundin Mining agreed when it
field programme that included
annum of its main commodity
bought the Candelaria mine in
condemnation, geotechnical
copper over a 20-year mine
Chile, as a way of financing the
and water drilling.
life, along with 230,000 ounces
capex for Josemaría.”
of gold and 790,000 ounces of silver per annum over the same period.
Ploughing ahead in 2020
Josemaria is blessed with a supply of groundwater just 1.5 km away from the project – a
The first quarter of 2020
considerable benefit given that
“The gold production is
has been about polishing
just across the border, Chilean
significant and accounts for
elements of the PFS ahead of
authorities insist on miners
around 25% of our revenue
the publish of a full feasibility
building desalination plants
of the mine life. That gives us
study and building towards
for their water supply.
flexibility when it comes to
applying for environmental
project finance. Maybe we will
and social permits. The
After proving its main source
look to the streaming deal that
company conducted a large
of water supply, the company
89
was about to test another basin
times. We’ve collected a lot of
Josemaria has also been
as a future supply source until
our baseline studies, so we’ll
monitoring the local
Argentina was placed in full
be in a good position to apply
environment in tandem with
lockdown to quell the spread
for permits in Q4.”
BGC Engineering over the last
of COVID-19 (coronavirus), so the work was cut short.
90
five years, specifically focusing On the social side, Josemaria
on minimising any potential
has engaged with the Lundin
impact on a glacier around
“The original plan before
Foundation and started to run
seven km away in the Andes.
COVID-19 was to finish the
social programmes within
feasibility and publish it in
the community. One aim is
Q3. I think it’s better to start
to eventually assist water
guiding the market towards
treatment facilities in the local
A standout company and project
the second half of the year,
city of San Juan.
The Lundin Group is bullish
just to give us some flexibility
about copper and a believer
as we adapt to these changing
in the forthcoming electrical
MINING | JOSEMARIA RESOURCES
revolution as the world looks
of experience in different
Despite the global
to shift away from fossil fuels,
geographical contexts and
resources sector facing an
and Josemaría is a large scale
economic cycles.
unprecedented squeeze from
mine that is going to stand
the coronavirus pandemic,
out in an environment where
“Lundin Gold was one of
Lundin is quietly confident
not many copper projects of
the first projects we built by
that Josemaria can emerge
an appropriate scale for the
ourselves and we are hoping
stronger. “Downturns is when
projected demand increase are
Josemaria is the next one.
we benefit the most as a
coming to market.
We have big camaraderie in
Group. We can push projects
the Lundin Group. All the
forward and retain key talent
Josemaria the company also
companies are independent
where other companies are
stands out in the junior space,
from one another, but we
sitting idle.”
as its part of a much larger
learn from each other and
family of natural resource
we’re always there to support
companies with decades
each other,” Lundin exclaims.
91
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ARGO GO 94
North America’s next m
MINING | ARGONAUT GOLD
ONAUT OLD
mid-tier gold producer
95
Over the last decade, Canadian gold explorer and producer Argonaut Gold has built a reputation for operating a cluster of simple, low risk gold assets across North America. The recent acquisition of NYSElisted Alio Gold at the end of March has been a long time in the offing and adds a couple more attractive pearls to Argonaut’s ‘necklace’ of assets, to borrow a metaphor used by president and CEO Peter Dougherty.
“Consolidation is healthy for
natural synergies. Firstly,
the sector because we’ll get
Florida Canyon is an open pit
better capitalisation, we’ll
heap leach mine – the type
be able to coalesce the best
of operation that Argonaut
talent in the industry and
has excelled in previously,
hopefully produce more vibrant
particularly at low grades.
Talking to RGN, Argonaut’s chief describes the deal as typical of the current gold space, with momentum released from M&A activity among the majors gradually trickling down to the mid-tier and below during the last 18 months. Consolidation has been the name of the game in the gold sector and this is only likely to continue as the global economy prepares for a brutal downturn in the midst of the ongoing COVID-19 crisis.
companies that can survive challenging conditions,” says
Dougherty describes Florida
Dougherty.
Canyon as a low grade, 0.4 g/t operation, but notes that
“For Argonaut in particular,
Argonaut has run 0.3 g/t
the Alio deal allows us to
orebodies and made money on
have another producing asset
them. “There are similarities
in a great jurisdiction,” he
between the two companies in
continues.
the processes that we deploy
Natural synergies
and the way that we execute those, and we think we can add
Alio’s only current producing
to and enhance those things at
gold asset is the Florida Canyon
Florida Canyon.”
Mine in Nevada, which is located 200 km from Argonaut’s
Secondly, Argonaut will use
corporate office in Reno – a 1.5
the acquisition to restructure
hours’ drive on a good day. In
its corporate departments.
comparison to the company’s
There will be a natural
other producing mines in
reduction in overall general
Mexico, La Colorada is half a
and administrative (G&A)
day of travel from Reno and the
costs following the closure
operations in Durango are four
of the company’s Vancouver
hours on top of La Colorada.
office. Instead Argonaut will pool its key talent in Reno,
96
Besides Florida Canyon being
with the existing team in
right in Argonaut’s backyard,
Mexico remaining in place and
the deal was also attractive to
overseeing the integration of
both parties based on several
the Ana Paula development
MINING | ARGONAUT GOLD
97
project in Guerrero from Alio’s
things all bode well and really
Turning Florida Canyon from
portfolio.
set this project up to bloom
a cash consumer to a cash
from where it is now.”
producer will be a significant
From an operational adds immediate long-life
Distinctly North American
growth to the portfolio and
Argonaut’s portfolio is now
memory, as the world slowly
will effectively replace the El
comprised of four producing
emerges out of lockdown
Castillo mine in Durango when
assets in Mexico and the
to contain the spread of
it reaches maturity in 2022.
US and three development
coronavirus.
However, the asset will require
projects in Canada and
some TLC from Argonaut in
Mexico. Dougherty describes
Indeed, having diversified
the short to mid-term.
the company’s model as
sources of gold production
North American-centric and
could provide unyielding
“Florida Canyon has been
is resolute in his belief of the
value during a period of
starved of the proper cash
world class nature of all three
unprecedented government
investment and we think that
jurisdictions.
stimulus packages aimed
perspective, Florida Canyon
because of the strength of the
of perhaps the steepest decline to the global economy in living
at propping up groaning
balance sheet we have, we can
“We like to play in playgrounds
economies. The addition of
really bring to the forefront
where we think we can
more debt load will only have
that ability. The first thing we
win. We think Mexico has
a positive impact on the gold
will do is unlock the Sprott
an attractive profile for
market in the longer term,
debt and replace it with our
investors, but we were looking
according to Dougherty.
revolving credit facility which
for diversification. The US
is carrying a 2.25% rate.
happens to be one of the best
“I expect to see gold rise over
jurisdictions in the world after
the next several years and
“Secondly, we will look to
you get your permits in and it’s
also bring along with it the
make a further investment in
the same in Canada. Once you
gold equities. It’s a matter of
the crushing circuits of less
overcome the infrastructure
economics. If we continue to
than $10 million, something
hurdle you have access to one
turn on the debt and printing
we can do out of the cash flows
of the best jurisdictions in the
presses as we have, at some
that we are generating as a
world.”
point in time we are going to
strong company today. Those
98
result for the company ahead
need that back-end commodity
MINING | ARGONAUT GOLD
Peter Dougherty, Argonaut Gold president and CEO to shore up that currency we
Argonaut quickly complied
are printing. As we look over
with the mandate and ceased
the long term, I am quite
mining, crushing and stacking
bullish about what this is going
activities at its operations, but
to do for gold.�
given that it operates heap
Coping with COVID-19
ARGONAUT GOL D AT A G L A N C E
leach mines, the company has been able to continue metal production and metal
Following the outbreak of
sales during the temporary
COVID-19 in Mexico earlier
suspension of mining
this year, mining was deemed
activities.
a non-essential business by the Mexican federal government
In fact, the impact on actual
on March 31st and all
metal production during the
operations were suspended
first 30 days of the suspension
at the beginning of April to
order was non-consequential,
STOCK TICKER TSX:AR
MARKET CAPITALISATION
US$233 million (as of May 11, 2020)
ajbr
prevent the spread of the virus.
99
says Dougherty. “When we
Colorada and El Castillo on
The company has gone above
think about it over the next
May 18th.
and beyond in its efforts to
30-60 days, I would expect us to recover 80% of what we
At the time of writing, the
community surrounding La
normally would’ve seen.”
region that hosts La Colorada
Colorada, offering sanitation
has had 0 cases recorded in
services to 253 local homes
Fortunately, the areas in which
that small community, and in
and providing face masks and
Argonaut operates in Mexico
the state of Durango – where
personal sanitiser to grateful
have received only very small
the El Castillo Complex is
residents.
outbreaks of COVID-19 and
found - there have been
on May 12th the government
two cases identified in the
“We also took it one step
reclassified mining as an
municipality of San Juan del
further and have acquired
essential business, paving
Rio.
COVID-19 test kits for
the way for Argonaut to recommence operations at La
100
tackle coronavirus in the
our people. We’ve done
MINING | ARGONAUT GOLD
this because we think it’s
The Magino project in Ontario,
now deploy the assets of the
important. If it turns out
Canada is envisioned to be
company in two different
that we didn’t need the tests,
built by an EPC contractor
functions.”
then so be it. We decided to
at a fixed construction cost
get out in front of this in our
expected to be close to the
Following the acquisition of
communities and whilst this
$320 million outlined in the
Alio, Argonaut’s total gold
doesn’t preclude you from
Magino feasibility study, with
production rate would be
having a case show up, we are
the financing strategy set
around 235-250,000 ounces
now more prepared for when
to be put in place by Q3 this
(oz) per year at full capacity.
it does.”
year. Meanwhile, Argonaut
While achieving this rate in
is progressing through the
2020 may be difficult following
final stages of securing an
the COVID-19 outbreak, clearly
operating permit for Magino,
this is no longer a small fry
Despite the incredibly difficult
having already received
gold firm.
conditions that Argonaut
environmental permits.
A packed pipeline (and the world) is navigating
In fact, Argonaut has the
through, Dougherty remains
“I think the unique thing
makings of a dynamic mid-tier
content with the position the
about the EPC approach is that
North American producer and
company currently finds itself
somebody else is building the
has set itself a transformation
in, chiefly due to the presence
car for you. They’re carrying
strategy with the goal of 300-
of three exploration projects in
out all those activities so we
500,000 oz per year, which
the portfolio.
can leverage our team to work on more than one project. We
“As a matter of fact, now is an
are not overburdening our
amazing time for the company
team and we’ve transferred
given we are still a relatively
the risk for overruns to the
small junior with three
contractor.
development assets that are all poised by the end of the year
“While overseeing the EPC
to be in a decision-making
contract at Magino in Canada,
process as to how we advance
our team can also be working
them,” he proclaims.
on Cerro del Gallo or Ana Paula in Mexico. We can
We like to play in playgrounds where we think we can win. Mexico has an attractive profile for investors, but we were looking for diversification and The US happens to be one of the best jurisdictions in the world” Peter Dougherty, Argonaut Gold president and CEO
101
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MINING | ARGONAUT GOLD
“We add to it Florida Canyon. Here’s another mine that is going to be operating for at least the next eight to 10 years, one of our longest life operating mines. Then the big pendant in the Argonaut scenario is Magino. We’ve already identified 5 million oz and started underground exploration last year to expand the resource. “Magino currently has a 17year mine life based on the first two million oz, but it’s probably going to have a 30year life. Then at Cerro del Gallo we have also identified a 14-year life that likely will PETER DOUGHERTY, ARGONAUT GOLD PRESIDENT AND CEO
extend to 20 years with further exploration. These longer life assets also have significantly
will involve upgrades to both
individual pearls (the smaller
lower operating costs and
the production rate and cost
operations in Mexico) that are
they are the pendants we are
profile.
unique and unto themselves
transitioning towards.”
Polishing the Argonaut necklace “When I formed the company
able generate some cash. “But they’re relatively short life, with smaller production profiles and relatively high cost profiles.
back in 2010, I had a simple concept in mind. Take these
103
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HUM R
More s
1 06
MINING | HUMMINGBIRD RESOURCES
MMINGBIRD RESOURCES
significant news flow from one of West Africa’s most exciting gold firms
1 07
Regular readers of RGN will be very familiar with AIM-listed gold explorer and producer Hummingbird Resources by now. This publication has been following the company’s West African story since 2016, when it had only then completed a definitive feasibility study (DFS) for the Yanfolila gold project in Mali, having pivoted away from its original exploration asset in Liberia. Over the last four years, Hummingbird has delivered the Yanfolila mine on-time and on-budget, transforming itself from an explorer to a producer in the process. After reaching nameplate capacity in early 2018, the highly flexible team skilfully navigated operational challenges at the mine in 2019 and boosted throughput through the addition of a second ball mill, all while maintaining a prominent position in the local Sikasso region through a series of generous community development programmes. 2020 has been another year of significant news flow for Hummingbird, despite the worrying emergence of a global pandemic that has posed a challenge not just to the company’s finances but more importantly to its stakeholders.
“There’s no doubt it’s been very challenging,” says managing director Dan Betts. “We operate a remote mine in a remote jurisdiction and Mali’s borders have been closed for some time, which has given us a lot of supply chain and logistics issues. “We’ve had to increase our inventory of spares, fuel and supplies so we can sustain unforeseen events, but when things do go wrong it’s hard to get parts to site and this has a cost implication for the company.” However, Betts believes that by far the biggest challenge posed by COVID-19 has been maintaining morale and managing fatigue on-site at Yanfolila. The pandemic has dictated a stricter focus on employee health and safety, which has meant changing shift patterns from normal with time off to an intense 15-week spell on-site for many staff.
10 8
MINING | HUMMINGBIRD RESOURCES
109
of the Kouroussa Gold Project
going so well, but it’s been
Going into Guinea
a tough ask for our team.
Despite these significant
Cassidy Gold Corp in June,
Another challenge has been
impediments to
moving into a third West
not knowing. You can’t really
Hummingbird’s regular
African jurisdiction in the
plan in this time, so it’s been
operational and corporate
process.
a case of reactive planning
rhythms, the company has
depending on what rules
remained active in the market
governments have thrown at
and announced the acquisition development asset in Guinea’s
“It’s amazing they’ve kept
us.”
110
in Guinea from junior explorer
The deal for this near-term prolific Siguiri Basin perfectly
MINING | HUMMINGBIRD RESOURCES
aligns with Hummingbird’s
per year. This bracket sounds
little gem in that respect.”
strategy of building a high
great on a spreadsheet but it’s
grade, high margin gold
actually very hard to find this
Kouroussa has a mineral
producer in West Africa and
type of project which is slightly
resource of 1.18 million oz of
it complements the Yanfolila
sub-scale for the majors and
gold, which Hummingbird has
mine in more ways than one.
the mid-tiers, but big enough
applied significant dilution
to be a substantial employer
to, but is still returning head
“We were aiming for a project
and revenue generator for us.
grades at over 3 g/t gold
with a production profile of
The Kouroussa project was a
according to Betts. “There
around 100-150,000 ounces (oz)
111
HUMMINGBIRD
were some absolutely knock
flowsheets and process plant
RESOURCES
out drill holes there and I
design and even service
think the exploration potential
providers as they are in the
is huge as well,” he says. First
same broad geographic region
gold is expected in under two
in West Africa.
AT A G L A N C E
years, when the mine will
STOCK TICKER AIM:HUM
MARKET CAPITALISATION
£101.5 million (as of June 24, 2020)
aj
produce around 100,000 oz per
“We can take a lot of synergy
annum.
from everything we have done at Yanfolila and transport it
In addition, there exist
across to Kouroussa, which
several similarities between
should help us build the mine
Kouroussa and Yanfolila, in
very effectively. We have kept
terms of the scale of both
the same project team together
projects, the metallurgical
from Yanfolila and after the second ball mill, this is the
11 2
MINING | HUMMINGBIRD RESOURCES
113
1 14
MINING | HUMMINGBIRD RESOURCES
third build that project team
it hosts plenty of major mining
there is no need to cross land
will work on.”
companies as a result.
borders to get on-site.
A mature mining sector
For Hummingbird, Guinea
“In terms of physical security,
represents a new political
Guinea is slightly more stable
While not as mature as Mali’s
environment – which always
than Burkina and Mali at the
gold sector, Guinea is by no
takes time to acclimatise
moment. I think it’s a good
means a fledgling mining
to. However, Betts believes
time to enter, certainly in
jurisdiction. Thanks to its
this adaption comes with
terms of gold exploration
world class bauxite and bulk
no significant risk. In fact,
around the Siguiri gold
commodities industries,
working in Guinea may
belt. There have been some
the country has established
actually be smoother as the
amazing drill holes come out
infrastructure, a strong
country has its own port and
recently from the Australian
understanding of mining and
juniors and I think there is
115
DAN BETTS, HUMMINGBIRD RESOURCES MANAGING DIRECTOR
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MINING | HUMMINGBIRD RESOURCES
going to be a lot of activity in this part of Guinea over the next 10 years.” Hummingbird is already busying itself at the Kouroussa project crossing Ts and dotting Is in terms of permitting and government approval for the change of hands. The company is in dialogue with the government and is pleased to have received early support from the authorities. “They [the government] seem very supportive of Hummingbird’s involvement and I don’t foresee any problems, so the team is now working on refining the detail and the scope of the plant.” Throughout the remainder of the year, the company plans to refine the Kouroussa feasibility study and enlarge the scope of the plant, making it more comparable to the Yanfolila operation. “We’re imagining a circa 1-1.2 million tonnes per year plant,
1 17
Dan Betts, Hummingbird Resources managing director
two-stage crushing, CIL gravity
presented problems due to its
while funding all other costs
circuit producing in the region
vast scale.
during the two-year period,
of 100,000 oz per year,” Betts
earning a 49% interest in the
envisions. “Hopefully we will
“It’s going to be a huge
be ready to start construction
project. Remember the first
at the beginning of next year.”
164 drill holes we did all hit
The agreement should also
mineralisation. There is so
unlock a huge amount of value
much gold there to be found,
for Hummingbird’s investors,
but we felt it needed someone
according to Betts. “When
with a longer-term mindset
ARX lists in Canada it will
Also in June, Hummingbird
to do more exploration and
be a separate entity with a
sealed an earn-in agreement
expand the project. That’s what direct look-through value for
with ARX Resources for the
ARX is doing.”
Sharing the workload in Liberia
Dugbe project (its original
project.
Hummingbird’s shareholders. And then at the end of it all,
West African asset). Liberia
Under the terms of the deal,
Hummingbird converts its
has been a tough nut to crack
ARX will spend US$10 million
51% in the project into 51% of
for the company over the past
on further exploration and
the company and maintains
five years and the project itself
commit to completing a DFS
control of the asset. I think it’s a fantastic deal.”
11 8
MINING | HUMMINGBIRD RESOURCES
119
In a third major piece of news
to find ways to promote the
community and healthcare. “I
flow in June, Hummingbird
industry and all the good work
think that is something to be
confirmed its membership
it does. That’s the bit of the
immensely proud of and I’m
with the World Gold Council
relationship I am most looking
looking forward to being a part
– a point of real pride for
forward to; looking at how we
of that with the World Gold
the company’s managing
can promote and be proud of
Council.”
director. “I see the Council as
the gold mining industry.” Betts is quick to highlight the
Assisting the COVID-19 effort
admirable work that the gold
In a particularly fraught
“It has many capable and
sector does around the world
time for all of its people,
respected people looking
in terms of R&D, environment,
Hummingbird has gone
the highest body in the gold industry.
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MINING | HUMMINGBIRD RESOURCES
health education, including
resource expansion at
bringing in an additional
Yanfolila as one of its key
site doctor who has provided
annual targets. This has
valuable assistance to our
not changed even after the
medical team in supporting
outbreak of COVID-19 and
Hummingbird’s COVID-19
all of its implications on the
response.
ground.
“In addition, we have made
In early June, the company
donations to the Malian
announced some encouraging
government and local
drill holes from underground
health authorities, offering
drilling at Komana East, and
direct support to our local
there are hopes this could
communities with initiatives
prove up the underground
such as soap manufacturing.
mining concept at Yanfolila
We have been buying
and add long-term oz to the
soap from the community
base load feed for the mine.
soap factories previously
above and beyond in its commitments to the local
established by Hummingbird
“We’re hitting mineralisation
and supplying the local
where we were expecting and
communities to help combat
are also targeting some new
COVID-19 with greater
deposits. Nobody has done any
handwashing and hygiene.
communities in Mali, bringing
greenfields exploration here for seven or eight years, and
in additional public health
“We also continue to supply
we’ve had a couple of good hits
education initiatives while
medical equipment and are
in the early drill holes. It’s a bit
continuing to support existing
in the process of buying some
early to say but I’m optimistic
programmes, including the
testing equipment with the
we will come up with more
hugely successful market
support of the government of
good results,” Betts concludes.
garden and water projects.
Mali.”
“We have put a huge amount of
At the start of the year,
effort into driving community
Hummingbird earmarked
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KOG IRO
Pioneer iron ore and steel p
to accelerate Nigeria’s industria
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MINING | KOGI IRON
GI ON
production
al development
125
The wheels of full-scale industrialisation in Nigeria have been in motion for several decades following independence in 1960 and the establishment of a large-scale oil sector in the 1970s. However, achieving economic development through rapid industrialisation has remained a major challenge in Africa’s most populous nation and largest economy, which was still reliant on oil and gas for 65% of government revenues in 2018. Industrial development in Nigeria is generally constrained by high cost of supply and this is glaringly apparent in the raw materials market. Nigeria does not produce any domestic steel, which means its existing fabrication facilities are dependent on the import of all steel raw materials - most of which is scrap metal - to produce low quality items such as rebar and hot/cold rolled steel and wire coils. The high cost of importing scrap to produce low quality steel is an equation that has stunted industrial growth in Nigeria for too long and changing this requires a trailblazer. Step forward ASX-listed Kogi Iron. The company plans to deliver the country’s first fully integrated cast steel project on the Agbaja iron ore plateau in Kogi State, central Nigeria.
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MINING | KOGI IRON
“Ours is a pioneer project,”
pivoted towards the idea of
Kogi’s managing director David developing a fully integrated Turvey proclaims. “There isn’t
steel production facility, a
any other steel production in
move that Turvey describes as
Nigeria so we have first mover
‘a real paradigm shift’.
advantage, but that comes with good and bad sides to it.
“The Nigerian domestic steel
There isn’t much policy with it
market has both current
because nobody else produces,
demand and significant
so we’re pioneering policy as
latent demand. If you can
well as producing steel.”
produce domestically than you are likely to benefit from
Kogi spent the best part of a
that latent demand. At the
decade exploring, discovering
moment, they are importing
and defining an iron ore
scrap steel at a very high price.
resource at the Agbaja Project, located approximately 200 km
“If we can match that price
South of capital city Abuja.
and over time lower it, then
The JORC-compliant mineral
we’re supporting the growth
resource on the plateau
of the local industry. I see it
has been estimated at 586
as a unique opportunity to be
million tonnes (Mt) with an
the first, but also to work with
in-situ grade of 41.3% Fe. The
the country in developing the
project is Nigeria’s only JORC-
policy for their first successful
classified iron ore resource.
integrated steel plant.”
The company’s original plan
In order to build a low-cost
for the project was to develop
steel producing facility, you
the mine and become an
need a few fundamental
iron ore export play, but
components, firstly a source of
after evaluating the difficult
suitable quality and quantity
logistics and escalating costs
iron ore. Tick. Reliable power
of exporting the ore, Kogi
supply is also a necessity.
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1 28
MINING | KOGI IRON
Fortunately for Kogi, running quite nearby the iron ore deposit is a large gas pipeline, ideally suited to supply a gasfired power plant. Tick. “These are two very significant fundamental competitive advantages that are very rare in the rest of the world,” Turvey explains. Coal and limestone are the other ingredients required for steel making, and the company has noted that both can be drawn from local sources. Tick.
Feasibility study work The company completed a substantial amount of prefeasibility level work for the fully integrated project between 2014 and 2018, including the manufacturing of a sample steel product using iron ore mined from the Agbaja plateau and local coal. “We took bulk samples of our iron ore and local coal down to South Africa and Mintek produced internationally
129
marketable steel billet. Steel billet is a traded intermediate product, and that’s what we’re aiming at. We’re not looking at being a fabricator of rebar or the finished steel products, we’re looking at selling to the pre-existing steel fabricators.” In 2018 Kogi hired Fast Markets to conduct a market feasibility survey, taking in all aspects of the contemporary steel industry in Nigeria and West Africa. The survey concluded that Kogi would be able to sell 1.5 million tonnes
KO G I I RO N
AT A G L A N C E
STOCK TICKER ASX:KFE
MARKET CAPITALISATION
US$22.32 million (as of August 29, 2020)
j
13 0
per year of billet steel in
from existing Nigerian
Nigeria and into neighbouring
steel fabricators which will
countries.
be progressed into offtake discussions, although Turvey
Following the publication
stresses this will take time and
of the survey, Kogi received
the company must arrange a
several expressions of interest
strategy with the government
MINING | KOGI IRON
for the eventual replacement
production and it’s a mutual
Many of these components
of imports.
process. There has been quite
will not take long to update
a bit of time and effort spent
to a bankable level, such as
“As a pioneer, we have an
on pre-feasibility studies
the upgrading of the iron
obligation to listen to what the
on the steel side, including
ore resource to reserve
government wants because
environmental work. We’re
classification (at a cost of
there is no current steel
currently converting these to
approximately US$1 million)
bankable feasibility level.” 1 31
“Ours is a pioneer project. There isn’t any other steel production in Nigeria so we have first mover advantage” – David Turvey, Kogi Iron managing director
132
and the Fast Markets study,
off on the process guarantee
which should be a relatively
from a world expert.
straightforward task according to Turvey.
Critical path value drivers
Process flowsheet refining
These elements, along
tests are another important
with confirmation of a gas
aspect of the bankable
supply contract, comprise
feasibility work, particularly
the company’s ‘critical path
the chosen steel refining
six-month value drivers’ – a
technique to remove
plan formulated by the board
phosphorous – a well-known
to essentially de-risk and
contaminant. This refining
expedite key parts of the study
stage is not a big capital item,
following the onset of the
but it’s crucial to receive sign
COVID-19 pandemic.
MINING | KOGI IRON
RGN editor Jacob Ambrose Willson interviews Kogi Iron managing director David Turvey, August 17, 2020
“The bankable feasibility
supply contract, if not slightly
“We’ve received positive
will take up to 18 months to
afterwards.”
feedback and progressed
complete and we will need
relationships with the UK ECA
to raise US$8 million to fund
The design engineering will
and with other banks on the
it. But we will probably only
be the longest lead item on
debt side of project financing.
need $1-2 million for our key
the BFS because it is reliant
It relates to the unique
value drivers over the next six
on the refining process and
advantages of the Agbaja steel
months.
power supply being in place.
project and the quality of
Once design engineering is
the investment opportunity
“The steel test work in Sweden
complete, a six-month timeline
destined in the bankable
is expected to cost less than
is expected before equity and
feasibility study,” says Turvey.
$500,000 and will probably
debt financing is secured, in
take three months. Then the
Q2 2022 at the earliest.
market entry is likely to be
As a result of the impact of the COVID-19 pandemic on equity
hand in glove with the gas
1 33
markets, and the subsequent
front end of the project can
aspects, and it has been
economic challenges that
be fast-tracked and de-risked,
no different for Kogi, who
have emerged in Nigeria this
while easing the short-term
finalised an early CDA back in
year, Kogi has decided to take
funding conundrum the
2016.
a phased approach to the
company would have faced
development of the project,
under the original plan.
which involves construction of a lower risk, smaller-scale steel billet plant.
1 34
Community support
The CDA details Kogi’s support for the local communities across four key areas: Education, health,
In Nigeria, mining companies
infrastructure (power
The plant’s design will allow
are obliged to draft community
and water supply) and
for expansion to larger scale
development agreements
employment. Recently, the
production capacity relative
(CDAs) for their projects
company has overseen the
to market demand, but the
far in advance of work on
installation of a water bore
phased approach means the
all technical and financial
and storage tank at one of
MINING | KOGI IRON
the remotest villages near
sustainability practices for all
the project, it has provided
water and wastes, and are in
education bursaries and
addition to the project itself
contributed to maintenance
supporting Nigeria’s ongoing
work on a key access road
path to industrialisation by
leading to the plateau.
providing a maiden source of domestic billet steel, after
“This has been rewarding for
years of reliance on expensive
me to watch and report. The
imported scrap for steel
sooner we can raise money
production.
to fund the feasibility study, the sooner we can plough
As the country’s first domestic
more into our community
steel producer, Kogi is also
development commitments.
working closely with the
I’m an explorer, I drive from
government to formulate an
the bottom up and unless I
appropriate policy framework,
have that community support,
thus opening the door for
it is not worthwhile.”
others to follow in Kogi’s
““We’ve received positive feedback and progressed relationships with the UK ECA and with other banks on the debt side of project financing. It relates to the unique advantages of the Agbaja steel project and the quality of the investment opportunity destined in the bankable feasibility study”
footsteps. When the fully integrated
“Nigeria has a lot of the
Agbaja project is operational,
Clearly, Nigeria has a lot to
ingredients that can make
Kogi expects to directly
gain from Kogi’s pioneer
this thing work – the iron ore
employ over 2,000 people and
project, but Turvey is keen
resource, potential low-cost
substantially more indirectly
to stress the mutually
gas and power supply, British
in related local businesses,
advantageous nature of the
law, improved sovereign risk
and the creation of a modern
relationship. “Now is the right
- and that is what attracted
mining and steel-making
time in a macro sense, because
me.” Now it is full steam
hub will bring innumerable
Nigeria is a big economy
ahead towards the trailblazer
benefits to the local
in Africa and it has highly
company’s six-month and two-
communities.
intelligent, highly skilled
year timelines to bankable
people with a drive to succeed.
feasibility and beyond.
These local ‘spin-off’ businesses will be based on
1 35
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Building Canada’s next mid-tier gold
KIRKLAN LAKE GOLD Meet the best performing mining stock on the TSX in 2020
1 36
MINING | KIRKLAND LAKE GOLD
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1 38
On September 15, 2020, Kirkland Lake Gold was deemed the best performing mining stock on the Toronto Stock Exchange (TSX) with incredible share price growth of 363% over the last three years. Kirkland Lake Gold’s President and CEO Tony Makuch tells RGN that the company’s inclusion on the TMX Group’s annual TSX30 ranking of the best performing stocks across all sectors on Canada’s main market primarily comes down to rapid growth in profitable, cash-flow generating production over the three-year timeframe. In 2017, the company produced 0.5 million ounces (Moz) of gold. This year, it is targeting over 1.35 Moz, thanks to a sustained period of growth via timely acquisitions and investments in exploration at its three gold mines; in Ontario, Canada (Macassa, Detour Lake) and in Victoria, Australia (Fosterville).
Kirkland Lake Gold entered
unwelcome emergence of the
2020 by completing the
COVID-19 pandemic this year.
transformational acquisition
The company acted quickly
of Detour Gold for $3.7 billion
to protect is people and
in January. The all-stock deal,
communities at all sites during
which was first announced
the height of the first wave in
in November 2019, gave the
March.
“At the same time, we’ve been very competitive with our unit cost performance, generated industry leading financial performance and increased our balance sheet strength,” says Makuch. “Really that’s the true measure of production growth that creates value.” The sustained free cash flow generated by Kirkland Lake Gold has allowed it to return significant capital to shareholders from share buybacks and dividends. “We introduced both in 2017 and have increased the dividend over seven times since then. So far in 2020, we’ve returned over US$640 million to shareholders. There aren’t many companies that can say they return that much value.”
“Detour Lake has generated
Many new on-site protocols
over 40% of our free cash flow
revolve around a tight
in the first nine months of the
adherence to social distancing
year and we see great potential
guidelines, changing how
here to grow production, lower
employees are transported to
unit costs and unlock increased
and from the workplace and
value.”
the proximity in which they
company ownership of Detour Lake, located within the
“In Canada, a lot of our
Northernmost section of the
employees live in remote
renowned Abitibi Greenstone
regions in James Bay. We sent
Belt.
people home, we gave people 14 days salary continuation
The open pit gold mine has
and reduced operations at
already made significant
Macassa and Detour. Since
contributions towards the
then, strict protocols have
operational and financial
become the new norm across
success of Kirkland Lake Gold
our sites.”
this year, according to Makuch.
COVID-19 response Kirkland Lake has also had to
can work in certain spaces, such as the cages that take workers to the underground Macassa mine.
demonstrate an unparalleled level of flexibility and
“It’s taken a bit of time to get
responsiveness following the
used to the changes, but our
MINING | KIRKLAND LAKE GOLD
1 39
people have really taken on the challenge and worked things through. Everyone has adhered to the standards put in place and come up with new ideas which we have subsequently adopted.” One by-product of the COVID-19 pandemic has been a flurry of ‘safe haven’ investment in gold throughout the year, which has boosted the price to record highs and brightened the horizons of gold mining companies around the world. Lo and behold, Kirkland Lake Gold’s net earnings were up around 41% in the first nine months of the year on an adjusted basis, and it generated close to $700 million of free cash flow, excluding non-recurring items. While Makuch acknowledges that the high gold price has certainly benefited the industry this year, he is quick to highlight the strong performance of the company’s people in extraordinarily trying circumstances.
140
MINING | KIRKLAND LAKE GOLD
1 41
1 42
MINING | KIRKLAND LAKE GOLD
“We have tried to focus on
three of the flagship assets,
Likewise, at the Macassa mine
keeping our costs down, which
each of which hold significant
in Kirkland Lake, Ontario, the
is a key success driver for our
upside potential in their own
company has grown reserves
business. Our operating cash
right.
from just under 1 Moz at 20
costs so far this year are just
g/t in 2016 to 2 Moz at over 22
over $400 per ounce, with AISC
At Fosterville, in the Australian
g/t, with plenty of additional
of around $800 per ounce.
state of Victoria, Kirkland Lake
exploration opportunities
Those are very strong numbers
Gold has achieved year-on-
available, including continuing
in our industry and support
year exploration success since
to grow the high-grade South
significant earnings and cash
acquiring the underground
Mine Complex (SMC) and
flow generation at much lower
mine in 2016. In particular, the
identifying new areas of high-
gold prices than we have today.
discovery of the Swan Zone has grade mineralisation along the been a key value driver and
Amalgamated Break and the
“The price of gold has gone up
has helped boost production to
historic Main/’04 Break.
and that has been beneficial
over 600,000 ounces this year.
for the company, and we feel
Recent drilling has intersected
very confident that the gold
In addition, the company has
price is going to continue to
grown the Fosterville reserve
be strong, but we build our
from around 240,000 ounces
business around keeping
at just under 7 g/t in 2016 to
ourselves profitable and
2 Moz at over 22 g/t this year.
sustainable in a low gold price
“Ounces have gone up, grades
environment.”
have gone up and the costs
Growing from the drill bit
exceptionally high grades
KIRKL AND L AKE GOL D AT A G L A N C E
have gone down, which has created significant value,” Makuch explains.
The crux of Kirkland Lake
STOCK TICKER
Gold’s strategy is to secure
“We think that there are
TSX:KL, NYSE:KL, ASX:KLA
long-term growth and value
more high-grade zones at
creation through success
Fosterville and we continue to
MARKET CAPITALISATION
with the drill bit, and the
drill there. We could be one
company has been doing just
drill intersection away from
that this year with exploration
a whole new level of success
campaigns taking place at all
there.”
US$12.79 billion (as of October 26, 2020)
aj
1 43
“We incre we’ve m
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MINING | KIRKLAND LAKE GOLD
introduced share buybacks and dividends in 2017 and have eased the dividend over nine times since then. So far in 2020, e returned over US$640 million to shareholders. There aren’t many companies that can say they return that much value.” – Tony Makuch, Kirkland Lake Gold president and CEO
1 45
TONY MAKUCH, KIRKLAND LAKE GOLD PRESIDENT AND CEO
in an area where the SMC
Break. In addition, a new
term exploration across the
approaches the Amalgamated
high-grade corridor of
vast Kirkland Lake gold camp,
“The price of gold has gone up and that has been beneficial for the company, and we feel very confident that the gold price is going to continue to be strong, but we build our business around keeping ourselves profitable and sustainable in a low gold price environment”
146
mineralisation has been
most of which the company
identified along the Main
now owns.
Break, near the location of a new shaft that Kirkland Lake
“It is a century-old camp, but
Gold is sinking.
there is a lot of gold left to be found and we are sinking a
The #4 Shaft, which is slated
new shaft at Macassa because
for completion in late 2022,
of the size of our current
will result in significantly
reserves and the tremendous
higher production at better
potential to add more through
unit costs, and will also
continued exploration
improve working conditions
success.”
in the mine and support long-
MINING | KIRKLAND LAKE GOLD
147
But Makuch is perhaps most excited by the growth potential at Detour Lake, which is already one of largest openpit gold deposits in the world with mineral reserves of 14.8 Moz at 0.97 g/t. Kirkland Lake Gold is drilling a number of inmine exploration targets after recent drilling revealed that mineralisation is open down dip of the Main Pit and in areas between the Main and West pits. “We’ve had significant exploration success in the Saddle Zone between the West Pit and the Main Pit. With that success, and the mineral inventory we have right now, we believe it is possible to double the reserves at Detour Lake. That’s a forward-looking statement, but we feel pretty confident that the opportunity is there.” And to give an idea of the broader exploration potential in the region, Kirkland Lake Gold’s land position at Detour Lake covers over 1,000 km2
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MINING | KIRKLAND LAKE GOLD
along the Abitibi Greenstone
in the communities where our
Makuch points out that, at the
Belt, which is the largest
people live.
end of the day, success comes
mineral-rich belt of its kind in the world.
down to people, and Kirkland “We are focused on working
Lake Gold is blessed to have a
with the traditional
team possessing unsurpassed
landowners in our area and
knowledge of how to build and
don’t look at it from a business
grow profitable, value-creating
While the company’s
perspective, but a relationship
gold mines.
exploration prospects have
perspective. We are one big
Responsible and sustainable
certainly appealed to investors, family and we treat everyone
“We have a strong track record
Makuch also credits Kirkland
in terms of operational and
with respect.
Lake Gold’s focus on ESG in
financial performance and
the last few years for its high-
“We also treat the land with
that, more than anything else,
ranking position on the TSX30
respect and understand
speaks to the quality of our
this year.
the importance of natural
assets and the quality of our
resources like water in the
people. With the progress
However, he makes it very
regions where we operate.
we, as a team, have achieved,
clear that the company’s
If we can focus on these
we have generated industry-
emphasis on sustainable
[aforementioned] areas, then
leading earnings, cash flow
and responsible mining is
the results will speak for
and balance sheet strength
not simply to accommodate
themselves.”
and delivered superior returns
modern investor demands, but
for our shareholders, without
because caring for its people,
Clearly, Kirkland Lake Gold
whom we would not be in
its communities and the
views ESG, like exploration,
business.”
environment is inherently the
as a core component of its
right way to run a business.
business, and one that is critical for success. “As a gold
“The health, safety and
miner producing in two of
wellness of our people is
the world’s greatest mining
paramount. After this, we
jurisdictions, ESG is central to
try to build our supply chain
everything we do; it impacts
in the region and give back
every aspect of our business
through investments in social
and it is the key to maintaining
and recreational programmes
social licence.”
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Building Canada’s next mid-tier gold
MINING | WESDOME GOLD MINES
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Wesdome Gold Mines is an established player in the worldleading Canadian mining sector with over 30 years of continuous gold production in the country. The next big target for the TSX-listed company is to break into the mid-tier rank of producers in Canada with a total annual output figure exceeding 200,000 ounces of gold. Wesdome’s current portfolio is arguably located in the most fertile geological region in the world and contains three assets along a 1,000 km stretch between Thunder Bay in Northwestern Ontario and Val d’Or in Northwestern Québec. The company’s president and CEO Duncan Middlemiss reveals to RGN that Wesdome was constrained to only minimal growth in the last downturn of the mining cycle, but since 2015 it has been able to optimise the performance of its Eagle River mine in Wawa, Ontario while investing heavily in exploration across the portfolio. The crowning glory of Wesdome’s resurgence was achieved last year when it was included in the inaugural TSX30 list of top performing stocks across the entire exchange. Wesdome was even able to retain its place on this year’s TSX30 ranking after averaging share price growth of 285% over the last three years. “[Our success is down to] everybody coming together to understand the geological potential of the properties we have. To define that potential, you have to invest in exploration and our recent efforts have gone very well at Eagle River in Ontario and Kiena in Québec.”
Wesdome’s current incarnation is a product of three decades of evolution from its early days under the name Western Québec Mines, when it owned several properties that were eventually amalgamated into the current Kiena Complex.
A storied history In 1994, Western Québec acquired a property in Ontario and spun out the assets – including Wesdome’s current Eagle River and Moss Lake assets – to a company called River Gold Mines, and in 1999 Wesdome Gold Mines was created in order to develop a portfolio of properties in Val d’Or. “Wesdome bought the Kiena mine from the Québec government in 2005 and it was probably the deal of the century,” Middlemiss claims. “It cost only $5 million and now we are looking at the very positive future Kiena has with us.” By 2007, River Gold and Wesdome completed a merger
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MINING | WESDOME GOLD MINES
153
and this is the point in the
thought when it first started
highs of 2011-12) and a lack of
company’s history that you
producing.”
subsequent drilling to sustain
see the current assets come together under one portfolio
Meanwhile, the Kiena mine
umbrella.
was in production under
However, a bull run has been
Wesdome from 2006 to 2013,
gathering pace in the gold
“Eagle River has been in
but has been in care and
market since around 2016,
commercial production since
maintenance ever since,
and the price reached new
1996, so it’s been operating
with Middlemiss citing
highs earlier this year in
now for 25 years and has had
a suppressed gold price
response to the major financial
a great mine life compared to
environment (following the
uncertainty triggered by the
what people may have initially
1 54
activity at the property.
MINING | WESDOME GOLD MINES
COVID-19 pandemic. This
Complex, despite the troubling
in camp to allow for social
brighter environment for gold
emergence of COVID-19 and
distancing. Unfortunately, we
miners over the last four years
the wide-ranging impact of the
had to suspend all diamond
has allowed Wesdome to re-
virus on mining operations
drilling, which is something
instigate drilling programmes
and the wider mineral
we definitely didn’t want to do
at Kiena, with encouraging
resources supply chain.
because we were quite excited
results thus far.
about that programme.” “Eagle River in Wawa,
Meanwhile, the company
Ontario is a camp situation,”
Other large-scale projects
expects to produce between
Middlemiss explains. “So what
were also deferred to the
90-100,000 ounces of gold
we had to do back in March
latter stages of the year in the
this year at the Eagle River
was reduce the numbers
aftermath of the deadly first
155
“Wesdome bought the Kiena mine from the Québec government in 2005 and it was probably the deal of the century. It cost only $5 million and now we are looking at the very positive future Kiena has with us” Duncan Middlemiss, Wesdome Gold Mines president and CEO
1 56
wave from around March to
Wesdome has since managed
June. Projects completed in
to bring back online four
Q3 included upgrades to the
drills (three underground, one
hoist and ventilation systems
near-surface) with a focus on
and work to increase tailings
follow-up delineation of the
capacity. These projects are
Falcon Zone – a new section to
expected to bring underground the West of the mine. production to 600 tonnes per day in 2021.
Return of the drill rigs
“This is something we discovered from our surface drilling programme of 2019. It’s a very high grade shoot that
There had been up to seven
links with the mineralisation
exploration drills turning at
at the 7 Zone within the
Eagle River pre-pandemic, but
existing mine. We are now in
MINING | WESDOME GOLD MINES
RGN editor Jacob Ambrose Willson interviews interviews Wesdome Gold Mines CEO and president Duncan Middlemiss, October 22, 2020
a process of exploring from
exploration work can add
“In terms of our drilling, we
appropriate underground
further years to the life of the
didn’t catch stride again until
platforms.
mine, which is already into its
around June or July. But we
26th year of production.
now have seven drills turning
“We’re also doing surface exploration, which involves a
underground and one onOver in Val d’Or, Wesdome
surface at the Kiena property.
lot of delineation of the various had to comply with a Québec
The goal for us this year is to
shoots we have. Essentially,
government mandate to close
convert a lot of our inferred
we would like to continue the
all mining operations at the
resources into indicated so we
growth of our resource there.”
peak of the pandemic, which
can then do a pre-feasibility
contributed to around eight
study in support of a restart
Last year, Wesdome grew the
weeks of lost work that it
decision for the Kiena mine.”
total reserve at Eagle River
had dedicated to exploration
from 400,000 ounces to 550,000
drilling at the Kiena mine.
A preliminary economic
ounces and the company is
assessment (PEA) of the
confident that its current
project was completed in
157
May and provides strong supporting evidence towards a restart, which will be considered by the board during the first half of 2021. The PEA indicated just US$35 million will be required in pre-production capital expenditure, a figure that Middlemiss ensures will be fully funded by the company. The study also estimated that Kiena will provide an after-tax IRR of 102% and will generate gross revenue of $1.4 billion, alongside other attractive economic metrics.
W ES D O M E GOLD
AT A G L A N C E
STOCK TICKER TSX:WDO
MARKET CAPITALISATION
US$1.4 billion (as of October 28, 2020)
j
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MINING | WESDOME GOLD MINES
159
within the company that the
The rise of ESG investing
time is fast approaching to
Away from the exploration
– in August. Miller will help
ramp up mineral development
side of the business, Wesdome
lead community engagement
at the Moss Lake property
– like a multitude of resources
programmes at Eagle River
near the city of Thunder Bay in
firms in recent years – has
and Kiena while managing
Ontario.
heightened the spotlight on
the firm’s environmental and
its commitment to sustainable
social pledges.
There is also a mounting belief
for sustainability and environment - Joanna Miller
Moss Lake is in fact Wesdome’s
and responsible mining, in
largest mineral resource
response to a new wave of
One could deduce that
with indicated resources of
ESG-driven investors.
Wesdome’s focus on ESG
40 million tonnes at 1.1 g/t
programmes over the last
of gold, totalling 1.4 million
“ESG has really come to the
few years has been suitably
ounces. Previous drilling in
forefront and is something I
recognised by the investment
2017 extended the strike length
think we did in the past, but
community, especially
mineralisation from 2.5 km
perhaps didn’t talk about when
considering the company’s
to 8 km and the geophysical
we were a junior company.
inclusion on the TSX30 for the
expression (IP) extends over
We were a small group and
second consecutive year.
the entire strike length, with
didn’t have the capacity to do
potential to significantly add to
comprehensive reporting. But
Middlemiss believes that the
existing resources.
now you see the investment
expansion of Wesdome’s ESG
community is very focused on
focus has occurred in tandem
“Moss Lake is envisioned to
ESG and we are definitely here
with the overall growth of
be a large resource, low grade
to do the right thing across all
the company, which goes
operation. In order to develop
facets of our operations and
to show just how entwined
this mine, we have to get the
the reporting of our progress
sustainability is with success
drills back there and do a
on these fronts.”
for the modern-day mining
substantial programme in
firm.
order to further upgrade the
The company has begun to
resource.”
‘staff-up’ to better manage
“I would say that we are on
the growing expectations of
the right track, people are
the investment community,
recognising that we are trying
hiring a new director
to do the right thing and we have received credit for it.”
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MINING | WESDOME GOLD MINES
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MINING | WESDOME GOLD MINES
Pushing for mid-tier status Wesdome’s primary aim over the next few years is to become a mid-tier gold producer. Reaching this level would see it churning out at least 200,000 ounces per annum, Middlemiss is confident that this goal is within reach given the company’s recent success
“Eagle River has been in commercial production since 1996, so it’s been operating now for 25 years and has had a great mine life compared to what people may have initially thought when it first started producing”
in adding resources at Eagle River through exploration,
maintain our commitment to
which is ongoing at the
exploration.”
sprawling complex in Ontario. In addition to the exploration Since 2016, Wesdome
opportunities in Wawa and
has doubled annual gold
Val d’Or, Wesdome could
production to 100,000 ounces
also benefit from a bolt-on
at Eagle River and it has the
situation at the 2,000 tonnes
Kiena mine waiting in the
per day mill within the Kiena
wings, which will add another
Complex.
100,000 ounces per year according to the PEA.
“Northwestern Québec is a very prospective area,
“Once we give the go ahead
particularly Val d’Or and
for the restart, it would be
Rouyn-Noranda. It’s got a great
two years until Kiena is back
history and is very active right
up and running. At that point
now in terms of exploration,
I would say we have a soft
so we’re definitely monitoring
base of 200,000 ounces, but
the situation there to see if
I would speculate that Eagle
we can augment the mill with
River and Kiena can together
additional feed.”
produce 250,000 ounces if we
1 63
IM SI
Continuous
164
MINING | IMPACT SILVER CORPORATION
MPACT ILVER
s silver production in one of the oldest mining districts in the Americas
1 65
TSXV-listed IMPACT Silver is now well into its 15th year of continuous production in the Royal Mines of Zacualpan district in South-central Mexico. The region has a long and rich history of mining activity going back to the 15th century when indigenous peoples mined silver and built temples in the current location of Zacualpan town, before the Spanish conquistadors arrived and extracted gold and silver for several centuries, leaving thousands of historical mine workings. IMPACT Silver took up the mantle of silver production in 2006 and has produced over 10 million ounces (Moz) in the last decade and a half from multiple mines within its 211 km² land package encompassing two contiguous mining districts.The properties are comprised of a series of epithermal veins which range from very high-grade sections to lower grade, intermediate mineralisation. In recent years, the firm happened to be working on lower grade sections which – along with depressed silver prices – contributed to a marginally profitable operation. However, a new production strategy for the district and positive developments in the silver price this year are set to add new shine to IMPACT’s horizons. “First of all, we’ve had some discoveries that suggest there’s a lot more happening in this district than previously we could say,” president and CEO Fred Davidson tells RGN. “Secondly, our leverage to the silver price is dramatic. When silver goes from $13-14 [per ounce] to $26-27, that virtually goes straight to the bottom line.
166
“What makes us somewhat
at C$0.95 per unit. Each unit
unique is that we are a
is comprised of one common
dedicated primary silver
share and one-half warrant.
producer, over 90% of
One warrant is exercisable to
our revenue is from silver
acquire one share at $1.30 for a
production,” Davidson
24-month period. We intend to
continues. “Recently we have
use a significant portion of the
been marginal in terms of
proceeds to accelerate current
profitability, but we’ve got a
exploration and development of
district-wide programme that’s
numerous targets.
going forward after a recent financing.
“That programme is going to explore not just the potential
“In August, we completed
for higher grade silver veins
a C$9.5 million financing
themselves, but an underlying
from the issuance of about 10
gold-copper district that hasn’t
million units of the company
been seriously exploited in the past 500 years.”
MINING | IMPACT SILVER CORPORATION
Coping with COVID-19
up and running again by
we were cash positive for the
June, however the shutdown
quarter.”
While major global economic
period knocked the company’s
uncertainty stemming from
quarterly and annual
As regional, national and
the COVID-19 pandemic has
production targets back, along
international authorities
significantly boosted precious
with revenues.
continue to battle the ongoing
metals prices this year, the
threat of COVID-19, IMPACT’s
worldwide health emergency
“We lost probably 25-30% for
boss is relieved that Mexico
precipitated the closure of all
the quarter in terms of total
moved to reclassify mining
mines in Mexico back in April,
sales,” Davidson concedes.
and points to the country’s
as the Latin American nation
“In retrospect, I think our
long-lasting appreciation of
emerged as one of the worst
loss for the quarter was about
the sector.
affected by the pandemic.
$200,000, but our EBITDA was extremely positive. That
“Every Mexican is convinced
The Mexican government
$200,000 encompassed things
he is a miner, so there is a
soon reclassified mining
like deferred income taxes,
real sympathy for mining in
as an essential business,
amortisation and depreciation,
Mexico. They understand
allowing IMPACT to get back
so on a cash generating basis
it. To give an example, the
1 67
1 68
MINING | IMPACT SILVER CORPORATION
church in the local town has a
the district and closed down
which has been on care and
statue of a miner out in front,
a handful of underground
maintenance since 2014, when
so mining is part of the culture
mines with low margins. This
margins slipped below the
there.
resulted in declining operating
profitability line.
costs and improving average “They are one of the countries
grades across the board.
that has been hit badly and
The facility is comprised of a 4.5 Moz open pit silver mine
therefore they need revenue
“Our emphasis during the
(with lead and zinc by-credits)
and employment. We can
last couple years has been on
and a 200 tonnes per day (tpd)
offer both while the district
positive cash flow. It may not
pilot plant. Restarting Capire
continues to have a very low
be as pretty, or have the same
could add 150,000-250,000
incidence of COVID-19. We
total of ounces coming out,
ounces of silver to IMPACT’s
shut down the district for
but the bottom line is better
annual output, according to
outsiders and it was only until
and people tend to forget that
Davidson.
about a month ago that we
mining is more than counting
had our first case in the whole
ounces,” Davidson stresses.
district.”
Furthermore, IMPACT is evaluating the possibility
“Now that silver prices have
of lowering costs at Capire
improved, we will look to
through the incorporation of
reopen these marginal mines
DMS technology. A 2019 study
After silver production
which have become profitable
on a low-grade sample found
peaked across the Zacualpan
again. It will take time to go
that in a DMS set-up, over 42%
operations in 2015-17, IMPACT
back and open up an area, but
of the sample mass could be
decided to shift its strategy
we are planning to increase
rejected while retaining 93% of
towards lower cost, higher
overall production by early
silver and lead and 79-92% of
grade production in late 2018
spring next year.”
copper, gold and zinc.
prices would not recover, in
In addition, the company is
“Using DMS we can probably
the near term at least.
assessing the possibility of
run about 400-450 tpd and get
re-starting another operation
it down to 200 tpd through the
Under the new approach,
in the region. The Capire
mill. This equates to higher
IMPACT undertook a strategic
project is a VMS mine located
productivity and dramatically
review of its properties in
Southwest of Zacualpan
Boosting the bottom line
on the assumption that silver
1 69
through the lab with bench
Significant exploration upside
scale testing and it works
The Royal Mines of Zacualpan
exceptionally well.
silver district is one of the
lower mining costs. We’ve
IM PA CT S ILV E R
AT A G L A N C E
run some heavy samples
oldest mined areas in the
STOCK TICKER TSXV:IPT
MARKET CAPITALISATION
US$89.47 million (as of October 07, 2020)
aj
“Now we are working on
Americas, and over the last
scaling up. Even at the current
two decades IMPACT has
price of silver we can just
identified well over 5,000
mine Capire as it is. We are
historic mine workings which
confident that silver over the
provide ample avenues for
next year is going to remain
near-mine and district-scale
in the $25-30 range,” predicts
exploration.
IMPACT’s boss. “When we first entered the district, we started a deep
17 0
MINING | IMPACT SILVER CORPORATION
“Our emphasis during the last couple years has been on positive cash flow. It may not be as pretty, or have the same total of ounces coming out, but the bottom line is better and people tend to forget that mining is more than counting ounces” – Fred Davidson, IMPACT Silver president and CEO
171
RGN editor Jacob Ambrose Willson interviews IMPACT Silver Corp CEO and president Fred Davidson, September 22, 2020
study on the potential of
four key areas, including a
be several gold-copper veins.
the property. That meant
prospective district-scale gold-
We are just starting to explore
going back into some of
copper zone in the centre of
that.”
the historical records some
the Zacualpan property.
200, 300, 400 years. We’ve
172
When asked if IMPACT would
accumulated that data now,
“In the last few years, we’ve
prefer to remain more of a
along with our predecessor’s
had sniffs of this underlying
pure-play silver producer,
drilling work, and it’s given us
gold-copper district and
Davidson quips that he’ll never
a good idea of the structures
have proven it exists. The
complain if he’s got too much
involved. It’s a massive area.”
Northern Mill is located on a
gold, particularly considering
steep canyon with about 2,000
the positive movement in the
Armed with this new
metres elevation. 500 metres
gold price this year.
geological understanding,
below that we’ve found a very
IMPACT has identified several
large high mag anomaly and
“We’re doing soils, rock chip
exploration targets across
radiating out of that appears to
sampling, sediments and one
MINING | IMPACT SILVER CORPORATION
of the outcrops we sampled
historic workings across the
“What we are really looking
ran 76 g/t gold and 76 g/t silver,
properties.
for is elephants,” Davidson
so we know it’s there, It’s just
concludes. “As we learn
about putting it all together in
Lots of life left
economic terms.”
Although the Royal Mines
district, including things like
of Zacualpan district has
the high mag in the bottom
IMPACT’s exploration team
witnessed over five centuries
of the valley, it allows us to
is also targeting brownfields
of silver production,
have a better grasp of what’s
exploration for silver veins
IMPACT’s near and long-term
occurring. After 500 years
within trucking distance
exploration programmes will
of mining in the district I’m
to its Guadalupe plant and
ensure that millions more
confident somebody will
early stage exploration for
ounces of silver will flow
be mining here for at least
Zacualpan Southeast extension
out of the region, along with
another 100-200 years.”
silver veins, while continuing
significant quantities of copper
to evaluate the thousands of
and gold.
the structure of the whole
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EVENTS Mines and Money Online Connect - Precious Metals Mines and Money’s first commodity-specialised digital event January 27-29, 2021 After successfully delivering a series of online shows in 2020, Mines and Money will host its first ever commodityspecialised event in January. The precious metals Online Connect will link institutional investors with senior management from gold, silver, platinum and palladium mining companies, including the likes of Ausgold,
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Investing in African Mining Indaba Virtual The 27th Mining Indaba moves to 2022 February 02-03, 2021 After much deliberation and consultation with health officials and stakeholders in South Africa, the organisers of the Investing in African Mining Indaba have cancelled the 2021 event and announced new dates for the 2022 Indaba. However, Hyve Group also announced it will be taking
streamed online, including pioneering insights from the industry’s heavyweights, multi-stakeholder strategic conversations, keynote addresses and more. “We recognise the role that Mining Indaba plays in connecting the global mining community and its significance in shaping the
Indaba virtual over two days in early February. This strategic event will feature free high-level content
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EVENTS
Mining, oil & gas and renewable energy events from around the world Future of Mining Australia 2021 Australia’s mining sector to reconvene February 02-03, 2020, Sydney, Australia While the COVID-19 situation is being continually monitored by authorities in Australia, the Future of Mining Australia conference is currently scheduled to take place in Sydney in February. The conference brings together over 400 senior mining industry executives and attendees can expect over 80 speakers representing mining companies, mining, equip-
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PDAC Virtual Convention PDAC 2021 goes virtual March 07-10, 2021 Another victim of COVID-19 from the events industry is the annual Prospectors & Developers Association of Canada (PDAC) Convention, which has been cancelled due to health and safety concerns associated with the pandemic. But, the 2021 convention will still take place from an entirely virtual platform for the first time
in its 89-year history. “The decision to move forward with a virtual event offers a safe and innovative solution for the industry to access our outstanding programming, investment and networking opportunities,” said PDAC in a statement. The event’s organisers will share further updates as soon they become available.
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