RGN Vol 4 Iss 8

RESOURCE Volume 4, Issue 8

GLOBAL NETWORK

Mining, renewable energy and oil & gas worldwide

‘S BEST OF

A YEAR OF RECOVERY & GROWTH

WWW.RESOURCEGLOBALNETWORK.COM

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MINING | Brookfield Multiplex

WELCOME

As the curtain falls on 2017, RGN is proud to present its annual ‘best of’ issue, where we celebrate a year of recovery in the resources sector and growth in the renewables industry.

Over the year we featured a host of vibrant companies across several themes, each of which has embodied the wider theme of progress.

We began 2017 with a spotlight on Australia’s well-established resources sector, led by New Hope Group and Goodline, before tracking the progress of several key players in South Africa’s sprawling coal mining sector, including Resource Generation and ELB Group.

Our annual gold focus fell in issue 3, charting the return of the gold price and the success that many miners have found in tandem with its recovery.

However, one of the leading stories in 2017 within the mining industry has been the unremitting rise of lithium.

Issue 4 provided an insight into the companies powering the electric vehicle revolution, such as Lepidico and Nemaska Lithium.

Next came RGN’s wind energy issue which featured a special report on the launch of GE’s DolWin3 offshore grid connector, followed by a focus on Botswana’s buoyant mining sector.

Executive Team Editor Jack Kennedy Content Manager Michelle Madureira Content Director (APAC and Americas) David Hunter Creative Director Hugo Currie ICT Director Stuart Clark Staff Writer Jacob Ambrose Willson Contributor Mickey Fulp Managing Director Simon Curran

We rounded off the year with a TSX-listed miners issue, headed by Alphamin Resources, whose responsible attitude to African mining has been another central theme in 2017.

Everyone here at RGN would like to extend our thanks to our featured companies, contributors and readers over the course of the year, and hope to see you again in 2018.

We hope you enjoy this issue and encourage you to connect with us on email, Facebook and Twitter. Thanks for reading!

Simon Curran Simon E Curran, RGN & Anderson Murray Media Managing Director

RGN is published by Anderson Murray Media: a diverse media and information services company focused on creating and distributing engaging content to business leaders across the globe.

Anderson Murray Media Fulham Green, 69-79 Fulham High Street, Main Reception, Bedford House, London SW6 3JW Tel. +44 (0)207 148 5630

VISIT US ONLINE AT WWW.RESOURCEGLOBALNETWORK.COM

CONTENTS

2017 REVIEW

RGN 2017 REVIEW 12 2017 review RGN’s review of the last year in the resources and renewable energy sectors 22 Testimonials Glowing feedback from several satisfied feature companies

NEWS 24 Global resources news Our selection of mining, oil & gas and renewable energy stories from the last month

COLUMNS 32 Mickey Fulp The Mercenary Geologist returns with a review of the relationship between Trump and gold in 2017

RGN ONSITE 40 DolWin3 ‘It’s a nuclear power plant in the sea’

MICKEY FULP

DOLWIN3

CONTENTS MINING 54 Alphamin Resources Corp Creating a globally significant responsible tin mine in DRC 78 Lepidico Harnessing cutting edge technology for new lithium production 90 Nemaska Lithium In prime position to capitalise on the lithium boom 106 Hummingbird Resources Driving its West African gold project into production 120 Resource Generation Committed to developing high quality and responsible coal 132 New Hope Group A turning point for the company as it builds up production capacity

MINING & MINING SERVICES 144 RUC Cementation Mining All the answers are underground for this mining contractor 160 Basil Read An established best-in-class contractor based on safety and productivity 174 Goodline Riding out the mining downturn with major project work 184 ELB Diversifying the engineering company to prosper through the mining downturn

APPOINTMENTS & EVENTS 200 Appointments Notable appointments in the resources industry from the past month 201 Events Our pick of the top mining, oil & gas and renewable energy events happening around the world in the months to come

ALPHAMIN RESOURCES CORP

HUMMINGBIRD RESOURCES

NEW HOPE GROUP

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Visit our website www.iriscorp.net or email info@iriscorp.net for further information.

www.iriscorp.net | info@iriscorp.net

“It was a pleasure working with the RGN team. The entire process - from the initial interview to the layout and finished piece - was seamless and professional. ” Orlee Wertheim Head of Business Development, Global Mining, Toronto Stock Exchange TSX Venture Exchange

12

REVIEW | 2017 across RGN

A YEAR

BY SIMON CURRAN, MANAGING DIREC

Resource Global Network

IN REVIEW

CTOR RGN/ANDERSON MURRAY MEDIA

13

14

REVIEW | 2017 across RGN

To kick off 2017, the RGN team focused

We interviewed New Hope Group’s boss

on Australia and its expansive resources

Shane Stephan and discussed how the

sectors. After years of depressed prices

company is expanding its coal production

and exploration programmes being shelved

capacity across sites in Queensland and how

across the nation, the winds of change began

it is diversifying into the oil industry.

to blow in the right direction once again.

Furthermore, we also spotlighted two A gradual increase of prices in both precious

fundamental representative bodies to the

metals and oil and gas saw the cobwebs of

resources sectors in APPEA and AMEC.

the downturn begin to be brushed off at the tail end of 2016.

These features highlighted the important work they do and provided an ongoing

Subsequently, the beginning of this year gave

outlook for Australia’s mining and oil and gas

birth to a marked increase in the number

sectors.

of projects receiving funding and being progressed in Australia.

Resource Global Network

In issue 2, RGN looked at fossil fuels and

In this issue, we highlighted the importance

saw a shift in attitude from some global

of coal in South Africa, the key players in the

powers.

sector and what the future looks like for coalpowered electricity. Our exclusive interview

The Paris climate change

was with the World Coal Association, which

agreement represented a sharp change in

offered readers a perspective on the global

mindset when it comes to carbon emissions

approach to coal and how that will impact

and electricity generations. 195 countries,

South Africa.

including the US and China, signed the agreement to reduce emissions to less than

Elsewhere, we interviewed a variety of

2 degrees.

different South African coal miners and mining service providers. Exxaro’s executive

South Africa signed the agreement, however

head of coal Nombasa Tsengwa described

the country still relies on coal to power its

how the company profited through a global

key industries and coal will continue to play

price downturn and we featured firms such

a fundamental role in meeting South African

as Resource Generation, ELB Engineering and

energy demands for years to come.

RSV ENCO.

15

16

REVIEW | 2017 across RGN

Next, the RGN team produced our annual

report and how global headwinds last year

gold focused issue.

saw a rush to gold as a safe haven before the market transformed in Q4.

The gold industry experienced a healthy rebound in 2017. The major boost to gold

We also spoke to a range of gold miners of all

miners who experienced trouble and strife

shapes and sizes. Hummingbird Resources

last year was the return of the gold price.

managing director Daniel Betts went into depth on the Yanfolila gold project in Mali

Although nowhere near the dizzy heights of

and its journey to production and Anaconda

US$1,780/oz we saw in 2012, gold spot prices

Mining’s Dustin Angelo told us about gold

rose to levels a far cry from the US$1,060 of

mining in Newfoundland, along with a variety

January 2016.

of forthcoming gold projects from around the globe

Our lead story was the World Gold Council, after we spoke to its head of investor relations John Mulligan, who discussed the organisation’s Gold Demand Trends 2016

Resource Global Network

17

Then came the hot topic of 2017 – lithium. A

the way for lithium development in the area

Deutsche Bank study revealed that electric

and Lepidico’s Joe Walsh explained how unique

vehicle (EV) sales are expected to grow to

processing technology can unlock potential for

over 16 million vehicles by 2025, a dramatic

lithium in Québec.

uplift from the 5-6 million range this year.

We also interviewed Critical Elements with We identified that EVs will be the main driver

regards to their forthcoming Rose project as

behind demand growth for lithium, a key

well as spotlighting MetalsTech’s Cancet lithium

component in the lithium-ion batteries used

deposit.

to power EVs. The RGN team focused on lithium as an energy metal, highlighting one of the world’s premier zones for hard rock lithium extraction in the Québec spodumene belt.

Guy Bourassa outlined how Nemaska Lithium’s Whabouchi project has paved

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REVIEW | 2017 across RGN

Moving into renewables and focusing on

and unique wind power projects with the

wind power there were major gusts of

headline piece centring on the Lake Turkana

change in 2017.

Wind Power Project – the largest single private investment ever in Kenya and Africa’s

New projects across the world are now

largest wind project.

coming in at price parity with conventional grid power and the landscape for clean

Our renewables issue also featured an

energy generation is transforming. In

extended report on the launch of GE/

addition to the financial attraction, there

TenneT’s DolWin3 offshore wind energy

has also been a conscious shift towards

converter, after the RGN editorial team

less polluting and less harmful energy

visited Northern Germany to witness first-

production, typified by the Paris Climate

hand the inauguration of the device dubbed

Change Agreement, less America’s

‘a nuclear power plant in the sea’ by its

participation; see Donald Trump.

general manager Patrick Plas.

RGN looked at a selection of innovative

ResourceGlobal GlobalNetwork Network 19 Resource

September brought our first spotlight

it easier for companies to explore far flung

on Botswana, one of the fastest growing

locations and the established mines such

economies in Africa. A significant driver of

as Orapa and Jwaneng have entered new

the Southern African nation’s growth over the

cuts – all of which have led to a robust mining

last few years has been its buoyant mining

sector.

sector.

We spoke with different players throughout

President Ian Khama’s legacy of developing

the mining value chain in Botswana, including

infrastructure combined with the country’s

an exclusive interview with Botswana

abundance of resources, particularly

Chamber of Mines CEO Charles Siwawa.

diamonds, has seen strong growth in

We also spoke to miners in the shape

exploration drilling in the last decade or so –

of Tlou Energy and Mount Burgess Mining as

providing a boost to the overall economy.

well as contractors Atlas Copco and Stefanutti Stocks to round off the issue.

The improved transport and telecommunication networks have made

20

REVIEW | 2017 across RGN

In the last RGN of the year, we focused on

TSXV (Toronto’s junior exchange) in an

Canada and the Toronto Stock Exchange.

exclusive feature which demonstrated

We featured the usual assortment of mining

the strength and breadth of its mining

companies with exciting projects dotted

ecosystem.

across the globe, including developments of various minerals and commodities stretching

The spotlight also fell on a host

across several regions in the Americas, Africa

of Toronto-listed mining juniors,

and more.

including Alphamin Resources who are advancing a responsible tin mine in

The TSX is the unifying thread amongst

Democratic Republic of Congo. We also

these disparate projects in wildly contrasting

checked in with South America-based miners

settings, with the exchange providing a

Golden Arrow Resources and SILVER impact,

robust environment for mining outfits of

along with mining service provider Capital

all shapes and sizes to thrive in. RGN spoke

Drilling.

to Ungad Chadda, president of capital formation, equity capital markets, at TMX Group, the holding company for TSX and

Resource Global Network

“

All in all, it’s been another interesting year for the global resources community, and one that has produced many more positives than 2016 did.

Myself and everyone here at RGN hopes to see this story of growth continue into 2018, and we would like to extend our thanks to our featured companies, contributors and readers over the course of the year, and look forward to working with you again in the future.

�

Simon Curran

Simon E Curran, RGN & Anderson Murray Media Managing Director

21

22

REVIEW | Testimonials

Over the course of the year the RGN team of all sorts and sizes across the oil and ga Here is what a

“I found the process that you conducte

and I am indeed most pleased with the

“The RGN team are a highly professiona Kennedy in particular being incredibly easy to speak to and col speaks for itself – informative, relevant and well-composed.” -

“It was a pleasure working with Jack Ke initial interview to the layout and finish with the quality and look of the final fe Global Mining, Toronto Stock Exchange

“The magazine is really one of the best I have seen so far on the impressed with the quality of the interview, article and graphic Buffalo Coal

“We consider RGN to be an informative resource sector and it was a pleasure w - Dwayne Finch, General Manager, Good

“RGN and its editor Jack Kennedy produced a quality piece on N to send to our shareholders, customers and suppliers. It was a professional team of people.” - Guy Bourassa, President & CEO,

Resource Global Network

m have interviewed over 150 companies as, mining and renewable energy sectors. few have said:

ed to be very professional

e resultant article.” - Tony Gilby, MD & CEO, Tlou Energy

al and resourceful team, with Jack llaborate with. The magazine itself Jason Lee, CEO, Indodrill

ennedy and the RGN team. The entire process – from the hed piece – was seamless and professional. We are pleased eature.” - Orlee Wertheim, Head of Business Development, e/TSX Venture Exchange

e global mining industry. I am really c design.” - Rowan Karstal, CEO,

e and professional publication supporting the Australian working with Jack Kennedy to bring this article to fruition.” dline

Nemaska Lithium that we are proud real pleasure working with this , Nemaska Lithium

23

24

NEWS | Brookfield Multiplex MINING

GLOBAL RESO

Our selection of mi renewable energy news

Resource Global Network 25

OURCES NEWS

ining, oil & gas and s from around the world

26

NEWS

CHINESE COMPANIES TO BUILD $1 BILLION SOLAR PANELS AT CHERNOBYL SITE

JANUARY: Solar energy will be harnessed from the nuclear contaminated Chernobyl reactor site in Ukraine, after two Chinese companies formalised plans to erect a 1GW solar power plant.

A 2,600km exclusion zone surrounding the reactor has been in place since the nuclear disaster occurred in 1986, but following the construction of a steel-clad arch enveloping the site, interest in the area has developed.

The race to renovate the deserted site has been won by GCL System Integration Technology (GCL-SI), a subsidiary of Golden Concord Holdings (GLC), one of China’s

biggest renewable energy companies and China National Complete Engineering Corp (CCEC).

The former company will supply and install solar panels on the site, while the latter will construct and run the plant upon completion.

Shu Hua, chairman of GCL-SI said: “There will be remarkable social benefits and economical ones as we try to renovate the once-damaged area with green and renewable energy.”

Ukrainian officials have reported that the two firms are set to spend up to US$1 billion on the project over the next two years.

BEIJING’S FINAL COAL PLANT CLOSES IN NATURAL GAS SWITCH MARCH: The last largescale coal power plant in Beijing has closed, marking a symbolic stage in the Chinese capital’s switchover to natural gas powered electricity.

The closure of the Huangneng Beijing Thermal Power Plant completes an objective laid out in 2013 which aimed to make Beijing the country’s first city to have all of its power facilities fuelled by natural gas.

The plant is the fourth of its kind to be closed since the 2013 five-year clean air action plan was tabled. These closures have cut nearly 10 million tonnes of coal emissions annually.

Beijing Mayor Cai Qi said: “Replacing coal with clean energy is not only to deal with air pollution but also a requirement of the company’s transformation.”

Resource Global Network 27

WORLD’S LARGEST OFFSHORE WIND TURBINES GO LIVE IN UK MAY: Danish energy company Dong Energy has officially unveiled its giant Burbo Bank wind farm off the Northwest coast of the UK, which is home to the largest wind turbines in the world.

neighbouring Burbo Bank wind farm, completed a decade ago.

“That shows you something about the scale-up of the industry, the scale-up of the technology,” said Benjamin Sykes, the country manager for Dong Energy UK.

The large-scale offshore facility has just begun generating electricity in Liverpool Bay from a Sykes added that the opening of the Burbo fleet of 32 turbines standing at 195 metres tall, Bank wind firm was a very important each producing 8MW of renewable energy. milestone for the sector, and is set to solidify In comparison, the mega-turbines tower the UK’s position as a global leader in the above national attractions such as the 135 technology of generating renewable energy. metres London Eye and the 180 metres tall The UK has installed more offshore wind Gherkin skyscraper. power than any other nation in the world, Furthermore, each turbine has twice the with a collective capacity of 5.3GW and eight power capacity of the turbines in the further projects in the pipeline.

APPLE’S NEW DANISH DATA CENTRE TO BE POWERED

BY RENEWABLES JULY: Apple Inc (NASDQ:AAPL) has announced it will build a new data centre in Denmark which will be powered entirely from renewable energy sources.

Erik Stannow, Nordic manager for Apple, said: “We’re thrilled to be expanding our data centre operations in Denmark, and investing in new sources of clean power.

The data centre will begin operations by the second quarter of 2019 in Aabenraa in Southern Denmark, and will become Apple’s second such centre to run wholly from renewables in the Nordic nation.

“The reliability of the Danish grid is one of the main reasons we will operate two sites in Denmark.”

The US technology giant has committed to a 100% clean energy target and also pledged to back the Paris climate accord with the issuing of a US$1 billion green bond, despite the US pulling out of the pact.

Denmark is a global leader in renewable energy with a highly developed wind power sector, recently passing the 4GW milestone for onshore installed capacity.

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NEWS

BHP SURGES BACK TO PROFIT THANKS TO INCREASED PRICES AND IMPROVED PRODUCTIVITY SEPTEMBER: BHP (ASX:BHP) demonstrated a strong financial performance for the last fiscal year returning to profits of US$5.9 billion.

The diversified resources giant’s boost came from an upswing in primary commodity prices and the effects of cost-cutting measures in the downturn taking effect.

The Australian firm increased underlying EBITDA to $20.3 billion from around $12 billion the year before and the free cash flow surged to $12.6 billion thanks to improvements in productivity and capital efficiency.

Andrew Mackenzie, BHP CEO said the results were based on the foundations that had been laid over the past five years ‘to significantly improve returns and grow value’.

The company said it would pay an increased dividend of $0.43 per share, totalling $4.4

billion in pay-outs.

Ken Mackenzie, who replaced Jac Nasser as chairman this year, commended BHP’s management team in bringing about the results.

“After several years of considered and deliberate effort, BHP is stronger, simpler and more productive,” the chairman said. “BHP has a world class management, led by Andrew Mackenzie, and I look forward to supporting them in our pursuit of long-term value creation for all our shareholders.”

Since FY2012 BHP has reduced unit costs across the business by more than 40% which has produced accumulative gains of $12 billion.

The company also reduced its debt burden to $16.3 billion, down $9.8 billion from FY2016.

RIO TINTO STEAMS AHEAD WITH DRIVERLESS IRON ORE TRAINS IN THE PILBARA OCTOBER: Rio Tinto (LSE:RIO) (ASX:RIO) has taken a huge step in implementing a driverless train network in its Pilbara iron ore operations.

The diversified mining giant completed its first long haul autonomous train journey, controlled by operatives hundreds of kilometres away, as it progresses towards the full commissioning of its AutoHaul project in late 2018.

The pilot journey of nearly 100km was completed without a driver on board, making it the first fully autonomous heavy haul train journey ever completed in Australia.

Rio Tinto iron ore chief executive Chris

Salisbury said: “This successful pilot run puts us firmly on track to meet our goal of operating the world’s first fully-autonomous heavy haul, long distance rail network, which will unlock significant safety and productivity benefits for the business.

The driverless train was monitored in realtime by Rio Tinto teams and representatives of the Office of the National Rail Safety Regulator both on the ground and at an operations centre in Perth.

Building a fully-autonomous train network is expected to bring Rio major gains in speed and reduced variability which will in turn reduce average cycle times.

Resource Global Network 29

TESLA COMPLETES CONSTRUCTION OF THE WORLD’S LARGEST LITHIUM ION BATTERY IN SOUTH AUSTRALIA NOVEMBER: Tesla has completed construction of its giant lithium ion battery in South Australia and is preparing to test the facility in the coming days, placing it on track to meet a 100-day deadline.

Musk offered to give the facility to the state for free if the December 1 operation deadline was not met, however it is now likely that South Australian taxpayers will spend up to AUS$50 million subsidising the battery.

Tesla’s founder and chief executive Elon Musk vowed to build the world’s largest lithium ion battery, a 129MWh device built alongside French firm Neoen’s Hornsdale wind farm, in just 100 days back in July.

Nonetheless, the SA government will have access to some of the battery’s output to provide stability services to the grid and to prevent load shedding blackouts if power supply runs low.

OPEC AND LEADING GLOBAL OIL PRODUCERS AGREE SUPPLY CUTS THROUGH 2018 DECEMBER: An agreement has been struck between members of OPEC and nonOPEC oil producers to extend output cuts until the end of 2018, as the market tries to clear a global glut of crude.

The deal, which has been expected for several months, was struck in Vienna where OPEC members met to finalise the terms of the extension to the supply cuts that have been in place since the start of 2017.

Oil producers honouring the agreement will continue to cut production by 1.8 million barrels per day (bpd), including OPEC’s leader Saudi Arabia and non-OPEC member Russia, the world’s top two oil producers.

Under the new agreement, OPEC has decided to cap the combined output of Nigeria and Libya at below 2.8 million bpd. Previously both African nations were exempt from cuts due to internal economic and political difficulties.

During the OPEC meeting, prices reached as high as US$64 a barrel but soon dropped off after the announcement was made by Saudi Energy Minister Khalid al-Falih.

Chris Midgley, head of Analytics at S&P Global Platts commented: “In agreeing to extend current production quotas OPEC and non-OPEC nations are managing a fine balance which is likely to maintain prices at current levels in the near term.”

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COLUMNS | Mickey Fulp

WHAT TRUM

Resource Global Network

MPS DOLLARS AND GOLD?

By Mickey Fulp, the Mercenary Geologist

33

COLUMNS||Ian Mickey Thomson Fulp 34 COLUMNS

I have commented and written extensively on the generally negative correlation of the US dollar and gold. In simple terms, when the US dollar moves up or down, the price of gold tends to do the opposite. This makes sense because the price of gold is quoted on world markets in good ol’ American greenbacks. That said, there are many other factors that contribute to the price of gold.

UK Pound (11.9%), Canadian Dollar (9.1%), Swedish Krona (4.2%) and Swiss Franc (3.6%).

Indeed, my friends at Kitco.com track the change in gold price attributable to the change in the US dollar index on a daily basis.

The benchmark price of gold in US dollars and other currencies is fixed twice daily (am and pm) by a consortium of 12 large banks and financial institutions and is based on the spot price of gold traded by the London Bullion Market Association (LBMA).

The LBMA is a highly-leveraged, fractionally reserved, paper gold system with daily trading volumes averaging 1.7 times the amount of gold that is mined on an annual basis. In 2015, 88% of the world’s paper gold

These include: world economic health;

trade occurred there.

geopolitical events; physical demand for jewellery, investment, hoarding, and

Another daily metric for gold is the New York

industrial use; central bank buying and

spot closing price, posted seven hours after

selling; ETF purchase and redemption; and speculative trading of gold in paper markets and derivative instruments such as futures and options.

Strong negative correlations of the US dollar and gold usually occur during times of volatility and sustained movements to the upside or downside in said fiat currency.

United States dollar metrics are best determined by the dollar index (DXY), a weighted basket of six relatively stable, developed-world currencies that include the Euro (57.6%), Japanese Yen (13.6%),

ResourceGlobal GlobalNetwork Network 35 Resource the London afternoon fix. In the treatments below, I use NY close for both the dollar index and gold. The correlation coefficient of DXY and Au is one of the derivatives that my research assistant compiles, tracks, and analyses on a daily basis in our proprietary commodity and economic database.

Two variables with no relationship give a correlation coefficient of 0.0. A perfect positive or negative correlation is equal to + 1.0. We define the threshold for a “significant correlation” at > + 0.6.

Today, I present our research on the relationship of the US dollar and gold price over the past 13 months. A composite chart of DXY values and Au prices since October 1, 2016 illustrates the on-again and off again negative relationship of dollars and gold: With this composite chart as background, let’s go to the gist of my missive.

MICKEY FULP The Mercenary Geologist Michael S. “Mickey” Fulp is a Certified Professional Geologist with a B.Sc. Earth Sciences with honour from the University of Tulsa, and M.Sc. Geology from the University of New Mexico. Mickey has 35 years’ experience as an exploration geologist and analyst searching for economic deposits of base and precious metals, industrial minerals, uranium, coal, oil and gas, and water in North and South America, Europe, and Asia. Mickey worked for junior explorers, major mining companies, private companies, and investors as a consulting economic geologist for over 20 years, specialising in geological mapping, property evaluation, and business development.

In addition to Mickey’s professional credentials and experience, he is highaltitude proficient, and is bilingual in English and Spanish. From 2003 to 2006, he made four outcrop ore discoveries in Peru, Nevada, Chile, and British Columbia. Mickey is well-known and highly respected throughout the mining and exploration community due to his ongoing work as an analyst, writer, and speaker.

36

COLUMNS | Mickey Fulp

President Trump

Gold traded in its seasonal pattern, falling

In a stunning upset a little more than one

through the third week of December as year-

year ago, Donald John Trump was elected

end international settlements were made in

the 45th President of the United States of

US dollars, and then steadily rising through

America. Prior to his election on November

the third week of January in conjunction with

8, 2016, there was no significant correlation

a weaker dollar.

between the dollar index and the price of gold over short, medium, and longer terms

This period was widely recognized as “The

as shown by the 20-day, 100-day, and 200-

Trump Honeymoon” but alas, was not

day DXY-Au correlation charts compiled for

destined to last.

November 7, 2016.

Since Trump’s election the relationship of

February 1 to July 14: DXY-Au = -0.21

dollars and gold can be broken into three

A modicum of reality set in by late January.

distinct segments. Macroeconomic and geopolitical factors are in play for each time

While equities markets continued to boom,

period and are discussed below:

energy staples (oil, gas, and uranium) lost 15-

November 8 to January 20: DXY-Au = -0.86 The euphoria created with a free-market

20% over the next five months and industrial metal prices went flat to negative once Trump’s infrastructure build-out plans were put on the backburner.

capitalist occupying the White House through 2020 caused US markets and dollars to surge.

On the political front, Democrats and the left-leaning mainstream media relentlessly

In mid-December, the Federal Reserve came

opposed and attacked everything Trump.

in with its long-anticipated 0.25% interest rate Although attempts at health care reform increase and that also boosted the dollar to

took centre stage, Senate Republicans were

the detriment of gold.

rendered impotent by internal factions and did nothing to repeal or replace Obama-care.

Until the new year, Trump’ platform of American nationalism, deregulation of

Trump signed executive orders rolling back

business, corporate and individual tax

Obama-era regulations and that pleased

reductions, infrastructure build-out, and

small businesses, large corporations, and

repeal of nanny state-mandated health care

big equities markets. The Federal Reserve

favoured the US dollar, US equities, industrial

feigned an interest rate increase, but Old

metals, and conventional energy markets at

Yeller did nothing but vacillate in her monthly

the expense of the precious metals.

missives until mid-June when a 0.25% increase was approved.

ResourceGlobal GlobalNetwork Network 37 Resource This event spawned a short interval when

was done without the approval of Congress,

DXY and gold had an inverse correlation.

neither the dollar nor gold reacted to any

However, since the markets had already

significant degree. Over the past month, as

baked in this increase, there was little

equity markets continue to set seemingly

movement in either dollars or gold. Trump’s

endless highs in a risk-on, low volatility

administration implemented aggressive trade

trading paradigm, the dollar has fallen and

policies toward North American and Asia

gold has risen.

countries that helped bring an overpriced dollar down.

With both moving in a saw tooth fashion, the strong negative correlation continues.

Gold went up briefly then straight down despite the declining dollar from mid-May to

In this musing, I have focused on the

mid-July.

apparent effects of the POTUS’ platform,

July 17 to November 24: DXY-Au = -0.77

politics, and policies on the price of gold and specifically, its correlation to the US dollar.

This period of strong correlation was initially

Always remember though, that correlation

influenced by geopolitical events that created

does not imply causality. There are

safe haven buying of gold and a weakening

undoubtedly many other factors that I have

US dollar.

not considered and are beyond the scope of my analysis.

North Korea exploded a nuclear bomb and sent ballistic missiles flying out into the

Regardless of your personal views of the

Pacific Ocean, including two over Japan.

man, we can surely agree that Donald J.

Tensions flared as Trump ridiculed Kim Jong-

Trump has significantly influenced the

un, calling him ‘little rocket man’ in tweets

relationship between the world’s reserve

and speeches; North Korean responded by

currency and the world’s only real money

calling The Donald an ‘old dotard’.

since he was chosen as our 45th President of the United States of America on November 8,

This incessant war of words gave currency

2016.

markets the jitters and gold spiked to a 2017 high of $1346 an ounce. But after a couple of

And finally, back to the beginning: The

months, the soap opera went into seasonal

Question: What Trumps Dollars and Gold? My

reruns and financial markets became numb

Answer: Nothing … Duh. Ciao for now, Mickey

to the noise.

Fulp Mercenary Geologist.

By mid-October when Trump announced he would undo Obama’s Iran nuclear deal that

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WIND | RGN onsite

at the launch of the DolWin3 offshore g

‘IT’S A NU PLAN

grid connector

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UCLEAR POWER NT IN THE SEA’

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WIND | RGN onsite

RGN editor Jack Kennedy went to visit the site where the DolWin3 grid connector is being built in Northern Germany and sat down with Patrick Plas, general manager, HVDC and FACTS, Grid Solutions from GE Power to discuss the impact this technology could have for offshore wind energy in the future.

D

wh of

dis

Resource Global Network In early July the DolWin3

transmit clean energy from a cluster of

offshore converter station was

wind farms in the Southwestern part of the

launched from Warnemünde and

German North Sea.

made its six-day journey along the German and Danish coastlines to its final position, 80km offshore, where the team successfully installed the platform onto the subsea jacket.

“The installation of the platform DolWin gamma is an important milestone for us,” Plas said after the installation. “DolWin3 is GE’s first offshore HVDC project. The technology represents a crucial turning

DolWin3 is a 900MW capacity grid connection

hich will convert alternating current (AC), a form electricity which travels inefficiently over long

stance, to direct current (DC) in order to effectively

point for offshore wind, renewables, and how we are able to move that energy efficiently from where it is being generated to the customer,

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WIND | RGN onsite with significantly lower losses over long distances.

“This project is a vital contribution to Germany’s energy transition, which aims to increase renewable energy production. HVDC technology plays a major role in supporting the long-term growth of the renewable energy industry throughout the world. We are proud to lead this project for TenneT and to make a difference in people’s lives through enabling clean energy solutions.”

A high voltage direct current (HVDC) transmission line will connect DolWin3 with an onshore converter located in Dörpen where it will then be converted back to AC, which can power a city the size of Hamburg – or roughly a million households.

General Electric’s Grid Solutions division is leading the construction of this deeply technical construction, contracted by German energy company TenneT which will use the system to supply energy across Germany.

Plas says it is the technical and

Arriving at the Nordic Yards ship building site

transformative nature of the technology

in Warnemünde, DolWin3’s construction site,

which attracted GE to participate in the

the first thing that strikes you is the sheer

project.

size of the HVDC system.

“It’s complex, it’s difficult and it’s meaningful.

At 76 metres tall and painted in a distinct

It is [the equivalent of a] nuclear power

yellow, DolWin3 towers over the shipyard.

plant in the sea, bringing power to a

The platform is the length of an American

million people,” highlighted Plas. “That’s

football pitch and weighs a gargantuan

why it is significant and meaningful for the

18,450 tonnes.

environment.”

The supporting structure for DolWin3, known

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WIND | RGN onsite

ResourceGlobal GlobalNetwork Network 47 Resource as the ‘jacket’, has already been shipped out

As this technology develops, Plas says the

to location and there was not much room for

two primary objectives are to reduce both

error when the platform was towed out for

the size and cost of building and installing a

installation. Despite the size and weight of

platform like DolWin3.

the grid connection there is only 50cm of leeway when it is attached to the supporting legs.

He said: “We need to make this technology easier to implement and the easiness means the price because its not cheap and it has an impact on the electricity bill at the end.”

Plas noted that as wind farms continue to bring down the cost of energy generation – with recent auctions seeing costparity with conventional grid electricity – making sure that energy can

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WIND | RGN onsite

Resource Global Network

be delivered at the same cost through the supply chain is crucial.

For this technology to continue to change the way offshore renewable energy is delivered to mainland grids it has to be refined to make it easier to install, cheaper and with multifaceted applications – Plas hopes it will also lead to an increase in the number of wind farms being built.

“It’s in all the technical economical studies, it’s about making the business case fly in a lot more cases. If you lower the entry barriers then suddenly you have opportunities which are much more likely than before,” Plas asserted.

Currently there are cases of wind farms

49

“We [at GE] are very focused here on green energy and wind but it goes beyond that. Its about transmitting energy and giving power to people who are needing it to develop.”

Patrick Plas, general manager

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WIND | RGN onsite

Resource Global Network

which are not economical as they are too far

is aiming to continue to reduce the size and

away from shore to have an easy, efficient

cost of offshore converters as the technology

connection without the use of HVDC. At

matures.

the moment it is more expensive, but Plas stresses that if the prices falls it will open the

“The next one we are bidding for is a little

door to a raft of new wind projects.

smaller and lighter but it’s not going to be half the size of this one,” Plas predicted.

He added: “This is a way to develop more

“We also need to be cautious with how we

wind farms and more connections beyond

introduce new technologies, you can’t just

Germany. Can we have cases in the US, the

introduce something brand new without

UK? Can we help these business cases fly in

testing it when you are 80km offshore in

these two countries? – That is what we are

the middle of the sea. This is why you need

trying to do.”

to go step-by-step and have a progressive approach on this technology evolution.”

The future for GE and HVDC is already happening. Plas is already busy going forward

Energy development

with bids for future projects, for example

The successful installation of DolWin3

DolWin6 - another project for TenneT, and he

represents a major milestone for both

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WIND | RGN onsite

Resource Global Network TennetT and GE in terms of offshore wind energy transmission, but looking at it with a broader scope this type of technology can transform the way electricity is distributed all over the world.

The fundamental role of the converter is for the efficient transmission of electricity over long distances. That can be for green energy, coal-powered energy or nuclear, and the model can be applied to countries that struggle to transmit energy to very remote or distant regions which lack power infrastructure.

For big countries such as Brazil, India, China and even the continent of Africa, which all suffer from energy poverty in the remote areas, the efficient transmission of electricity at low costs and widely available could represent a step change in energy development.

“We [at GE] are very focused here on green energy and wind but it goes beyond that. Its about transmitting energy and giving power to people who are needing it to develop.

That’s the other face of the story which is less about green energy and more about development,” said Plas.

Jack Kennedy was speaking to Patrick Plas at the GE/TenneT press event for the launch of DolWin3 in Warnemünde, Germany.

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MINING | Alphamin Resources

ALPH R

E

S

O

U

Creating a globally significant re

Resource Global Network

HAMIN

U

R

C

esponsible tin mine in DRC

E

S

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MINING | Alphamin Resources

Democratic Republic of Congo, a country that has been ravaged by civil war in the 20th century, is treading the long road back to peace and civility. Mineral resources and the manner in which they have been exploited have been at the heart of DRC’s violence, anguish and misery.

Artisanal mining has directly contributed to the formation of armed militias on the back of profits made and traded.

The low-tech miners have destroyed potentially billions of dollars of value to the national finances through cherry picking the highest-grade areas of large deposits rendering them uneconomical for commercial exploitation. Alphamin is a TSXV-listed company trying to change things in DRC. With a commitment to conflict-free, responsible tin mining. CEO Boris Kamstra hopes the Bisie tin project will act as a catalyst to a new chapter in DRC’s mining story.

The Bisie tin project comprises a host of highly mineralised zones located in the deep jungle in DRC’s North Kivu region, Kamstra has no doubt that it is one of the ‘world’s most significant tin deposits’. At one point Bisie was producing 4% of the world’s tin, but the riches that it produced never

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Resource Global Network

trickled down to the local community. That

post-tax NPV of US$402.2 million and a post-

can be attributed to the business structure

tax IRR of 49.1% positioned against a capital

of artisanal mining. However, Alphamin is

expenditure of $124.4 million, peak funding

committed to stimulating real economic

of $152 million. The company’s aim is to get

prosperity and development through Bisie.

Mpama North up the development curve and in a positive cash flow position in order to

The company completed a DFS followed

drill out the rest of the mining licence.

up by a comprehensive budget estimate to execute the project and the results were

“We needed to find a starter project. A

outstanding. Kamstra calls the project’s

project where we could define the resource,

economic metrics absolutely stellar and

get sufficient tonnes into our measured/

Bisie will provide the necessary cashflow to

indicated categories, around which we could

support further exploration in the nearby

build a project that made financial sense and

areas.

get cash that would allow us to explore the rest of the area,” explains Kamstra.

Alphamin is developing Bisie’s Mpama North deposit first and Kamstra is right, the

When Alphamin set out on the drilling

economics of the project are impressive.

process for Mpama North it had identified

Mpama North has a 12.5-year life with a

a likely 100,000t contained tin at a grade of

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MINING | Alphamin Resources

We needed to find a starter project the resource, get sufficient tonn categories, around which we c financial sense and get cash that w of the area - Bor

t. A project where we could define nes into our measured/indicated could build a project that made would allow us to explore the rest ris Kamstra, CEO

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MINING | Alphamin Resources

Resource Global Network

2.5% hoped for. But, to everyone’s surprise,

necessary to build the mine. With $80 million

after 40,000m of diamond drilling the deposit

signalled in debt funding, Kamstra is now

was showing 230,000t contained tin at 4.5%.

going to the markets to raise the balance of the capex in equity.

Kamstra and the team were ecstatic with the new grades but due to the disparity from

This year the focus has been on preparing

their predictions, the results were subject to

the project to receive the main construction

independent verification from MSA and DRA

work. Next year the civil work will begin,

and passed with flying colours.

before the SMPP contractors install the process plant which will be commissioned in

“Everyone is wildly excited about Mpama

2019 with a target for steady state production

North, and so they should be, but we need

in the second half of 2019.

to remember why we are doing this,” says Kamstra, heeding caution. “We are doing this

Welcome to the jungle

to unlock a whole host of mineralisation that

Operating in DRC offers a whole range of

we are yet to quantify.”

unique challenges that have to be overcome, particularly in the remote jungle where

From a financial perspective Alphamin is in

Bisie is situated. A lot of the challenges are

a favourable position to secure the funding

common for frontier mining projects, such

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MINING | Alphamin Resources

Resource Global Network

“Everyone is wildly excited about Mpama North, and so they should be, but we need to remember why we are doing this. We are doing this to unlock a whole host of mineralisation that we are yet to quantify” Boris Kamstra, CEO as local skilled labour, infrastructure access,

When Alphamin first started at Bisie there

government relations and communication

were only two ways to access to project; by

networks.

helicopter or a two-day trek through the jungle. The initial work was completed by

However, with the fragile nature of DRC’s

helicopter and limited drill rigs which has led

tribal villages and the often-bureaucratic

a to a ‘false horizon’ on the mineralisation, in

dealings with government, Alphamin has had

that with full size rigs Kamstra believes the

to approach the project with special care.

resource goes much deeper than has been

When it came to looking at how to develop

drilled out so far.

the project the first major hurdle was even just to get access to the site.

Bisie is surrounded by thick jungle and difficult terrain. The nature of the jungle

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MINING | Alphamin Resources

Boris Kamstra, CEO with ravines, steep climbs and rivers at any point made the mission to build an access road fraught with difficulty. But without light vehicle access the project would not come to fruition and the locals would not reap the benefit of a usable road through the mountain range.

“The solution was to tape a GPS to my back and walk the forest. We had to build up our knowledge of the terrain and plot the route by foot, we eventually found a watershed along which the bulk of the road runs.

“We recruited around 400 locals, which rose to 600 at one point, and they built the 38km road through impenetrable jungle. It wasn’t a pretty road but you could get a cruiser and a motorbike through. We are upgrading it now and sending through 20 truckloads a month.”

Resource Global Network Despite the achievement of getting the access road built, Kamstra maintains that logistics remain the biggest problem. The main road between Goma and Walikale, the district Bisie is in, has seen major floods and Alphamin has had to reroute trucks. However, it has now established supply lines to both the East and West and is providing $4.5 million to improving the road from Goma.

The through pass from East to West will unlock a raft of economic potential in the area. Previously the fertile agricultural fields struggled to reach their capacity with poor transport routes but Alphamin’s investment will see new opportunities for trade and commerce for local producers.

“We always said that when we build Bisie we will be an economic catalyst for the entire region. We are seeing it happen now, our road repair initiative is getting more support because the route joins Mombasa on the Indian Ocean to the Atlantic coast and you can now get goods across the continent,” notes Kamstra.

“This extraordinary agricultural area hasn’t been able to access markets in the West because of a lack of travel routes. The agricultural potential is running at a fraction of what it should be,” with the new road farmers will be able to realise the full value of their crops.

Sparking new industries In addition to developing a world class tin project it is these types of developments for the local population which really set

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Resource Global Network

Alphamin and Bisie apart from what has

in DRC, Alphamin is the direct opposite,”

gone before. Not only the project itself but

says Kamstra referring to a recent visit by

the way Alphamin has gone about working

the North Kivu minister of mines Anselme

with the community and stimulating the local

Paluku Kitakya who described the project as a

economy.

‘beacon of hope’ for DRC and its history.

There was understandable distrust when

The commitment Alphamin has made to

the company first approached the local

local prosperity comes in the form of jobs

communities, but through a process of

and economic stimulus. Alphamin’s focus has

mediation using the Catholic Church and

been to keep all the work as labour intensive

the local leaders, as well as the promise of

as possible to bring as many people into

jobs and economic generation, Alphamin

employment as it can. Where the choice is

has been accepted as a vital component

between one excavator or 200 men for a

for development of the North Kivu region’s

task, Kamstra will always favour the manual

future.

labour.

“Our thesis is that Bisie tin should be a

In terms of blooding new markets and

premium product in that everything that

industries in the area there are no better

has been levied against the tin industry

examples than the mining company’s need

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MINING | Alphamin Resources

Transportation Mining Construction “Traminco shall reflect back on 2017 as a year of exceptional growth and expansion in the mining and construction divisions of the business.� This is according to the CEO, Mr. Brian Christophers.

Some highlights for the year would include two World Bank Projects, a mass-concrete Hydro Electrical Power Project, Quarry Development and Crushing, several Road Maintenance and Road Rehabilitation projects and the construction of a Runway, some Bridges and a Detox Facility.

TRAMINCO ROADS AND INFRASTRUCTURE

projects@traminco-drc.com

Uganda DR Congo

Traminco has been awarded the 185km Road Maintenance Contract for the fourth consecutive year running at Kibali Gold.

Traminco was also awarded the Rehabilitation Contract for the R529 by Alphamin Resources.

This road is between Goma and Walikale in DRC where roads are impassable! This project is especially challenging due to the huge amounts of material that has to be processed.

Figure 3: Road Maintenance and Rehabilitation

Figure 4: Road conditions at its Worst!

BRIDGES Traminco has constructed two Concrete Bridges in Garamba Park, one of the biggest and most significant wild life conservational parks in Africa that is situated in the North of the DRC. This project will allow game rangers and antipouching units access to the whole park, even in the wet season when rivers are flooding!

Figure 1: Aerial view of the Intake Structure of the Hydro Electrical Power Project for Rand Gold at Kibali Gold Mine, DRC

HYDRO ELECTRICAL POWER PROJECT Traminco was appointed the main contractor for Intake Structure of The Azambi Hydro Electrical Power Project. This is the third hydro powered electrical plant constructed by Randgold Recourses at the Kibali Gold Mine in DRC. This is a substantial mass concrete project. The footprint of the Intake Structure is 2,060 square metres and the structure consists of 6,000 cubic metres of concrete. There is 660 tonnes of reinforced steel in the structure.

WORLD BANK PROJECTS In the last two years, Traminco undertook two World Bank Projects. The road project near Kisangani is now coming to an end where Traminco was awarded two sections of Road Rehabilitation from Kisangani, the capital of Tshopo province in the DRC to Buta.

Figure 5: Bridges in Garamba Park

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Our teams are equipped to work and perform well in harsh and remote locations where we are contracted to assist in the opening mines, the construction of roads and infrastructure, quarrying and even bulk concrete works.

QUARRYING AND CRUSHING Part of this Hydro Electrical Power Project is the Development of the Stone Quarry and the Crusher Operations.

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Figure 2: Quarry Development, Blasting and Crushing

Brian Christophers (CEO) +27 82 562 4422 (SA)

See our contact information below and let us assist you in your next challenging project!

Joe Meyer (MD) +243 824 900 355 (DR Congo)

Resource Global Network

“Our thesis is that Bisie tin should be a premium product in that everything that has been levied against the tin industry in DRC, Alphamin is the direct opposite�

Boris Kamstra, CEO for access and communications spinning off

by the call and electric recharge being

into wider economic generation.

purchased. There were also a number of lifechanging social benefits to the new

As discussed, building the road opened new

telephone network. If people were sick or

trade routes and opportunities for local

under criminal threat they could quickly

farmers and tradesmen and when Alphamin

make a call to Goma for medical or police aid,

needed a communication network, Vodacom

instead of sending a porter which could take

installed a telephone mast in the area.

up to two weeks and has an associated cost.

Quickly a budding telecommunications

Another development which changes the

market sprung up in the villages with airtime

landscape for the population of Bisie is the

vouchers being sold, phones being rented

new bank that Alphamin requested be built in the village.

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MINING | Alphamin Resources

Resource Global Network

“We try to use local contractors as much as

need all those facilities, we bring them in and

possible and we have a complete aversion

they get leveraged up by the needs of the

to cash payments. When we tried to pay one

people in the area.”

contractor by electronic transfer he said it wasn’t worthwhile as he had to travel all the

Bisie’s long term success

way to Goma and back just to get the money.

Looking forward to how Alphamin can deliver its goal of creating a globally significant

“We went to Trust Merchant Bank and said

tin precinct, Kamstra is focused on getting

we need a bank on site and they are bringing

Mpama North into production before

in the facilities.

widening the net of drilling programmes to incorporate new deposits in the immediate

“That is the power of the mining industry. We

area.

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MINING | Alphamin Resources

Even at Mpama North the life-of-mine is stated at 12.5 years and because of the amount of contained tin already proved, there was no pressing need to continue to spend shareholders money on expensive drilling, although Kamstra is confident there is high grade mineralisation that extends deeper into the mountain.

Following Mpama North’s ramp up, Alphamin will turn its focus to Mpama South, a second deposit which is showing similar geology and mineralisation trends to the cornerstone resource. “We will be generating a lot of cash [from Mpama North] so our first priority has to be to pay down our debt, secondly we will provide our shareholders with dividends

Resource Global Network

and then retain a portion of the cash to start drilling programmes.

“We will first target Mpama South and what you have to bear in mind when you look at the increase potential at the project is that Mpama North has had to bear the costs of all the infrastructure and the overheads.

If we add units all we are picking up is the operating costs but all of the revenue.

“These extra units could be hugely accretive.

This region will become the world’s premier producing tin area, in my mind there is no doubt to that.”

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MINING | Lepidico

LE P I D Har nessi ng cutt i ng edge techno

Resource Global Network

DICO l og y fo r n ew l i t h i u m p rod u c t i on

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MINING | Lepidico

The rise of electric vehicles (EVs) and battery storage systems is signalling a new era for the application of lithium in the automotive and energy sectors. It is widely expected this will lead to a significant demand side increase and supply side deficit and therefore a substantial price rise in the coming decade. As EVs hit the mainstream, guided by a global shift to reduce CO2 emissions, and the use of lithium in energy storage systems becomes commonplace it is imperative that any lithium producer can be competitive on the cost curve to enter the market. Lepidico, with its transformative L-Max® technology, is primed to supply the growing lithium demand market as it turns.

different pH levels until you are left with high

Lepidico’s key differentiator in the ultra-

specification battery grade lithium carbonate

competitive lithium market is the L-Max®

at 99.88% purity.

specification battery grade lithium carbonate.

Using industry standard equipment L-Max® leaches lithium from micas using sulphuric acid, without the roasting employed for the capital and energy intensive conventional processing of spodumene.

Spodumene roasting does not generate any by-products either. In Lepidico’s case the by-products, which include sodium silicate, potassium sulphate and caesium, will provide almost as much revenue as the primary lithium carbonate. The technology is subject to an international patent application and Lepidco is developing the process further to expand its application. A recent milestone for Lepidico was the completion of the prefeasibility study which managing director Joe Walsh says has demonstrated L-Max®’s considerable potential as a low-cost solution for producing lithium chemicals. The process was tested using three different lepidolite concentrate feeds and returned excellent results. The PFS tests produced high

technology it owns which will bring down the costs of production, unlock new sources

“L-Max® has consistently delivered

of lithium which have previously been

excellent results from the recent test work

overlooked and provide an opportunity to

programmes, both in terms of recoveries and

draw revenue from a suite of by-products.

product specification,” explains Walsh.

L-Max® technology

As well as providing high grade product,

L-Max® works through a simple but highly

the technology will unlock a third source of

effective leach and impurity removal process

lithium for the global market. Walsh explains

using Lithium micas as the concentrate

that until now there has not been a process

feed and removing different elements at

technology that can commercially exploit

Resource Global Network

Joe Walsh, managing director

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MINING | Lepidico

lithium micas and to date they have largely

benefits from a suite of by-products and

remained in the ground, lithium today

so long as the L-Max® plant is strategically

predominately originates from conventional

located to maximise the value of those by-

brine or spodumene.

products and minimise the transport cost of bulk reagents we will be right at the bottom

Walsh highlights two of Lepidico’s strongest

end of the cost curve.”

competitive advantages after validating L-Max®, “Firstly lepidolite has not been

Lepidico will be pursuing both a fully

systematically explored for so the best grade

integrated business model and a

deposits sitting at surface are still in the

downstream process model which will

ground, sources of high quality lepidolite that

combine the use of third party feed sources

can be mined cost effectively.

into its L-Max® plant.

“The other key factor is that the technology

The strategy is straightforward, to secure

Resource Global Network

and acquire quality lepidolite deposits that

to the market for the associated by-products

will support the development of a mine

and the reagent accessibility. The PFS was

and concentrator to provide feed to the

heavily focused on logistics and evaluating

downstream plants, as well as to bring in

the most strategical location to build the

third party feeds.

plant.

“The compelling findings from the recent pre-

“The study concluded that the optimum

feasibility study have provided the confidence location is where we can minimise the cost to commit to a full feasibility study for the

of sulphuric acid and maximise the value of

Phase 1 L-Max® plant located in Ontario,

our by-products,” explains Walsh, with all

Canada,” remarks Walsh.

the current signs pointing towards Canada.

Canada calling The location of the plant is crucial in relation

North America, around the Great Lakes region, has a depth of market for sodium silicate with over 1 million tonnes (mt) annual

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MINING | Lepidico

demand as well as significant sulphuric acid

that for lithium carbonate.”

being produced and exported. There are similar market situations in central Europe

To further strengthen Kenora as the likely

and Japan, two locations which will both be

location of the L-Max® plant is Lepidico’s

explored for future production.

offtake agreement with Avalon Minerals from its Separation Rapids project just 80km

However in Kenora, Ontario, where Lepidcio

to the North. The agreement would provide

is seriously contemplating building the

Lepidico with a lepidolite feed very close to

plant there is access to sulphuric acid from

the plant and thereby provide a significant

two large copper smelters in Sudbury – the

location benefit for both parties.

company can act as a ‘sulphuric acid sink’ in this scenario. Then there is the strength

“Part of the logic for Kenora is that it’s on

of the sodium silicate market in the region

the Trans-Canada rail line and we can get

which substantially bolsters the project

acid straight from Sudbury, plus we can sell

economics.

sodium silicate into the major manufacturing regions of Canada and the US,” highlights

“If we can maximise the value of the sodium

Walsh.

silicate then the revenue potential of the byproducts will be approximately equivalent to

“Ultimately though, that is just the next

ResourceGlobal GlobalNetwork Network 85 Resource

step. If we take a 5-10 year strategic view,

work on logistics feed source characterisation

we would be looking at having a larger scale

still remains.

L-Max® plant in Ontario, another in central Europe close to where Arubus produces

On the operational side Lepidico is already in

approximately 2mtpa of sulphuric acid and

an enviable position. It has advanced in the

another in Asia, possibly Japan where there

security of high grade supply via a number of

are two large smelters producing a lot of acid

agreements for lithium mica projects across

too.”

the world, it is proving up the technology and advancing its Phase 1 Plant Project. If

Now that a possible site has been identified

you then consider the market indicators

in Kenora, Lepidico can begin the process

for lithium over the next decade and the

of review and approvals before entering the

significant likely price increase the picture

design and engineering work required for the

becomes ever rosier.

future L-Max® plant.

Walsh stresses the company is fully

The energy metal revolution

committed to the feasibility study and is

Car manufacturers, led primarily by Elon

completing the test work for that with a

Musk’s Tesla, are in a race to design and

continuous mini-plant trial, however further

manufacture a mainstream, low cost electric

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MINING | Lepidico

Australian Resource Business Global Network vehicle that will dominate the global car market.

Walsh firmly believes the electric vehicle story and says he is even more convinced that it is the future of the automotive industry having test driven the Tesla Model S. While the basic specification Model S currently retails at around $68,000 Walsh believes the industry is only a couple of years away from producing a $20,000-30,000 vehicle with superior performance to a conventional internal combustion engine car that will take urban spaces by storm.

The effect on lithium, as a key component in the lithium-ion batteries which power electric vehicles, will be strong demand growth and therefore continued robust lithium spot prices. Walsh is now completely focused on gearing Lepidico to be at the bottom of the cost curve and be part of the supply chain when that demand spike happens.

“As a greater number of models become available and the mainstream car manufacturers produce in bigger quantities the price point will come down and the demand for EVs will really increase,” notes Walsh. “I’m a firm believer in the lithium battery story for the next 10 years at least and we are well positioned to be putting new supply into that market from a new primary source.”

The second major new application for

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lithium will be in power storage units, again

further development in storage technology

market-led by Tesla through its Powerwall

the price for individual units will come down

unit. They are subject to the same pricing

and the sector could have a huge impact on

issues currently preventing EVs becoming

lithium demand.

mainstream, but Walsh explains that with

Resource Global Network

Another factor putting Lepidico in a prime

“Lepidico has a very focused strategy

position to take advantage of the anticipated

to leverage our robust technology, as

lithium demand upswing is the time it

demonstrated by the recent PFS results,

normally takes for the industry to respond to

and become a lithium producer as swiftly as

a price jump with supply. Walsh is expecting

possible and then expand into the market.

to have the plant built and the logistics in order to fast-track to production, whereas for

“The massive growth is in the new

many other developers there is significantly

applications of lithium, but the question

greater lead time in getting a new project

for the industry is how many of the new

online.

projects that don’t yet have identified mineral resources on them can be converted into

Looking forward Walsh has set out a clear

producing projects?

timeline to drive the company through to production. He is hoping to have completed

“We are looking at coming into this market in

the feasibility study by the end of this year,

a very measured way with a clearly defined

followed by financing, then enter an expected

and straightforward strategy.”

15-month development phase for the plant with first production targeted in mid-2019, although subject to permitting and approvals.

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In

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CRITICAL ELEMENTS Low risk approach to capturing growing lithium demand

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ENERGY METALS | Nemaska Lithium

There is a race going on in the global lithium market right now.

It is the competition among a number of mining firms to see who will be first to enter with qualified lithium production as the market is gripped by a supply deficit coupled with a substantial demand increase.

With the use of lithium as a key component in lithium-ion batteries, the batteries which will underpin the whole electric vehicle and battery storage industries, the price is going to increase and supply is going to be constrained for the next several years at least. Nemaska Lithium has spent eight years progressing the world class Whabouchi project in Quebec and has developed a unique production process to ensure it enters the lithium market as one of the lowest cost producers.

Nemaska Lithium has developed the Whabouchi project into what CEO Guy

As well as having a truly world class deposit,

Bourassa calls ‘one of the largest and richest

Nemaska Lithium has also decided to

spodumene deposits in the world’. Everything

become a fully integrated supplier from the

is in place for Nemaska Lithium to capture

mine to the end products, lithium hydroxide

the boom in lithium demand in the coming

and lithium carbonate. Nemaska Lithium

years. All the environmental permits have

has signed two deals with major players in

been signed as well as the impact benefit

the lithium battery and production space.

agreement with the First Nations and now

Johnson Matthey Battery Materials (JMBM)

the company is ready to go forward with a

and FMC Lithium will off-take approximately

feasibility study.

50% of the production from the hydromet

Resource Global Network

Guy Bourassa, CEO plant in Shawinigan, Quebec and Nemaska

for qualifying the end product with potential

Lithium has recently taken a major step in

customers.

making that a reality.

The project itself is split into two sites, the The crucial step for those contracts to be

hydromet plant site in Shawinigan which

validated has just been completed. In early

comprises the phase 1 plant and the large

May, Nemaska Lithium announced JMBM

scale commercial plant, and the mine site

approved the first commercial sample of

near the town of Nemaska to the North.

lithium hydroxide from the phase 1 plant in Shawinigan, a small commercial plant used

Bourassa is confident that the mine site has

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ENERGY METALS | Nemaska Lithium

all the necessary infrastructure in place to

longstanding supply chain and localised

be a success. The location is perfect, the

skilled labour force for Nemaska to take

CEO says that within 30km of the mine site

advantage of.

there is all the infrastructure necessary to start and operate a mine. Close to civilisation

The Cree Community of Nemaska will

in Nemaska with lodging capabilities for

provide around 25-30% of the total required

employees, an airport just 18km away,

manpower of 130 employees for the mine

existing railways and most importantly

site, while the remainder are likely to come

two government-owned hydroelectric

from Chibougamau and surrounding areas

substations.

according to Bourassa.

The availability of power transforms the

The Whabouchi project is permitted to mine

capex of the project. The only infrastructural

1.1 million tonnes (mt) of ore per year for

investment necessary is to install a 13km

the next 26 years, that will be concentrated

hydroelectric transport line from the

down to around 213,000t of spodumene

substations to the mine and in addition

concentrate which will be transported down

electricity is low cost in Quebec. Furthermore

to the hydromet plant at Shawinigan by road

with Shawinigan’s history of providing the

and rail.

electricity to power Montreal there is a

Resource Global Network

Grade is king

pit scenario adds to the reduced costs of

However, having the infrastructure in place

production.

is only one of the central planks necessary to be successful in the lithium space. The

There is no tantalum or niobium in the ore

other two fundamental advantages Nemaska

so the recoveries will be stronger and the

Lithium has up its sleeve are the grade of the

stripping ratio is low. With Nemaska Lithium

ore and the unique processing technique to

converting the spodumene in Quebec it will

convert spodumene into lithium carbonate

have a large cost advantage over Chinese

and lithium hydroxide. The latter particularly

competitors because it owns the resource

is what will differentiate the company in

and the logistics are simpler thanks to not

the market and enable it to compete with

having to import any raw materials.

Chinese counterparts on price.

“It’s a very good advantage,” says Bourassa.

The spodumene concentrate will contain

“The commercial process for transforming

6% lithium oxide, a grade suitable to be

spodumene into lithium carbonate in China

converted into high grade lithium hydroxide

would cost about $2,000/t and in our case

and lithium carbonate necessary for use

it’s less than $1,000/t, so we have at least

in lithium-ion batteries. The fact that it can

$1,000/t advantage on the Chinese just on

be predominantly mined from an open

the conversion of the material.”

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ENERGY METALS | Nemaska Lithium

It’s a process

prices increases over the past years. In addition, their process produces a by-product

Nemaska Lithium’s unique chemical process

of sodium sulphate which must be disposed

replaces the conventional technique of

of at a cost.”

adding costly soda ash to lithium sulphate to transform it into lithium carbonate. Instead,

The processing technique will also allow

Nemaska Lithium is using a process of

Nemaska Lithium to reuse the available

electrolysis to produce the lithium salts and

sulphuric acid in the process. Bourassa says,

the results are transformative for the project

“We therefore reduce the need for sulphuric

economics.

acid by about 75%. You don’t need to neutralise the weak sulphuric acid at the end,

“Our process uses electricity as the main

you don’t need lime to do that and you don’t

reagent and therefore we have a better

have to take care of any waste products that

handle on the cost structure because in

would have otherwise been produced.

Quebec we have long term electricity supply agreements at affordable and predictable

“There are less reagents and we have a

costs. By contrast our competition uses soda

good handle on the natural reagent that is

ash as its reagent, which is bought on the

hydroelectricity, so it is the greatest way of

spot market and has experienced constant

making lithium salt by far.”

ResourceGlobal GlobalNetwork Network 97 Resource

The combination of a low capital expenditure, high grade ore at Whabouchi and the innovative processing technique will see Nemaska Lithium enter the market with a distinct cost advantage over the major industry players.

Big players take a shine However, it is the quality and grade of the lithium carbonate and hydroxide that attracted the offtake agreements with JMBM and FMC. Bourassa says the fact that Nemaska Lithium was able to sign these two agreements with companies of this size is the strongest reflection that the process is going to be a success and there is a belief in Nemaska Lithium’s ability to deliver strong long term supply.

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ENERGY METALS | Nemaska Lithium The first agreement with JMBM is for the battery cathode manufacturing firm to supply lithium sulphate that Nemaska converts into lithium hydroxide for use in the production line.

“It’s a service agreement which is based on the phase 1 plant. That’s why they agreed to put in $12 million as an up-front payment to help us build the plant and help them regenerate lithium hydroxide from their byproduct of lithium sulphate.

“It has never been seen in the industry that someone pays up front 100% of a purchase order for goods that are coming from a plant that is not even built. They did their homework before paying us and for us it’s a very good stamp of approval for our process.”

Nemaska Lithium’s agreement with FMC has raised eyebrows as it will be selling product to the largest lithium hydroxide producer in the world. While FMC has a good conversion capacity of carbonate into hydroxide it cannot source enough lithium carbonate in the market so it needs to shore up long term supply.

“We accepted the request and signed with FMC because as a large credible, creditworthy client it definitely re-assured our lenders,” observes Bourassa. “It assured them on our capacity to sell and our capacity to have offtake agreements to service the debt.”

Resource Global Network

Both agreements, and the accessibility to

Bourassa cannot stress enough the

funding they bring, are crucial for Nemaska

importance of the lithium hydroxide and

Lithium. As it stands it is still a single asset

lithium carbonate at Whabouchi being

company, with no revenue yet and in a metal

qualified prior to commercial production.

where there is little price transparency.

Any new lithium producer who wants to

Bourassa had to have a good qualification

sell a lithium salt will have to factor in 12

of the company’s capacity to sell to credit-

months of product testing by end users, to

worthy clients, as he has done.

ensure the product stands up in engineering.

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ENERGY METALS | Nemaska Lithium

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ENERGY METALS | Nemaska Lithium

Nemaska Lithium has reduced this lead time

“We have these two key advantages and

by commissioning the phase 1 plant, thereby

that’s why we have so many people talking

incorporating the product qualifying process

to us, end users that are interested to secure

into the construction and commissioning

long term supply.”

phase of the project development.

With the phase 1 plant in place and proving “We have to remember that it’s important

the quality of the product, all that is left

to come to market but it’s more important

for Nemaska Lithium is to commence

to qualify your product. One of the reasons

construction of the mine and construction

we built the phase 1 plant was to shorten

and commissioning of the hydromet plant to

the period it usually takes to qualify the

commercial production of lithium hydroxide

product once you have started commercial

and carbonate. However, to do that there is

production,” explains Bourassa.

still a considerable amount of financing to find.

“The phase 1 plant gives us two advantages.

The first is we can engage and discuss the

Last summer the company graduated from

specifics of each client we are talking to

the TSX Venture Exchange to the TSX main

and secondly it gives us at least a one year

board and raised C$69 million, through a

advantage on anyone who is going to build a

public offering - $50 million of that was

commercial plant directly.

earmarked to advance the commercial phase of the project. Nemaska also attracted 32

Resource Global Network

new institutional investors, some coming

cost entry to production and institutional and

from interesting funds.

end user backing. All the key ingredients are there to develop a world class lithium project.

“We had some very large institutional investors in natural resources funds but also

Bourassa says the fact that the project is fully

clean tech funds, which shows the market

permitted, fully integrated from the mine to

realised we were not a mining company

the end product and could be in production

anymore but more of a green chemical

in the next two years really sets it apart from

company,� Bourassa observes.

the majority of potential lithium projects.

The project will require around $500 million

The next two years will be a crucial period

in capital to construct the mine and the

for Nemaska Lithium and it could be a major

hydromet plant. The company aims to do a

player in global lithium production if all goes

60/40 split of debt to equity, which Bourassa

well.

says is progressing well.

It is no surprise that Nemaska Lithium is attracting such widespread attention from both the investor and end user market. It has all the permits in place - a major hurdle to commercial production - high grade ore, low

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AFRICA. IN THE PALM OF YOUR HAND.

ONLINE NOW WWW.AFRICANBUSINESSNETWORK.CO.ZA

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MINING | Hummingbird Resources

HUMMINGBIRD DRIVING ITS WEST AFRICAN GO

Resource Global Network

D RESOURCES LD PROJECT INTO PRODUCTION

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MINING | Hummingbird Resources

Hummingbird Resources has been very busy since last speaking to RGN in February 2016. The AIM-listed firm has made substantial steps in advancing the low cost, high grade Yanfolila gold project in Mali. The mine is expected to be pouring the first gold by the end of 2017, a new team for construction and production has been put in place, the project is fully funded thanks to some strategic raises in the last year from different sources and the construction process is firmly underway. Hummingbird CEO Daniel Betts says the project is delivering as per the plan and expects the mine to be completed on time and on budget.

Hummingbird delivered a definitive feasibility study on Yanfolila in January 2016, followed up by the optimised new mine schedule, which outlined a mining plan of 132,000 ounces gold production in the first year and life of mine production at 107,000oz p/a. The AISC remains low at US$695/oz and the after-tax IRR sits at 60% at a US$1,250 gold price.

Over the last year Hummingbird has been able to secure ample finance to fully fund Yanfolila and that has been a major achievement in terms of commencing construction in Mali. In June 2016,

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Safety meeting at Yanfolila

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Resource Global Network

Hummingbird announced a $71 million equity raise from markets in London and

The team

the US which serves as a reflection of the

With the financing in place the next key step

potential of the project and the confidence in

was for Betts to form the right team to take

the team.

the project through the crucial construction stage and into production. Hummingbird

On the back of that the company reengaged

has implemented a structure of divisional

with its lender Taurus Funds Management to

VPs responsible for specific sections of the

restructure the loan deal, reducing the total

project overseen by senior VP for project

loan amount and in February of this year

delivery Shaun Bunn.

the Government of Mali paid $11 million to increase its stake in the project to 20%.

The vastly experienced Wayne Galea is in charge of managing the engineering,

“[The raise] was a catalyst, it recapitalised

procurement & construction management

Hummingbird and allowed us to commit to

contract, former British Army officer William

construction at Yanfolila,” explains Betts.

Cook is taking on operations management,

“We are fully funded and that is a major step

David Hebditch is on board to run the

forward from where we were last year. It

safety, health, environment and community

means we are building the gold mine and

considerations and Murray Paterson is the

also on all sorts of operational levels the

chief geologist.

progress has been monumental.”

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MINING | Hummingbird Resources

Construction underway at Yanfolila

ResourceGlobal GlobalNetwork Network 113 Resource

Betts highlights that in addition to all the

Moxham, a professional engineer with over

planning for the mining operations, when the

30 years’ experience in managing African

site is fully manned in around August there

mining projects, will take over from Bunn

will be almost 800 workers.

when the project hits production.

“We have to think about every flushing toilet,

Moxham has a glittering track record of

every meal and every knife and fork so we

delivering excellent results on a number

will effectively be running a huge catering

of major African projects. Moxham was

business as well as a mine. That will all fall

most recently general manager and

on Will’s [Cook] plate for getting the logistics

head of operations at Newmont Golden

right,” remarks Betts.

Ridge, overseeing the commissioning and construction of the 9 million tonnes per

Betts is confident the team will be able

annum (mtpa) Akyem gold mine in Ghana.

to deliver the construction of Yanfolila on time and on budget, however then it has to

He also managed the delivery of the Eritrean

be passed on to an operating team which

Bisha mine for Nevsun and acted as head of

requires a whole new set of skills.

global engineering for Goldfields. Betts is in no doubt as to how important he will be for

Hummingbird has announced that Kevin

the project.

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MINING | Hummingbird Resources

“Kevin has an absolute world class CV and

The concrete foundations have been poured

we are absolutely delighted he has come

- an area which can cause major delays if

on board,” beams the CEO. “The team at

hampered by wet weather - the carbon

Yanfolila will be key to us delivering this

in leach (CIL) tanks are being erected and

project on time and on budget and then

all of the engineering drawings have been

running a professional business. It’s been a

completed by EPCM contractor SENET.

huge step forward since last year.”

“Here we are seven months into the build Hummingbird has the key personnel

and we are going well. We are on schedule

in position to drive forward with the

and on budget. However nothing of this scale

construction, which Betts says is going as well

is going to go absolutely seamlessly and

as he could hope for.

everyday there seems to be a challenge, but

Resource Global Network

all of those challenges have been anticipated

operate in Africa and an exemplary safety

and I would say that is key,” observes Betts.

record.

Contract model

IMAGRI-SARL has been awarded the

For a junior of Hummingbird’s size taking

(SMPP) contract and has begun delivering

on the full mining operation would be a

steel work, SENET is overseeing the project

monumental task. Instead the company is

as the EPCM contractor and African Mining

employing a contractor model using key

Services (AMS), a subsidiary of Ausdrill, will

supplementary companies to perform each

take on the contract mining responsibilities

duty. All of the major contracts have been

post-production – a contract worth $250

signed on the basis of a proven ability to

million over the life of mine.

structural, mechanical, plate work and piping

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MINING | Hummingbird Resources “In every single contract we have issued there has been a full tender process reviewed by us and independent contractors, we certainly haven’t just gone for the cheapest,” Betts also explains how big a task it would be to bring the mining operation in house. “As a new company that has never built a mine, the art of mining and running a fleet is a whole new science for us. If we were learning that while we were also building the mine and the plant and managing everything else we could drown.

“I think it’s the right strategy for us to outsource to a professional contract miner but the management of the contract and the interface with us is absolutely vital because it’s the biggest contract we will ever sign.All of these contracts are partnerships, whether it’s the EPCM or the power contract, we have to be intimately involved in those operations and that’s what our VPs are there for.”

Betts is going to use the partnership with AMS to develop a residual knowledge of the mining operation so if the opportunity arises to bring that element in house on another asset and if it will save the shareholders money, Hummingbird will have that option.

“The whole thing about business is to make yourself more efficient and make more profit for your shareholders. It isn’t just about the bottom line though, it’s a trade-off between the cost of learning that discipline and whether you are a mining company or a project management company.”

Resource Global Network

“We are fully funded and that is a major step forward from where we were last year.”

Daniel Betts, MD However, with contract mining comes a significantly reduced capital expenditure. It is likely that the mining fleet will total around $100 million, almost doubling the project’s capex spend, that figure has to be traded off against an AISC saving of around $100/oz.

Betts says the grade at Yanfolila puts the project in a strong position, “Even with a contract miner our AISC is still $700/oz so we can carry it. Whereas if I had come to market and said the capex was $200 million instead of $88 million, the market would have said we couldn’t raise that. We wouldn’t have got the project built.”

2017 While the foundations are in place for construction at Yanfolila there is still a huge amount of work to get through before reaching Betts’ target of first gold production

by December 2017. The concrete has been poured for the plant, the mill and the gold room and the terraces for the power have been installed. The next steps involve completing all the steel and piping work, bringing the reagents on site, electrifying the plant and then move into commissioning.

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“We have to run it to make sure it all works

of those different parts of the project and

and iron out any teething problems. There is

making sure they all come together at the

still a huge amount of work to do. It is hugely

same time.”

complicated but we are not reinventing the wheel here, it’s a pretty standard gold plant,”

The gold price and how it performs in the

says Betts.

next few years will be a key determinate of Hummingbird’s fortunes. Having based the

Outside of the plant the major focus

numbers on a gold price of US$1,250/oz Betts

is preparing the camp so it is capable

says any fluctuation of $10 on the price will

of housing and feeding the 800-strong

result in $1.3 million either onto or off the

workforce expected later this year. Following

bottom line.

that the mining fleet will need to be mobilised to pre-strip the pits before the plant is

He adds that its a unique industry where

commissioned. Then finally Hummingbird will

the biggest variable in terms of revenue and

construct the tailings dam.

profit is something which is completely out of the company’s control.

“It is a case of every single element of this project falling under one of the VPs’ scopes

“My philosophy is quite simple. I want

of responsibility. It’s all down to the interface

shareholders to be exposed to the gold

Resource Global Network

price because otherwise why would they

option in the coming months.

be involved with a gold company, however I want to balance that with prudent fiscal

“I think the market is pricing in a lot more

controls.”

risk than remains. The market has been so bad for so long and I don’t think people think

There is the option for Hummingbird to

anything is ever going to happen in mining in

hedge a small proportion of the production

West Africa.

to paying back the debt facility, of $40-45 million - protecting the company from any

“People say ‘is it actually possible to produce

sharp moves in the gold price.

a mine on time and on budget and produce what you say you are going to?’. Hopefully

With $60 million free cash potential at

Hummingbird will prove that it is possible

US$1,250/oz and four years to pay back the

and that will be very good for the whole

debt it would amount to only a small portion

industry.”

of production that would require hedging.

Betts says ideologically he is against the idea but he recognises the that prudently there is a place for it and the board will discuss the

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MINING | Resource Generation

RESOURCE G

COMMITTED TO DEVELOPING HIGH Q

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GENERATION

QUALITY AND RESPONSIBLE COAL

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MINING | Resource Generation

It has been a busy few months for Resource Generation (ASX, JSE:RSG) as CEO Rob Lowe and the team bring the Boikarabelo mine, located in South Africa’s Waterberg region, into development. Lowe has overseen a programme of putting the building blocks in place to ensure this project tips over into production. Resource Generation has agreed the commercial terms for a R5.65 billion debt fund, reached a deal with the local rail authority, Transnet Freight Rail, for transporting its coal production at an economically viable rate, tendered out the construction of the coal handling plant and contract mining, and completed a feasibility study on a coal-fired independent power plant on site. The cards are aligning for Resgen to dominate the opening of South Africa’s next coal reserve in the Waterberg from targeted first production in 2019.

While securing the commercial terms from

and several over-rail bridges have been

the South African-backed finance syndicate

constructed. However, the company had to

is a significant step forward in terms of

secure the balance to complete construction

completing construction, Resgen has already

and on 8 August Lowe announced the

invested US$200 million into the project

agreement of commercial terms with the

and has laid the foundations to construct

‘debt club’ comprising; Rand Merchant Bank,

the mine. The roads, accommodation and

Noble Group, the Industrial Development

water infrastructure have all been built

Corporation, the Public Investment

Resource Global Network

Corporation and Australia’s export credit

Waterberg coal field,” says Lowe. “The

agency EFIC.

support we have received from the financing syndicate, including RMB, Noble and the two

“This is an extremely important milestone

largest development funding institutions in

towards the construction and commissioning

South Africa has been very pleasing.”

of the mine, which will be the second largest in the Waterberg region and will have a

The funding that has been committed to

marked impact on the opening up of the

complete construction has enabled Resgen

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Resource Global Network to enter into an agreement with Sedgman, a leading provider of mineral processing and infrastructure solutions to the resources industry, for the construction of the coal handling plant at the Boikarabelo mine.

Lowe says Resgen chose to give the contract to Sedgman based on the execution strategy the company adheres to when appointing EPC contractors. Lowe explains the execution strategy; reduce risk on the company through turnkey lump sum contracts, hire experienced contractors with good track records and have the right to recourse in the event of failure or delay – Sedgman ticked all

“The project has become a great example of how the private and public sectors can come together to get a very substantial project like this across the line. The support we’ve had from the IDC, the PIC and Transnet has been exceptional and incredibly encouraging.”

Rob Lowe, CEO

of those boxes. also being considered for the operations and “Sedgman fitted all the criteria in terms of a

maintenance contract for the wash plant and

good track record in the design, construction

for the contract in relation to the ancillary

and operation of coal handling plants across

works programme. “That could limit the

the globe, it has a track record in Africa too

number of EPC interfaces we are having to

which is very important to us,” explains Lowe.

deal with which always a good thing in terms of managing risk.”

The contract will be with Sedgman’s South African subsidiary so it will meet all of

The final factor that led to Sedgman winning

Resgen’s obligations in relation to Black

the coal handling plant contract was the

Economic Empowerment (BEE), which Lowe

value it offered Resgen - a result of the

says was an essential factor. For Lowe,

recent commodity price slump. Having

mitigating risk on the company is crucial as

originally budgeted for a $200 million

the programme for Boikarabelo develops.

contract, Sedgman ended up receiving a $141

Having the expertise of Sedgman clearly

million deal. “In terms of pricing, it really

reflects that policy.

demonstrated that now is the time to build this mine because now is the bottom of the

“The primary driver for me was to limit risk

cycle when contractors are looking for work

on us and therefore to have people who truly

and you can cut the best value deal. That was

knew what they were doing and had the track

reflected in the final price as we were able to

record to prove it and Sedgman ticked all

negotiate a very favourable deal.”

of those boxes,” Lowe says that Sedgman is

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MINING | Resource Generation

ResourceGlobal GlobalNetwork Network 127 Resource

Rob Lowe, CEO

Resgen also announced the second key

with Transnet Freight Rail to construct the

contract recently. Stefanutti Stocks Mining

link from the mouth of the mine to the

Services has been appointed as the preferred

Lephalale-Witbank main line. The rail link

mining contractor and while there are still

represents a vital step in opening up the

a number of details to be ironed out Lowe

Waterberg coal field according to Lowe as

says it further demonstrates the company’s

it proves the region’s viability in terms of

execution strategy for contractors.

transporting product.

“The appointment is in line with our

“Transnet has the expertise and track record

execution strategy to appoint contractors

and is best placed to be construct and own

with good track records and strong balance

the rail link. We have finalised the tariff

sheets and thereby reduce the company’s

that would be payable to Transnet for the

exposure to operating risks inherent in a self-

transportation of our domestic and export

operated mine.”

coal and that tariff is very favourable and one that renders the project absolutely

Another key development for Resgen’s

economical.

project is the finalisation of the terms for the rail link. Resgen are in ‘advanced discussions’

“There has been a lot of scepticism around

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MINING | Resource Generation

Resource Global Network the Waterberg on the basis that it’s too far

the partnership model and what it could

from the port and domestic power stations

mean for South Africa on a wider scale.

and therefore likely to be uneconomic. We have been able to debunk the scepticism by

“The project has become a great example of

agreeing a viable tariff with Transnet so that’s

how the private and public sectors can come

a significant step.”

together to get a very substantial project like this across the line. The support we’ve had

Alongside bringing Boikarabelo into

from the IDC, the PIC and Transnet has been

development, Resgen is also pursuing a coal-

exceptional and incredibly encouraging.”

fired independent power plant at the project.

The company currently has all the main

Lowe is confident that coal will play an

approvals in place for a 240MW IPP including

integral part in the South African energy mix

the environmental impact study, the water

for years to come. He says the country has

use licence and the land use licence and is

such large reserves of coal and too much

on schedule to participate in South Africa’s

existing coal power infrastructure to move

Department of Energy’s second window for

away from fossil fuels at this stage. While

IPP procurement which opens early 2017.

he accepts it is right to have a balance of

South African coal Lowe identified that the first world is no

energy, including renewables and nuclear, in his judgement coal will always be the biggest contributor of electricity to the grid.

longer embracing fossil fuels and has consequently realigned the company to be

With the agreement of the commercial

focused on the host country South Africa. He

terms of the funding Lowe expects financial

says financiers in Europe, the US or Asia are

close by Q1 2017. Following that timeline,

reluctant to fund new coal mines, however it

construction will commence in Q2 2017, he

is a different story in South Africa.

is expecting construction to be completed and the commissioning of the coal handling

“South Africa needs the energy, it needs

plant by the end of Q4 2018, the rail link will

the growth, it needs a good story in mining

be commissioned in Q3 2018, the first coal

and it also needs to create jobs. When we

out of the ground should be Q1 2019 and

came with a South African story, project and

ultimately ramping up to full production in

management team we got traction with the

Q2 2019.

financiers and government stakeholders such as the PIC, the IDC and Transnet very quickly.”

The project is one of the first examples of the public and private sectors collaborating to finance a new mine. Lowe is excited about

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NEW HOPE GROUP A turning point for the company as it builds up production capacity

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MINING | New Hope Group

New Hope Group (ASX:NHG) has had a long history in the Queensland coal mining industry. It started as an underground coal mining company in 1952 in West Moreton, the home of Queensland mining. Washington H. Soul Pattinson (WHSP) became the major stakeholder in the late 1970s investing in a 60% interest.

The company was listed on the ASX in 2003 for an initial public offering of AUS$286 million.

Shane Stephan, New Hope’s managing

to have seen several price

director, explains that having a long-term

cycles.

successful investment house such as WHSP as its major shareholder has encouraged an

New Hope Group has

operations strategy that has brought high

demonstrated an exemplary track

level success since the investment.

record of M&A activity in the last 10 years. It has continually been able to invest

“The company strategy has been one of

capital in projects, push them up the value

holding on to a few core assets to operate

curve and then offload them with significant

and using disciplined capital investment

upside on the initial investment.

to make money buying and selling assets through the cycles.

“WHSP holds 60% of our shares, we are controlled by them and they are patient

“Having a share ownership structure like we

investors and that is definitely a competitive

do provides us a patient capital and therefore

advantage of the firm,” says Stephan.

the ability to see through coal prices better than our rivals.”

M&A

Having pioneered Australian investment in the Indonesian coal industry through New Hope’s acquisition of the Adarro project, it

The coal sector is on a roundabout of peaks

sold its interest for US$406 million in 2005.

and troughs in terms of price and New

The company picked up the New Saraji

Hope’s vastly experienced management

project, located near BHP Billiton’s Saraji

team have been in the industry long enough

open-cut mine in central Queensland, for

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next to nothing and sold its interest, in an

Following the sale of both the Arrow and

exhibition in expert board-level timing, for

Saraji interests, paying tax and paying a large

AUS$2.45 billion in 2008. In 2006, New Hope

special dividend to shareholders New Hope

acquired an interest in Arrow Energy for $48

still had over $1 billion cash in the bank –

million and in 2010 received $650 million for

other more daring firms might have jumped

the same stake. Using the cash in the bank

at any opportunity with that level of capital

New Hope reinvested by purchasing Rio

available.

Tinto’s 40% stake in the Bengalla thermal coal mine for $865 million.

“We have been very patient in holding onto that capital during the downtown. In 2015

The timing of this year’s investment in

we came to a point where we believed the

Bengalla is significant. It reflects the board-

coal price reached unsustainable levels,”

led strategy of investing in a low-cost asset

New Hope formed that view on market

at the bottom of the cycle at the right price.

struggles occurring in China, as well as

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tonnes per annum (mtpa) with room for the domestic situation.

significant upside and it is in New South Wales which Stephan says

Last year over 90% of Chinese thermal coal operations were not making

helps to mitigate regulation risk by being located in a different state.

money, according to Stephan. In New Hope’s opinion that situation was unsustainable and that was cemented in mid-2015 when some Chinese companies were unable to pay the wages or their staff or defaulted on interest

Once Bengalla had been identified New Hope immediately undertook due diligence in mid-2015. The transaction was announced in September last year before being formally completed on 1 March 2016.

payments on their loans.

“In hindsight the timing of that transaction Both Australia and Indonesia showed similar

looks good given the increases in coal prices

negative situations with very few thermal

in seaborne coal prices in Asia since July this

coal projects able to turn a profit in 2015.

year,” currently the spot price for thermal coal sits at US$110 per tonne, when New

“We formed the view that this was the

Hope completed the transaction it was less

appropriate time to start looking for an asset.

than half that around US$50-52. “It is all

We had been looking continuously for coal

about timing, M&A is always about timing.”

assets for sale and what attracted us to Rio Tinto’s Bengalla stake was its position on the

These major investment decisions do not

cost curve,” notes Stephan.

happen by chance. It takes an experienced management team to make those

Bengalla matches the profile of how New

judgements on global commodity markets. In

Hope targets investments. It is a low strip-

addition, the board must have the confidence

ratio mine, it has an existing infrastructure

in the management to back them with

chain, it is producing at around 10.5 million

significant capital in a period when the coal

Resource Global Network a low strip-ratio and is a multiple thin seam mining operation.

The yield - product coal from the raw coal mined - sits at 52% and Stephan says New Hope is acknowledged in the industry as highly proficient when it comes to thin seam mining.

The product from New Acland is transported by rail to New Hope Group’s 100% owned Queensland Bulk Handling (QBH) facility at the Port of Brisbane where it is shipped to industry had

market.

been through five years of decline.

New Hope’s major operating asset has also acted as a key employer in the

“That’s a characteristic of our company, our board is particularly disciplined in making capital investment

local area and injected much-need funds into the local economy.

The mine provides 300 direct jobs for local people,

decisions. We are fortunate that we have

160 contractors and

a lot of very experienced managers that

contributes to 2,300

have seen many coal price cycles,” Stephan

indirect jobs. The

is a leading example with over 35 years’

operations in

experience in the resources sector.

Acland inject

Operational assets New Hope Group is headquartered in Ipswich, Queensland and all its current core operating assets are located in the state.

The flagship project is the 100% owned New Acland mine. Situated just outside the town of Oakey, New Acland is a 5mtpa thermal coal mine, it has

AUS$110 million into

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high standard, experienced people because it is a far better place to live and go home each night to your family rather than fly in/fly out.”

New Hope operate a second, supplementary mine at Jeebropilly in Amberley. It is a thermal coal mine with the capacity to produce 600,000tpa of product. However, Jeeboprilly only has around two years of coal reserves left to exploit and then Stephan says it will have to be closed and rehabilitated.

Exploration programme New Hope’s owned and operated exploration the Darling Downs economy annually and

team have a full schedule to develop the

over $300 million in the broader South East

next mining stage at New Acland and move

Queensland purse each year.

forward with several other targets.

New Hope’s commitment to hiring local

New Acland is currently coming towards the

people and using local businesses has

end of its Stage 2 mining area operations.

ensured New Acland is a significant part

The exploration team has been working

of the local economy and community.

tirelessly on infill drilling around Stage 3

Stephan says the mine’s location, with on-site

areas to strengthen New Hope’s confidence

workers able to live in Oakey, also delivers a

in the geological models and provide a

competitive advantage.

platform to submit a successful application to the Queensland Government to move to

“We have been able to attract and retain very

the Stage 3, which is currently progressing

ResourceGlobal GlobalNetwork Network 139 Resource through the approvals process.

its development options for the project. In 2011 New Hope sold 10% of the project to a

“Over the next six months it is very important

subsidiary of the Taiwanese group Formosa

for us to obtain the mining lease for Acland

Plastics.

Stage 3,” particularly to ensure there is a smooth transition to Stage 3 with Stage 2

A major interest for New Hope in terms

reserves due to expire in mid-2018. Stephan

of exploration in the next six years is the

is expecting Stage 3 production to commence

tenements it holds in the North Surat region.

in mid-2018 and maintain production levels.

Stephan explains that the company has a series of land holdings which total 1 billion

New Hope is pursuing two prospective

tonnes of open-cut thermal coal. It is a huge

projects at Colton and Lenton. Colton is a

potential resource.

small coking coal project near Maryborough at which New Hope currently have a mining

However, currently there are two key barriers

lease application pending, New Hope’s MD

to entry for any company aiming to develop

is targeting approval on that in the next 12

projects in the North Surat. Firstly, there

months. Lenton is a combination thermal-

isn’t the existing infrastructure to transport

metallurgical project with an existing mining

product from the region and secondly New

lease and New Hope is currently evaluating

Hope is of the opinion that the market is not

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MINING | New Hope Group presently demanding such an influx of product.

“The missing link [in the North Surat] is a rail link of around 210km to link rail from Wandoan in order to get the coal out of the North Surat through the Gladstone port,” Stephan explains. throughout “We believe that the market will demand

the downturn

that coal around 2022. In about six years

has been on

from now we believe that Asian thermal

limiting off-site

coal markets will be demanding that coal.

costs. That includes

We have done a concept level study and will

operational expenditure

be working through pre-feasibility studies

on water, power and rail

looking at how to develop these projects,

transport and amounts to 50%

probably in a joint venture with others.

of New Hope’s total costs.

“Our focus is on nearer-term development

The cost of transporting the product

projects and bringing them up the value

by rail has big implications for New

curve, in particular getting the approvals.”

Hope’s operational expenditure. It

The mining downturn

faces two charges, ‘above rail’ costs which it pays to the rail service

The mining industry has faced severely

provider Horizon and ‘below

depressed prices across the board in the

rail’ costs which is a regulator

last few years and the coal price has been

charge to Queensland

in decline since 2011. To maintain a strong

Rail. The Queensland

balance sheet throughout the downturn

Competition Authority

New Hope focused on a cost mitigation

recently refused

programme for both on and off-site costs.

to approve the Queensland

The company began with reducing the number of staff and in addition decreased the number of operational hours worked at the mines. This helped in both reducing costs and improving efficiencies.

Stephan explains the major focus

Rail’s

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Bridgeport is currently producing from its assets in the Cooper, Surat and Otway basins at a rate of approximately 215,000 barrels per year. The company has overseen significant expansion since the takeover and proposal

Stephan says that trend will continue.

to hike up below rail charges and Stephan deemed it a major success for the

“We will continue to grow the organisation’s production base organically and through small bolt-on acquisitions. We would like to get production in excess of 500,000bbls p/a.

company.

“Ultimately it is our hope that Bridgeport will As New Hope manoeuvred

get to a size where it can be the master of its

the coal price downturn it made

own destiny and potentially we would look at

a shrewd investment in Bridgeport Energy in 2012. It was a move to diversify the company into the oil sector and reduce exposure to the suppressed coal market.

an IPO.”

Open to innovation While New Hope is controlled by a patient, long-term focused board, the management are not afraid to implement new techniques

Stephan says he was attracted to Bridgeport because the

at the mine to carve out a competitive advantage in the market.

management team in place and the way the company was run, focused on low overheads and a low breakeven

Stephan has implemented a series of innovative solution trials at the Acland mine and it became the first coal mine in Australia to successfully use a machine surface miner after the solution was suggested by a member of the project team.

point, The second major innovation is the current trialling of a natural gas-powered pull truck at the mine. While natural gas power is in use around the word in civil activities such as local transport, Stephan doubts any other

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MINING | New Hope Group

but enough that you are able to keep ahead of your competitors.”

Timeline mining operations have trialled natural gas as a fuel in a surface haul truck.

“Most of our idea by the workforce a and come up thro they are not im the top d Shane St managing

Stephan has ambitious plans for New Hope Group in the next 10 years. He is aiming to have upgraded all the aspects of the current portfolio as well as making new additions through exploration. The primary task will be to push New Acland onto Stage 3 mining

“Most of our ideas are

– a move that will increase its production to

generated by the workforce

7.5mtpa. In that time Stephan also expects

at the mine sites and come up through the ranks, they are not imposed from the top down.

“We have a culture of

Colton and Lenton to both be in commercial operations and Bridgeport will likely be separated from New Hope.

In terms of exploration objectives, New

trialling innovations and

Hope is the second-largest landowner in the

being fairly brutal

Ipswich region and will look to develop and

with the evaluation of those

monetarise some of its estate, it will also progress the huge resource potential in the

innovations.

North Surat.

Not all of them work

In addition, New Hope is discussing incremental expansions for Bengalla.

Current production is around 10.5mtpa but the mine has the approvals to operate at a total capacity of 15mtpa. As a 40% stakeholder New Hope does not control the asset but does wield influence in the management of the joint venture.

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Stephan as are generated is very at the mine sites confident ough the ranks, about how the way the company mposed from has been managed down.” over the past few years tephan, will set it up to dominate g director the Queensland resources sector for the next 10.

“We have the balance sheet because we have cash at bank and no debt, we have the financial capacity in place to expand, we have the people in place with the competency to build new mines and we have the site workforces to be able to operate them as well,” explains Stephan.

“New Hope is in a great position to take advantage of this current price spike. But we are really looking for an increase in demand out of other Asia [outside China]. This current price spike is being driven by supply constraints in the domestic Chinese market.

“We would like to see increased demand out of the other Asia; Japan, the Philippines, Taiwan and South Korea. There is a lot of new-generation thermal coal power stations being built in those countries and that is what we are looking to as the trigger to increase our investment.”

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MINING SERVICES | RUC Cementation Mining

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RUC Cementation Mining

All the answers are underground for this mining contractor

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MINING SERVICES | RUC Cementation Mining

The mining industry, particularly the companies servicing major miners, has finally navigated what appeared to be an extremely severe downturn in metal prices. Many mining services providers were forced to shut down operations and go to the banks to stay afloat.

The sharp price downturn sent shockwaves through the sector and it took a combination of prudence, frugality and quality of deliverance to ensure a future beyond the downcycle.

RUC Cementation Mining, led by managing director Barry Upton, did exactly that. Having guided the company through the worst times in mid-2014 the underground miner is now set to embark on a period of 35% growth year-on-year until 2020.

RUC is a diversified Australian underground mining contractor which provides turnkey underground solutions including; raise drilling, shaft sinking, underground construction, mechanised mining, and specialist ground support. Upton says the company is a full service, full supply, selfperforming contractor.

The private company has an extensive project portfolio which spans Australia and several countries across the Asia-Pacific region. RUC

Resource Global Network has established a reputation for excellence in the delivery of its work, ensuring complex projects are completed on time, within budget and taking responsibility to make sure the work is of the highest quality.

However, this reputation did not come about overnight, RUC first came to Australia in 1991 and has spent the last 26 years building its profile.

Expansion beyond borders Upton joined the company in 2006 with the specific ambition to expand the company’s offering into mechanised mining. RUC continued to pick up contracts with a number of the big players in WA for a variety of projects and then in 2009 it entered an exclusive arrangement to sub-contract to Gammon Construction on a civil construction project in Hong Kong and that was the birth of the major international expansion of RUC Mining.

It wasn’t long until operations had spread to Mongolia by 2010 and then by the end of that year RUC had been contracted to work for one of the world’s biggest mining companies Freeport McMoRan, through its subsidiary PT Freeport Indonesia at the Grasberg complex in Papua.

Having picked up some raise boring work with Freeport, RUC then bid on the tender Freeport issued for a turnkey project to excavate, equip and construct the Grasberg block cave service shaft – playing a major role

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MINING SERVICES | RUC Cementation Mining in production at one of the world’s true super mines.

“It was a fantastic project for us and we finished in December last year,” says Upton.

“By that stage we had works in Mongolia, Hong Kong, Indonesia and the core business in Australia, which was still principally raise drilling and shaft sinking.

“However, when we lost the Newmont Callie Shaft Expansion project contract due to the project cancellation, I appealed to our client in Indonesia for more work which ultimately led them to give us an opportunity in the permanent ground support area.”

RUC’s involvement at Grasberg continued to grow and the company now operates with more than 650 employees on the books with Freeport.

In the meantime, it was not all plain sailing.

With many parts of the business going well, RUC’s order books were torn to shreds when the commodity price downturn began to bite.

Upton says that at the lowest point in mid-2014 turnover fell to just $2.5 million one month. That was when the business reorganised, rebranded and began to lay the foundations for the prospering mining contractor we see today.

Weathering the storm “At the low point of our business in July 2014 we did a number of things; we reorganised our overheads and our business

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MINING SERVICES | RUC Cementation Mining structure, we established a head office in

Resources contracted RUC to undertake work

Perth and unfortunately there were a lot of

on the Karari underground operation at its

redundancies,” observes Upton.

Carosue Dam mine.

“We also decided to invest in a rebranding of

Those two projects as well as the continued

the business with the stated goal of making

work at Freeport really brought RUC back

the market more aware that our offering

from the precipice of mid-2014, culminating

wasn’t just a shaft sinking and raise drilling

in the recent announcement of winning

offer.”

a $200 million contract to carry out underground mining at Dacian Gold’s Mt

RUC was able to do that thanks to the

Morgans project in WA.

portfolio of work it had built up with Freeport - it had a strong story to tell and to sell. At

“On the grounds of those two projects

this time there were two major turning points

principally we then elevated ourselves to a

for the company.

$132 million turnover for FY2016. I suppose the fact is that the work we were doing at

Firstly it won a jumbo development contract

Karari became our advertising point and

with Panoramic Resources at its Savannah

innovation point of reference for all the other

mine and shortly after Saracen Mineral

work we have tried to win,” explains Upton.

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“Then the Mt Morgans contract for Dacian is really the consolidation of all the efforts we have been putting in particularly on the Karari site, but more generally across the business in terms of rebranding, engaging innovation and improving our quality, safety and performance.”

With Upton’s mantra that without anything on the order book you can’t survive, the Dacian contract will underpin the business for the next three years.

Upton can now maintain capability and capacity and will continue to drive productivity through engaging with innovative solutions and new ideas on the Dacian contract.

“The work we were doing at Karari became our advertising point and innovation point of reference for all the other work we have tried to win.”

Barry Upton, MD

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MINING SERVICES | RUC Cementation Mining His target is to achieve 35% year-on-year

back to their families each night and also so

growth for the next four years based on

the company can maintain its commitment to

the work that is either secured or on the

quality of service.

horizon, not accounting for any organic growth in that time. That trajectory would

Firstly, the physical risk of working with heavy

be a continuation of the increase in revenue

machinery and on hazardous underground

RUC has experienced since posting revenue

projects is taken with the utmost care. RUC

of $78 million in FY2014. The following year it

adopts the same rules and procedures if it

increased to $88 million, in FY2016 revenue

is working locally in WA or further afield in

hit $132 million with Upton expecting FY2017

Indonesia and Mongolia.

to reach $170 million.

Then there is the commercial risk to the The Mt Morgans contract will play a crucial

business of taking on a new contract. RUC

role in achieving those numbers this year and

typically operates on a cost reimbursable

going forward. RUC mobilised on the project

basis internationally where the company is

rapidly, signing the letter of intent on April 10

incentivised for performance over and above

and by May 28 had achieved 95m advance.

Managing the risk The very nature of RUC Mining’s work comes with a number of risks that have to be managed to make sure all the employees go

“The most important aspe quality of the work we d

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ect of our business is the do. Quality lasts forever.”

RUC Mining’s reputation is something the company has concentrated on building up throughout its existence and it transcends all areas of the business.

a base fee, but the entirety of the domestic

“The most important aspect of our business

work portfolio is on a full schedule of rates

is the quality of the work we do. Quality lasts

basis.

forever, we have a saying ‘the bitterness of low quality remains long after the sweetness

Working on a cost reimbursable basis

of low pricing has gone’,” Upton says.

however brings a reputational risk, Upton says you have to adopt the approach

“We don’t plan to be a low cost, low margin

and philosophy that it is still a fixed price

business we plan to be a high performance,

contract and to do that through superior

high, quality, reasonable margin business

performance.

and if we make a higher margin based on our performance that’s what it’s about because

RUC has proven its ability to provide the

then everybody wins. The Mt Morgans

highest quality service highlighted in the

contract was won more on what the client

fact it has never resorted to litigation or had

saw in the site visits they undertook rather

a case brought against it in the 25 years in

than on a price alone basis.”

Australia.

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MINING SERVICES | RUC Cementation Mining

Key innovator Upton has championed the cause of innovation at the projects RUC Mining is working on - he sees an opportunity to differentiate the company in the market - turning out to be transformative for the industry in some cases.

RUC has invested heavily in digitising wholeof-mine and whole-of-fleet tracking for the Karari operations which gives the contractor full real-time visibility of all the underground assets and Upton says it is the first project in the world to do that in a 3D environment.

“We pushed the limits in terms of engaging new technology. The whole Minetec proposition was done on our back, sometimes you don’t want to be first but in this case we are and we think that has created a step change in the operating environment,” asserts Upton.

“As part of the Minetec proposition we are now at the point where we are doing task allocations directly to the plant item throughout the shift where the operators can log the task and we get instantaneous reporting. Overall that could be a 10-12% productivity gain.

“We are very keen to engage technology.

Innovation is an interesting word for it, because we are not necessarily inventing anything we are just finding new ways to apply technology for advancement.”

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Reliability is paramount Referring to Upton’s focus on quality over cost, the companies in RUC’s supply chain are a clear example.

In terms of large equipment suppliers, RUC uses the major players in the industry such as Atlas Copco, Westrac, Sandvik, JCB and Normet and Upton takes into account reliability, performance and technological advancements on offer for each company.

In addition, the support of companies such as Silverise, Westland Autos and Fero Group is crucial in various areas of operation.

RUC’s nature as a 365, 24/7 business means the reliability of the service is paramount.

Upton says that reliablility is what he looks for first, in return RUC will show loyalty and commitment to its suppliers on a long term basis which can in turn lead to priority service during breakdown situations where a provider may have a conflicting demand.

“I think we are a very loyal client and have been to most of our suppliers for a long time.

We’ve also remained loyal to Kalgoorlie, even though we moved procurement to Perth, we kept Kalgoorlie regional suppliers.

“We could save a little bit of money by shopping around but I think loyalty and support and service is much more important than a few bucks here and there.”

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MINING SERVICES | Basil Read

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BASIL READ An established best-in-class contractor based on safety and productivity

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MINING SERVICES | Basil Read

With a history stretching back to 1950 when Basil Leonard Read launched a small construction engineering company in Boksburg, South Africa, Basil Read has now firmly established itself as a best-in-class provider of construction and mining services across Southern Africa.

Spanning six divisions, Basil Read has built up a reputation of quality, expertise and safety in the delivery of any major project, ABN speaks to acting CEO Kathutshelo Mapasa to take stock of the company’s success and find out what is driving the next growth cycle.

Basil Read implemented a strategy to bring the group of companies operating in different sectors under one name with a number of divisions. In the construction sector, it has completed major projects predominantly for South Africa’s large public entities, laying thousands of kilometres of roads for the South African National Roads agency. It has also undertaken several civil and pipeline projects for Eskom on power plants across the country.

The developments division is building cities from brownfield sites in Cape Town and Johannesburg, as well as being involved in constructing schools in partnership with the National Education department.

These include major new districts such as

Resource Global Network 163 Resource Global Network Savanna City, comprising 18,000 new houses, and Malibongwe Ridge an extension of Johannesburg’s Cosmo City.

A recent major accomplishment was the construction of an airport on the island of St. Helena, a remote landmass in the Atlantic Ocean. Mapasa says undertaking a project with such logistical challenges was a strategic success for the company and will stand the firm in good stead as it seeks to demonstrate its capabilities and replicate such projects across Africa.

Finally in the mining industry Basil Read has been heavily involved in some of subSaharan Africa’s biggest resources projects.

In this area Basil Read operates as a mining services provider, with the capability to run the entire contract mining side of a project.

That includes the whole mining value chain from drill and blast to upfront mine designs and mobile plant optimisations.

Basil Read is currently working on major projects across Southern Africa in a range of different minerals. In South Africa, there is a business partnership with De Beers Consolidated Mines for the Venetia and Voorspoed projects to mine diamonds.

In Botswana, the company is playing a fundamental role in the construction of the Cut 8 Phase 2 project for Debswana’s Jwaneng mine. In addition Basil Read is working with a variety of blue-chip, tier-1 mining companies throughout sub-Saharan Africa bringing major projects to fruition.

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MINING SERVICES | Basil Read

The mining services sector in Southern Africa is extremely competitive and the recent commodity downturn has forced contract miners to streamline and demonstrate to the market specifically how they can reduce operating costs and improve profits in order to continue to win contracts.

Mapasa says Basil Read has differentiated itself in the African contract mining industry through two key factors; safety and productivity.

Firstly, when it comes to safety Mapasa sees it as an essential licence to operate. He identifies that clients place such importance on a strong safety record that he has implemented systems to place Basil Read as a best-in-class contractor when it comes to keeping employees safe – it also has a huge

bearing on a company’s potential revenue.

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SA has historically suffered from numerous

performance point of view, to the point

fatalities across its mining operations. While

where we find ourselves leading the client in

the number has been drastically reduced

terms of safety.

from the multiple hundreds per year to around 70, the mining ministry retains

“We’ve got proven systems from a safety

the power to shut down operations until a

point of view which means the client actually

company can prove it can safely operate a

depends on us and they are comfortable that

mine. That is a huge worry for a company

when they outsource a service to us we will

as it can have a multi-billion-rand impact on

actually improve their safety performance.”

revenue and therefore selecting a contractor with a focus on safety performance is a

The ability to provide a safe service also relies

priority.

on Basil Read’s supply chain providing the highest quality equipment. Particularly major

“When companies go to outsource contract

global players such as Komatsu, Liebherr and

mining they need to be able to rely on a best-

Atlas Copco ensure all of the Boksburg-based

in-class safety operator before they even

company’s contract mining is using the best

talk about the cost of the service and that is

machinery.

where we come in,” asserts Mapasa.

The second key plank to Basil Read’s “We believe that Basil Read as a contractor

offering is what it can bring in terms of

probably has leading statistics from a safety

boosting a project’s productivity. Mapasa

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MINING SERVICES | Basil Read

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portrays the service as an ability to bring a

we are delivering and in turn the productivity.

lean manufacturing concept to any project

It comes down to productivity and we have

and reduce the unit costs by, for example,

delivered in that space.”

increasing the amount of tonnage or the final product delivery.

Mapasa declares that while Basil Read is not often the cheapest bidder at the tender

Basil Read has demonstrated its effectiveness

stage, it’s the company’s track record in safety

in this area at Vedanta’s Skorpion zinc project

and productivity gains that sets it apart and

in Namibia. With the project’s economics

normally leads to repeat contracts. He cites

putting it in the highest cost quartile,

a recent tender for a project in Botswana

Vedanta approached Basil Read with a view

where Basil Read came third in terms of cost

to bringing operational costs down and a

but its history of delivering projects on time,

challenge to push the project into the second

on budget and safely gave it the advantage

quartile of the cost curve.

over the competition.

“We were able to demonstrate that and now

Traditionally, the South African firm has only

the project has been in operation for three

occupied the contract mining space however

months and we have shown what we are

things are starting to change on that front.

made of,” says Mapasa. “I was on site recently

Mapasa is targeting a full turnkey offering

and the client is very satisfied with the costs

for future clients, using its experience and

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MINING SERVICES | Basil Read

expertise to branch out the contract services

put a particular strain on mining services

and act as a long-term lifecycle partner for a

providers. Clients were tightening their belts

sub-Saharan mining project – illustrated by a

and either looking for value on a contract

deal signed with Shumba Energy to develop

or improved returns on existing costs. Basil

its coal projects in Botswana.

Read had to find ways to reduce its clients’ costs so they could remain profitable in the

“We signed an agreement with Shumba

depressed market.

Energy who came to us and said for them to raise money in the market they need to

Mapasa led optimisation programmes across

work with a reputable contract miner to take

the operations bringing reductions in costs

the project from design and put together a

through productivity improvements. He

feasibility study with them so when they are

says, “We were able to move more materials

ready for funding it’s on the back of reputable for the same fixed costs through improving players in this space. It is another feather in

our shift change and enhancing our plant

our cap.”

equipment availability.”

The commodity price crash which savaged

Anglo American CEO Mark Cutifani has

the global industry over the last few years

suggested for a mine to be operating at

Resource Global Network

optimal efficiency, mining trucks should be in

engineering and development firm, Mapasa

operation at least 6,000 hours per year.

sees big opportunities to establish Basil Read as a market leader in the growing African

Mapasa took that figure as a benchmark

mining services sector.

for efficiency and now Basil Read has been able to demonstrate at least 6,000 hours

“We will continue to pursue our blue chip-

per truck per year - a clear reflection of what

type clients, we are looking to expand on

the company can do in challenging market

those relationships and see where that

conditions.

takes us. We have a very aggressive growth strategy in that sense,” Mapasa exclaims.

With commodity prices steadily returning across the board so too is the flow of capital

“We want to exploit the growth opportunities

for new projects and expansions. Basil Read

in the mining business in Africa. “

is targeting a position as the go-to partner for any new mine construction in sub-Saharan Africa.

While it will remain a diversified construction,

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MINING SERVICES | Goodline

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MINING SERVICES | Goodline

Goodline is the locally-owned company that supports Australia’s mining industry through providing some of the country’s highest quality construction and maintenance services. Established by John Kennedy in 1999, Goodline has grown to become an integral part of the country’s biggest and most-productive mines.

Operating out of three divisions in Weipa, Darwin and Port Hedland the company, which prides itself on its safety and quality record, has completed projects for Rio Tinto, Fortescue Metals Group, BHP Billiton, Santos and has recently completed a major contract for Royhill.

relationships with ongoing projects and unique mine-specific knowledge have seen either a rush to the administrators as bankruptcy looms or had to strip back so much of the workforce that the skeletal remains cannot maintain anywhere near the same level of quality and contracts begin to move elsewhere.

“I don’t think we changed anything, a lot of people talk about what they changed to remain in the market today. It wasn’t about change for us because we had generally conditioned ourselves to remain sustainable in good and bad times, John [Kennedy] and the business always maintains an approach to continuous improvement, be multidisciplinary and pursues diversity,” says Dwayne Finch, Goodline’s general manager and Kennedy’s right-hand man.

Finch stresses that there is no job too difficult

While the mining industry as a whole has

for Goodline and it is through flexibility and

been at the whim of dwindling commodity

resilience that the company continued its

prices for the last few years, mining services

success through the mining downturn.

companies have found it particularly difficult. Those without long-term contracts,

Resource Global Network For Goodline the challenge was to remain

Goodline has a wealth of experience working

competitive despite falling commodity prices

on a number of Australia’s most influential

driving down profits across the board. One of

resources projects. The relationships it has

the key areas is in cost, however, by reducing

built with the majors served the company

wages to such an extent you can expose

well as the industry began to shrink and

yourself to competitors with higher wages

work dried up.

poaching the residual intellectual expertise in the workforce.

According to Finch the company has been able to service such projects thanks to

“It was important to us to make sure we

the key values and attributes that the

keep that core workforce going because

management has endeavoured to instil

that is where you get the real DNA and

throughout the company.

culture of the business in operation and you have to maintain that to keep performing,

The business prides itself on its ability to

time served is a real ingredient of culture,”

provide a multi-discipline service to projects,

explains Finch.

in doing so engaging synergies in having one company complete multiple functions. In

“The real cost advantage is that you must be

addition, Goodline has an impeccable safety

market competitive in terms of your hourly

record across the projects it has worked

rate, however it is also about performing

on and it ensures that it provides stable

on site and then having the right skillset

and safe facilities for contractors and staff.

in the business that when you work on

One of Goodline’s key differentiators in the

site you keep your resource levels low and

market is that it offers a 24/7 service at the

productivity high.”

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MINING SERVICES | Goodline

to support our customers business, we are highest level of management. Finch says, “We are available at any time, if you want to

only a call and or plane flight away.�

get onto John, myself or anyone one of our

Recent projects

people to provide assistance, we will be there

Based on those lengthy relationships with

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Australia’s tier 1 mineral producers, Goodline

contract Goodline serviced at the Pilbara-

was able to contract work throughout the

based Roy Hill iron ore project.

downturn. While it completed some big shutdowns for the likes of FMG and BHP

After completing major projects in Port

Billiton and continued to work on contracts

Hedland port for BHP and FMG, Goodline had

for the local government, the primary project

an opportunity to take over the Roy Hill Port

workload over the last 12 months was the

construction during a difficult period.

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FP

ResourceGlobal GlobalNetwork Network 181 Resource

“Goodline has previously worked on the Roy

Finch is keen to emphasise the significance

Hill project and is familiar with the overall

for Goodline working on a project of this

construction schedule. We look forward to

magnitude, Roy Hill is expected to cost over

working with them,” Samsung said at the

AUS$10 billion overall. Being contracted for

time.

all the structural, mechanical and electrical installation works for the port as well as

Goodline were engaged by Samsung C&T to

completing substantial packages at the mine

construct and commission the Port facilities

was a fine demonstration of Goodline’s ability

package 3 - Area B and Area C, the works

to operate in a multi-discipline approach.

primarily consisted of multiple conveying

The project also demonstrated Goodline’s

systems, a re-screen/surge bin station,

capabilities in terms of hiring labour and

transfer and sampling stations and three

mobilising a workforce, “We had a workforce

balance machines, two stacking and one

that peaked at just under 1,500 across the

reclaiming.

project. We had to mobilise that workforce quickly as it was a 12-month delivery for both

“In addition to covering all SMPE&I scope

port and mine operations,” explains Finch.

activities at the Port, we completed detailed civil earthworks and a magnitude of E&I

Following Goodline’s successful delivery

scope at the mine, we spent a combined total

of the contract at Roy Hill it has continued

in excess of 1.83 million man hours on the

to win new business from the project,

project, with an impeccable safety record and

predominantly on smaller scale project

handed over each system prior or upon the

packages in the mining area.

milestone date,” says Finch.

182

MINING SERVICES | Goodline Another key area of work undertaken by

Townsville into Weipa, they also carried out

Goodline in the last year was the pioneering

the piling activities for us.

marine package it secured with Rio Tinto at the Amrun project. Finch says that while this

“We typically don’t sub-contract work on site,

is not Goodline’s core area of expertise the

this was a bigger step for us as a company,”

company used its experience in the industry

explains Finch.

to make it work.

Finch understands the crucial role that He says the only real difference in their

Goodline’s supply chain plays in ensuring

approach was that they sub-contracted out

it can deliver high quality and safe contract

a larger portion than they typically would for

work. He says Qantas is a key company they

the marine project.

work with in terms of moving labour around the country, as its one of their largest spends.

“Our marine partner was PMG Group out

Goodline also supports local business in the

of North Queensland. They supplied us

area they operate out of. Goodline always

with the marine fleet to transport rock from

Resource Global Network

engage local suppliers and providers as much

Two of our major operations at Weipa and

as possible, generally the local hardware

Port Hedland have blast and paint systems

supplies.

installed and we are the only remote EPAcompliant business available in those two

Looking forward, Finch says the key priority

regions.

in the near future is to continue to grow the multi-discipline elements of the company.

“We are typically moving forward every day in a more challenging environment. It’s

“We want to gain more diversity, expand

important to get synergies and to get people

our workshop and service operations and

on the ground to do the jobs at the lowest

be more multi-disciplined in the shutdown

cost in a productive and safe environment,

space. By that I mean we are continuing

we have good people providing a good

to grow our services to include protective

service to our customers, this is in every facet

coating, scaffolding and access within our

of the business, the skill set is high and the

regions of work, we are also performing

DNA is strong.”

conveyor belting services for Rio Tinto’s bauxite operations in Gove and Weipa.

“We have spent a lot of money on the business, improving our fleet and operations.

All the operations have had add-ons to them.

183

184

MINING SERVICES | ELB Engineering

Diversifying the engineering company to prosper through the mining downturn

Resource Global Network 185

ELB ENGINEERING SERVICES

186

MINING SERVICES | ELB Engineering

ry u nt an e c p h 0t com Jo 2 he the the u t of hed on foc s y lis ted tly a d ab lis an jec y rl est as in pro . a e ho w dom ial cts e p th , w rou pre str oje o u pr t an G is d k n ac tem ELB any nd i urce b a e s p , a so B n h i m L ig rd 51 T co tion al re r o a i e ti s dw n 19 f th ficia ent es er, E nd i m o ene nflu c ra nd h a ar ls b st i t up fou owt ring era mo o Gr f its gr inee min ca’s LB t o ady ng for fri E e igh ste e e on th A h T res d Th ati ou fo joye LR). par f S en E:E y se e o (JS avit som gr le in ro

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Resource Global Network 187

188

MINING SERVICES | ELB Engineering “ELB Engineering Services has the capability

dramatically reduces the clients’ exposure to

of offering the mining and minerals,

risk as there are far fewer interfaces on an

industrial and power sectors total turnkey

already-complex project.

project solutions,” says ELB Group CEO Dr Stephen Meijers.

The secondary benefit is that ELB develops specific project knowledge that results in

“We provide total turnkey solutions using

efficiencies as it moves through the project

world class technology partners on an

stages – instead of a new company having to

exclusive basis. By getting the best-in-breed

come in and learn the unique challenges on

in the world, with the best R&D going into

any project.

the technologies, we provide world class solutions to our clients.”

“Everything from the technical risk to the execution risk, the relationship and financial

One of ELB’s key differentiators in the market risk is all controlled under one roof. There are is the way it applies the total turnkey solution efficiencies because we take responsibility for approach to the projects it works on. The

the overall price of the project and there are

company provides solutions for every stage

not ‘profits put on profits’,” explains Meijers.

of the construction and implementation cycle of a project.

“From a schedule point of view, from a financial point of view and from an interface

It provides services for the design on

point of view our model is definitely a

structural, civil and electrical stages, ELB can

differentiator. It takes all the pressure off the

do ‘anything a project requires’ says Meijers.

client. They can have a smaller management team and we get to liaise directly with the

ELB designs the product, has it fabricated and delivered on site. Then its construction

owners.”

subsidiary provides a full suite of

Major projects

construction services including mechanical,

ELB Engineering Services has a vast portfolio

structural, electrical implementation and

of completed projects. The company has

manages it all the way to commissioning.

experience on a truly broad range of projects, providing innovative technical solutions

“It is a very unique offering. I would say there to facilitate cross-industry production, is not another South African competitor

processing and engineering.

which has that full offering. That is one of our main differentiators,” notes Meijers.

One of the major projects ELB is currently working on is the coal and ash handling

One of the key benefits of a single firm

package for Medupi power station. The

providing the total solution is that it

Medupi power station is an Eskom facility

Resource Global Network 189

“I think the most important thing around business survival today is the strength of the balance sheet to get you through the tough times.�

Dr Stephen Meijers, CEO

190

MINING SERVICES | ELB Engineering

Dr Stephen Meijers, CEO

ResourceGlobal GlobalNetwork Network 191 Resource

which ELB has been contracted on since

overland conveyors, standing at 26.9 km in

February 2010. The engineering firm’s role

length. The conveyor was part of the overall

on the project entailed the design, supply,

contract to commission the Impumelelo Mine

erection and commissioning of the terrace

Materials Handling System, which comprised

coal and ash handling facility comprising 54

seven conveyors with a total length of around

conveyors of various lengths.

30km.

“It is one of the largest coal-fired power

“It is a great project and it broke all records

stations in the world. We have been on the

in terms of length and the ability to start

project for seven years and we have another

material conveyance,” says Meijers.

two and half to go. It is a really significant project for us, at the time it was the biggest

ELB has just been contracted by Vedanta

materials handling project in South Africa.”

Zinc for Black Mountain Mining Company to supply the full processing plant,

Another of ELB’s flagship projects recently

infrastructure, all power connections to the

completed was the Impumelelo overland

grid and the supply of water from 40km away

conveyor for Sasol Mining. ELB constructed

for the new Gamsberg zinc mine.

one of the world’s longest single flight

Resource ResourceGlobal GlobalNetwork Network 195

The mining downturn

we had to diversify. We looked at where we

The collapse of commodity prices in the last

could apply our engineering and project

couple of years has forced industry-wide re-

management skills and FMCG suited us best.

evaluations. ELB was no different, although it has shown real agility to refocus its expertise

“We saw a niche market where we could

and experience towards the fast-moving

tie-up with international food and beverage

consumer goods (FMCG) industry.

process suppliers and with our local capability of detailed engineering, electrical

Meijers and his team identified that the

installation and our construction we knew

FMCG sector could provide to be the perfect

we could provide turnkey solutions for that

solution to the dangers of volatile resource

sector and we have been highly successful in

prices.

the last two years in that space.”

“Because of the downturn in commodity

ELB has been awarded some major projects

prices and the demand basically disappearing

by the big players in the FMCG business.

Resource ResourceGlobal GlobalNetwork Network 197 It completed the Nestle Egron 5 Estcourt

ore, coal and platinum, start to move in the

Project in KwaZulu-Natal.

coming months.

Alongside the diversification into FMCG,

“I think it could be largely driven by a demand

Meijers has also led ELB into two other

pull where supply has reduced in terms of

external markets. The first growth area was

capacity, as soon as we see that we will see

the ‘stay in business’ sector. This involved

new projects, but I still predict another 18

working with mining companies which were

months of hard times.”

employing new technologies in order to improve efficiencies, essentially cutting costs

Meijers is targeting continued growth in ELB’s

enough to placate the price downturn.

power and FMCG divisions while at the same time expanding the business into Africa as a

The second external market for

continent.

diversification moved away from mining and minerals and into the small package plant

In terms of his ambitions in the mining sector

power sector. Meijers says this is an area

Meijers wants to win contracts for another

that he wants to get more involved with, “We

one or two large projects in the next 24

focus on biomass boilers generating power

months to balance the business across the

up to 25MW and we hope to land our first

three sectors.

project in the next two months. We also moved into the 2-10MW gas turbine market.”

“We know where the projects are and it is critical that by 2018 we have an even

Meijers adds that it was the residual

stronger balance sheet than we do now.

expertise that existed in the company that

We need to make sure that when the next

enabled it to smoothly transition between

downswing comes the balance sheet can

sectors and still retain the quality of solution

carry us through again.

that it provided to the mining sector.

“I think the most important thing around Throughout the mining downturn ELB

business survival today is the strength of the

Engineering Services maintained a solid

balance sheet to get you through the tough

revenue stream by diversification into

times.”

different industries and Meijers says he is beginning to see green shoots in the resources sector.

“It is definitely not like it was a year ago. The zinc price has been increasing but I think you will see some other commodities: iron

200

APPOINTMENTS & EVENTS

APPOINTMENTS Keith Spence to become Santos chairman in February 2018 Australian oil and gas giant Santos has revealed that Keith Spence will succeed Peter Coates as chairman of the company in February 2018, after the latter announced he would step down in May. Spence has over thirty years of know-how in the industry, serving senior executive positions with Woodside Petroleum and Royal Dutch Shell.

“I am honoured to be appointed to the Santos board and succeed Peter as chairman,” said Spence. “Peter has worked tirelessly with Kevin Gallagher and his team over the past two years to turn Santos into a less complex and more resilient company.”

GE appoints new executive for Australia and NZ wind business GE Renewable Energy has appointed Steven Oswald as new country executive for its wind business in Australia and New Zealand, on the back of a strong year across the sector.

Oswald brings a deep understanding of GE’s wind operations in the region, having been a part of GE across several roles since 2008.

After his appointment, Oswald said: “GE has a strong track record of successful project delivery and wind farm operations in Australia. My focus will be to ensure that we continue to bring world-class technology and solutions for our customers.”

Women in Mining UK appoints Calliope Lalousis to newly created committee Female mining advocacy body Women in Mining UK (WIM UK) has elected Calliope Lalousis to lead its newly created partnerships and finance committee. In her new role, Calliope will lead the team that manages WIM’s existing strategic partnerships with global mining giants Anglo American, Glencore, and Rio Tinto, as well as any new partnerships.

Calliope is a Registered Professional Engineer of Queensland (RPEQ) with an MBA and has considerable experience delivering mining projects around the world.

Simon Thompson to assume chairman role at Rio Tinto Rio Tinto Rio Tinto has chosen Simon Thompson as its new chairman, replacing Jan du Plessis who has served the position for almost nine years.

Working across five continents in the mining and metals industry over 20+ years, Thompson will bring bounds of executive experience to the position at the world’s second largest mining firm by market cap.

Thompson said: “I am honoured to accept this role and to succeed Jan as chairman. Rio Tinto is in great shape, with a strong management team, world-class assets and a successful strategy.”

Resource Global Network 201

EVENTS Our pick of the top mining, oil & gas and renewable energy events happening around the world in the months to come

Investing in African Mining Indaba February 05-08 Cape Town, South Africa January 29-30 Glasgow Scotland Wind O&M EU 2018 February 13-14 Munich, Germany Energy Storage Summit February 27-28Â London, UK Doha International Sustainable Energy 2018 March 19-21 Doha, Qatar Africa Mining Summit October 10-12 Gaborone, Botswana

Want to promote your resources event?

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