Mining Global magazine - August 2016

August 2016 • w w w.miningglobal.com

RIDING

the cycles Independence Group’s strategy to develop a diverse portfolio

11 Q&As on the future Deep space mining: SPECIAL REPORT: of mining with Fircroft The world of tomorrow Palabora Mining Co.

TECHNOLOGY

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EDITOR’S COMMENT

The Final Frontier G R E E T I N G S A N D W E L C O M E T O the

August issue of Mining Global. This month we are looking at mining from above, and below.

We speak to the CEO of Nautilus Minerals, as the industry sets sails on one of its darkest journey’s yet - in the deepest darkest reaches of the ocean.

We’re not just following the stars, we’re heading straight for them as Deep Space Industries plans to take the industry into space, mining asteroids to create a mining resource economy. We speak to the company as they unveil plans to one day take mining operations completely off world.

What does the future hold for mining? How does technology and innovation impact the mine workers of the future? Find out with our 11 questions for leading recruitment, contractor and consultancy service providers Fircroft.

Mining Global magazine – let us know your feedback @MiningGlobal

Enjoy the issue!

Dale Benton Editor dale.benton@bizclikmedia.com

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CONTENTS

F E AT U R E S

PROFILE

06

50,000 leagues under the sea: Deep sea mining and the world of tomorrow

TECHNOLOGY

12 4

Let me play amongst the stars August 2016

22 LIST

Looking for answers: 11 questions for Fircroft on the future of the mining industry

C O M PA N Y PROFILES

32

Independence Group (IGO) Australia

56

Palabora Mining Company Africa

Independence Group (IGO) Nova Project Australia

76 5

PROFILE

50 000 LE UNDER T DEEP SEA ,

AND THE OF TOMO

Written by C a t Edited by D

EAGUES THE SEA: A MINING

E WORLD MORROW

herine Cooper Dale Benton

7

PROFILE

Nautically speaking

“By 2040, our worldwide need for copper will have almost doubled,” says Mike Johnston, Helmsman, President and CEO of Nautilus Minerals, a deep sea mining company operating from Brisbane, Australia. “There are still huge reserves under the sea. By 2040, I’d expect about 30 percent of copper to come from below the water. There’s huge potential.”

Nautilus, set up in 1997 and listed on the Toronto stock exchange in May 2006, specialises in mining metals at a depth of 1000 to 7000 metres below sea level. A 227-metre-long ship is currently being built for the company in China. It will be moved to around 30 km off Papua New Guinea to mine the Solwara 1 deposit which is already being explored by the company. It is the size of around 15 rugby fields and sits in the seafloor at 1600 metres. Mining operations are planned to start in early 2018.

The company also has exploration licences for deposits off Tonga and in the Central Pacific – including a site which contains around 750 million tonnes of copper, cobalt, manganese and other minerals.

8 August 2016

“Metals mined from the sea floor tend to be of a higher grade than those from traditional terrestrial mining,” Mike adds. “The Solwara 1 deposit contains a copper grade of nearly eight percemnt as opposed to land-based copper mines where the grade average around 0.6 percent.” Nautilus will also mine for other metals including gold and silver, zinc, lead, cobalt and manganese from the sea floor.

DEEP SEA MINING

robots via computers on deck and managed by people in a control room – virtual technology is taken on very quickly and the chances of injury are much, much less.”

Rock is disaggregated using two large machines and then a third collecting machine sends the material as seawater slurry to the surface where it is sieved in a similar way to on land. After this, the filtered seawater is returned by two smaller pipes to the same place on the sea floor to minimise the ecological impact. The returned water also powers the hydraulic pumps.

Deep sea mining vs terrestrial mining: what’s the difference?

While there are some similarities between terrestrial and deep sea mining, mainly around materials handling, Mike says that in many ways some of their techniques have more in common with drilling for oil or gas.

“At the depths we work, everything has to be done remotely using 9

PROFILE

A sea of sustainabilty

“Operating in an environmentally sound way is very important to us,” says Mike. “Mining companies are an easy target for people who don’t like mining or don’t want mining to happen – even on land.”

“Our focus is to get that first project up and running and show the world that this thing is virtually invisible. We work closely with the regulator – we go above what’s required and try to set a high bar for sea floor mining.

The impacts are already less than on land, but we try to manage things to a high standard. We have a much lower carbon footprint than traditional mining as we are using less energy.” He adds.

“We’re also operating at depths well below where most of the marine life is. The hydraulic oils in our machines are all vegetable oils, so they’re biodegradable. Our noise monitoring is high and we sit well under natural levels. The metals occur on the seafloor, so unlike land mining you don’t have big waste dumps next to them.

The ore is sent directly to China for processing and there are no tailings.”

Mike also adds that there is no need for the damming often associated with 10 August 2016

DEEP SEA MINING

‘There are still huge reserves under the sea. By 2040, I’d expect about 30 percent of copper to come from below the water.

There’s huge potential’ mining which can become a long-term liability, or for moving people away from a mine site and keeping them away. “We don’t impact on fresh water, we don’t impact on people, we don’t impact on pollination, we don’t have waste dumps, we don’t have longterm liabilities. It ticks a lot of boxes.”

As well as paying the appropriate royalties, Nautilus works closely with local government and employs local people where they can. “You try to start off with as many local employees as you can, but there can be a limited number of skillsets within the local country. They do allow you to bring in experts on the understanding that you’ll be training local people to eventually do those tasks – that’s the ultimate goal.

When I started working in Papua New Guinea in 1995 I remember training up young guys – some of them are now mine managers all around the world.

That’s been a really good process.

We’ve actually just taken on two locals

to be trained to drive two new machines we’ve just taken delivery of.” The government in Papua New Guinea has 15 percent ownership of the project and Nautilus works closely with them.

The company has also equipped 15 out of 29 local schools with running water and toilets. “We work with aid agencies as well as the government and hope that these things we’ve helped to put in place will be able to be sustained even once we leave.”

Looking to the future

“We’re the leading company in deep sea mining, we’ve got all the technology and most of the patents,” Mike says.

“I look at it like oil and gas was in the 50s when the oil and gas industry was virtually non-existent. When it started going offshore in the 60s it slowly grew and now it accounts for about 30 percent of the world’s oil and gas production,” he adds.

“We know there are these huge resources of copper on the sea floor – the resources on land are of a much lower grade and much harder to get. It doesn’t take much imagination to see that a significant chunk of future copper production is going to come from these very large offshore resources.”

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TECHNOLOGY

Let me

amon

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TECHNOLOGY A vision shared “There is a possibility that we could actually replace mining on earth with space mining one day,” says Meagan Crawford, of Deep Space Industries.

Deep Space Industries (DSI) is a Huston based company that specialises in building and operating cutting edge spacecraft. The company develops technology solutions for government, scientific and commercial customers.

DSI has 14 founding fathers, some of the top scientists and space craft engineers in the world. They are chaired

by Mr John Lewis, one of the most well-known space industry advocates in the world, author of Asteroid Mining 101, the man who ‘literally wrote the book’ on asteroid mining.

In 2014 these 14 founders were in attendance at a conference on space programs and asteroid mining and discovered they all shared a vision of how best to turn these ideas into reality.

“They sat down together and decided that the only way to make this happen was to make a company. So they did.” she adds.

Water: the secret to success The business plan of DSI is to act as a supply chain to governments and 14

August 2016

businesses that operate in space.

“We are a mining and technology company but our primary purpose is to get the right supplies to the right place at the right time. We will supply space businesses with what they need to be successful,” explains Meagan.

One of the primary supplies that DSI will provide is water.

When broken down into its constituents, hydrogen and oxygen, water can be used as rocket fuel – essential to any space mission. A large communications space craft will usually have a life span of around 15-20 years, with one of the main

FINGER ON THE PULSE

reasons for breaking down at the end of that lifespan being a lack of fuel.

This is where DSI comes in.

“If we could refuel a billion-dollar asset, the value of refueling is going to be some function of that billiondollar cost of replacing the asset at the end of its lifespan. We could really bring down the operational costs of space mining.” She said.

The image DSI is painting represents a petrol station in space, where businesses and satellites can refuel while in orbit rather than attempting to return to Earth which often proves difficult.

The last two years have seen DSI planning, building relationships, preparing to make its mark on the world, before making a bigger one off it.

“We’ve spent the last couple of years getting all our ducks in a row and getting the science and engineering right. At this moment in DSI’s history, when we are really coming out for the first time – we’ve got a very solid plan in place.”

Part of this ‘coming out’ to the world is a partnership with the Luxembourg Government. Together with the Luxembourg Government’s spaceresources.lu initiative and the Société Nationale de Crédit et 15

TECHNOLOGY

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August 2016

L E T M E P L AY A M O N G S T T H E S TA R S

d’Investissement (SNCI), the national banking institution in Luxembourg, the partnership will fund the development of the spacecraft technology built by DSI. “With the partnership with Luxembourg, it has really allowed us to actually start implementing the technology that we have been working on for some time now,” said Meagan.

One giant leap – one step at a time The inaugural project from the partnership will be Prospector - X, an experimental, low earth orbit technology demonstration. This will provide DSI with an opportunity live test equipment and gather data in space.

“The first step in any mining venture is prospecting and determining the best process and equipment to extract the material,” she adds.

Prospector-X will do exactly what it says on the tin – experimental prospecting in space. On paper it sounds simple, but Meagan stresses the importance of extensive testing before sending technology into space.

“With any deep space mission it’s very prudent to test the technology in low earth orbit. We can gather readings, see how its working

and check that the equipment we’ve spent years developing is performing the way we want it to,” DSI may sound like more of a supply chain company rather than a mining company, but there are mining roots deep within the company’s foundation. These roots that will play a fundamental role in the success of DSI and space mining. Some of DSI’s board members are in fact key figures in the mining industry.

“Although the mining technology that we will use will be very different, I think the principles and the methods are very similar,” she said.

Better connected Technology and innovation in the mining industry has advanced a great deal over the last decade and this is something that DSI is keeping a watchful eye on in a bid to create key working relationships with members of the sector over the coming years.

“There’s a lot of overlap with the mining industry, we are very watchful of technologies including geophysical and geotechnical implantation, visualisation techniques and computer programs that interpret resource data.”

This overlap is not limited to simply 17

TECHNOLOGY terrestrial mining, within their board and list of partner advisors, DSI works closely with deep sea bed mining. Deep sea mining and deep space mining have a lot in common, working in difficult and demanding environments to extract core resources.

Deep space mining and the terrestrial mining companies have a lot to offer to one another in the future of the industry. This is evident through what DSI call a ‘micro space’ approach, a more sustainable and efficient method of approaching space travel that will largely reduce the operational costs.

The ‘micro space’ approach uses smaller technologies with big capabilities. Through the use of smaller equipment that is inexpensive to launch into space, DSI will take advantage of decades’ worth of advances in information technology and computing to channel large computing power into smaller working systems.

“Through the micro space approach, we are taking big functionalities and making them smaller and cheaper, all the while maintaining efficiency,” “We could easily adapt these technologies into the mining sector, which would be a huge boost for the industry.” she said.

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August 2016

To boldly go In the movie Armageddon, Bruce Willis and his team of deep sea drillers were tasked by the world to fly into space and break apart an asteroid hurtling towards earth. Should deep sea miners be fitted for space suits?

“This project has captured the imagination of people from all around the world,” said Meagan.

“That being said, Prospector-X will be 100% robotic.”

The decision to use robotic technology for the whole project is a simple one – expense.

“It’s very expensive to send a human out to space. Life support, water, food these are things that artificial intelligence simply doesn’t need,” said Meagan.

By using robots, DSI can alleviate potential communication issues. If an asteroid possesses a similar earth orbit, the asteroid will eventually be on the other side of the sun. If this was a manned vessel, communication latency will present huge complications.

“We are building robots that possess the ability to make decisions independently so that we don’t have to rely on an operator at all times. Essentially they will

L E T M E P L AY A M O N G S T T H E S TA R S

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TECHNOLOGY

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August 2016

L E T M E P L AY A M O N G S T T H E S TA R S

operate on their own – only phoning home if there are exceptional circumstances” said Meagan.

In the quest to create a successful deep space resource economy, DSI is using decades of existing technologies to create innovative machinery. Calling on the experience of mining industry leaders and scientists to nail down the best possible ways to tap into the full potential of space. The processes are the same if not very similar, the tech is the same but more advanced, but there remains one crucial influence, and it’s an obvious one – gravity.

“There isn’t much mass to an Asteroid, meaning they are held together very loosely. On earth you would drill down to get to the resources, if you drill into the surface of an asteroid all that would happen is it would push your spacecraft off of the asteroid – as there’s no gravity holding you to the surface,” said Meagan.

An asteroid is held together by an electromagnetic charge, due to this smaller mass. Electromagnetic charges are damaging to electronics.

DSI is approaching this issue and flipping it on its head, by considering not drilling at all.

“If we can turn this charge into

electromagnetism on an asteroid rich with iron, maybe we can turn this charge into electromagnetism and use these magnets to move resources around – removing the need to drill into the asteroid at all,” she said.

Reach for the stars Like most of DSI’s approach to working in space, the ambition and drive is there. While it may be years or decades before a successful mining economy is established, the partnership with Luxembourg and Prospector-X represents a huge step in deep space mining, taking DSI one step closer to the vision that those 14 founders had when they came together – taking mining operations off of earth completely.

“It’s unrealistic to think that humans are ever going to stop mining for precious metals, if we can take that off world that gives us a way to protect the planet in a very real way,” she said.

“There are a lot of things to work out before that becomes a reality, but we believe in a multi planetary species. In order to do that we need to have the supplies and the infrastructure to make that possible – that is DSI’s long term vision.”

21

LIST

Looking for answer questions for Fircroft future of the mining i

As a leading provider of recruitment, contractor logistics and con Fircroft has a big say in the future workforce of the mining indust the CEO of Fircroft, tells us what the future holds for the mining Writ ten by: DALE BENTON 22

July 2016

rs: 11 t on the industry

nsultancy services worldwide, y. Here, Jonathon Johnson, g and minerals industry industry.

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LIST

Tell me a little bit more about what is Fircroft, who is behind Fircroft and a short history of the company.

Here at Fircroft we define ourselves as a global workforce solutions provider to the technical engineering sectors; which, put simply, means that we provide recruitment, contractor logistics and outsourcing and consultancy services to the biggest engineering companies in the world.

Fircroft was established in 1970

by John Johnson, an experience and respected engineer. John’s son Johnathan is now CEO and the company has experienced significant growth and expansion in recent years with Fircroft now providing services to the Oil & Gas, Petrochemical & Chemical, Mining & Minerals, ICT, Infrastructure & Construction, Power, Nuclear & Utilities and Automotive sectors.

contractor logistics, and utilisation or detailed management information systems to deliver meaningful gains in performance, efficiency and effectiveness. So we feel that we can apply these insights and experiences globally to the mining industry to great effect as we have done in the oil and gas industry.

If you could put a number to it, how many workers has Fircroft helped put into the mining industry over the last three years?

What can Fircroft offer to the mining industry?

Whilst we can’t place an exact figure on this, our involvement in the mining industry has been a growing part of our overall business portfolio. We have, and continue to develop, excellent relationships with many of the biggest mining houses however; and with the acquisition of One Key Resources we hope to expand our overall footprint in the mining industry and overall numbers of workers placed.

Fircroft has consistently pioneered innovative workforce solutions since our establishment. We’ve become the experts at managed service provision, workforce planning,

There is a negative tide of thought within the mining industry, that there is a decline in demand/jobs

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August 2016

THE FUTURE OF THE MINING INDUSTRY

25

LIST

and the industry is in a bit of a slump, what are your thoughts on this?

It’s certainly unarguable that the mining industry is currently in the midst of a significant downturn. However it’s Fircroft’s belief that there are also major opportunities and gains to be made through the implementation of new approaches and efficiencies in workforce management and planning.

We’ve achieved similar efficiencies in other sectors (e.g. Oil & Gas) during downturns, and we’re confident that with the combination of One Key’s 26

August 2016

detailed ‘on-the-ground’ knowledge, and Fircroft’s long-term expertise, we can achieve similar efficiencies for our clients in mining. While there continues to be a reduction in investment in new projects, existing mining projects are focused on productivity and cost reduction.

This is the key area in which we can assist in the sector moving forward not only with our cost effective workforce management solutions but also through One Key’s innovative range of productivity improvement and proficiency training services.

THE FUTURE OF THE MINING INDUSTRY

involvement in the mining industry as we see a fantastic opportunity to apply the innovations and insights that we have gained over the past half century for the benefit of mining companies. One Key will enable us to expand both our geographic footprint and our knowledge and expertise.

One Key remains led by Grant Wechsel, a fantastic entrepreneur who possesses a deep commitment to the mining industry- as well as a keen eye for innovation. With One Key as part of the Fircroft Group we will be in a position to leverage their unique service offering and insights and take them to a global level.

Tell me a little bit more about the recent acquisition of the Australian company One Key Resources, what does this say about the current status of the industry?

With technological advancements and innovation changing the modern industry, how has this affected recruitment?

The acquisition of One Key comes at a time of significant growth and expansion for Fircroft. One Key is the latest in a series of acquisitions and joint ventures we have undertaken as we seek to expand our longterm commitment to engineers and engineering firms alike. For Fircroft we are keen to expand our

Innovation and technological advancements are prominent in all industries at present including mining. With autonomous haul trucks, drills and locomotives deployed on mining projects already, there may be a perception that this creates less jobs for the industry but it really just creates different types of roles. New 27

LIST challenging positions have been created in central control hubs off the mine site which means new training, new skills and of course continued recruitment requirements. Aside from that, there are many traditional mining roles to recruit for on a daily basis with a majority of projects yet to adopt such technology.

Is there more of a demand for workers with specialist skills in certain technologies, such as IT and Data Analysis over the last few years?

There has been an exponential increase in demand for specialist ICT roles over recent years and Fircroft has sought to accommodate this

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through the acquisition of Rygon in 2015; a formidable global player in ICT recruitment. As engineering sectors begin to adopt increasingly sophisticated technology and face increasing demands for detailed data analysis and reporting, so they require specialist workers.

How do you feel technology has affected the mining industry as a whole?

Technology allows the mining industry to continue to seek best practice, cost reductions, as well as efficient methods of mining and processing. At present the industry is focussed on how to produce certain commodities at the lowest price

THE FUTURE OF THE MINING INDUSTRY

possible and technology assists that, particularly as we move toward harder to access resources in the future.

With the acquisition of One Key Resources, there is a clear belief that there is growth in the market, there is a belief that the industry will improve, where do you see Fircroft going next?

Mining is not an industry that is going to go away. The world needs the resources we mine and it needs great people and workforces to do that.

One Key Resources have developed outstanding workforce management

strategies for their clients in the mining industry in Australia that have assisted in reducing cost and improving productivity. This was a major factor in attracting Fircroft to the acquisition opportunity and we certainly believe there is growth opportunity to expand One Key’s suite of innovative services on a global basis within the mining industry.

Is there going to be a big increase in demand for skilled workers?

In Australia, it is not the requirement for an increased in skilled workers, but providing a cost effective and

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THE FUTURE OF THE MINING INDUSTRY

productive solution to engage the right people with the right skills for the roles. The mining industry cannot afford to engage the wrong candidates in a very tight cost environment and One Key has proven it is able to deliver the right workforce with a hands on management system time and time again. Outside of Australia we see demand for skilled workers on projects in developing nations and also a need to train local national workforces to the same productive standards of Australian workers which is where One Key Resources can assist again.

There is a thought that with the lower demand in resources due to financial restraints and the cost of resources plummeting, jobs will simply stop existing.

Companies are making cost cutting measures to reduce debts and cope with this downturn in share prices and resources, how has this affected the level of recruitment, from

Fircroft’s perspective (how you train and support potential workers) to the industry leaders (how they approach you and look to employ workers?

As mentioned above, the world still needs the resources we mine and it needs great people and workforces to do that. While there has been reductions in commodity prices with flow on pressure to the mining houses share prices and balance sheets, there is a continuing demand for commodities. For instance, coal exports have reached record levels out of Australia in recent years despite the downturn in the price per tonne. This drives a need for a productive, cost effective workforce solution for all of the mining companies and they are constantly engaging with One Key Resources Managing Director Grant Wechsel to try and achieve this in Australia. One Key’s range of workforce management strategies for their clients in the mining industry in Australia are proven solutions for the challenges currently facing the major mining houses.

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RIDING the cycles Written by John O’Hanlon Produced by Andy Turner

Independence Group’s strategy to develop a diverse portfolio

Peter Bradford CEO

INDEPENDENCE GROUP (IGO)

Independence Group’s strategy to develop a diverse portfolio of assets positions it well to ride out the inevitable fluctuations in world commodities markets

I

n another article we discussed with Peter Bradford, MD and CEO of Independence Group (IGO), the significance of the company’s newest asset, the world class, low cost Nova nickel mine which will come on stream later this year.

The ability to fund this important development, though, has derived largely from the strategy the company has apursued in the 14 years since its establishment and listing on the ASX in 2002.

The Tropicana phenomenon By the time of its IPO the company

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had secured a 12,500 square kilometre exploration tenement on what is now known as the Tropicana gold belt (though at the time it was not known for its gold potential), at the western edge of the Great Victoria Desert.

Subsequent exploration and development was undertaken by AngloGold Ashanti, which farmed in to the project in the same year, IGO retaining a 30 percent interest. AngloGold discovered the Tropicana deposit in 2005 and the partners gave mine development the go-ahead in 2010 based on a feasibility study

MINING

based on mining the Tropicana and Havana deposits, and treatment of 5.8 million tonnes per annum (mtpa) of ore to deliver average gold production of 330,000 to 350,000 ounces per

annum over a ten year mine life.

By 2012, gold resources in the deposit had grown to 7.89 million ounces, establishing Tropicana as fourth

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AUSTRALIA INTRODUCES A DIVERSIFIED MINING

Headquartered in Western Australia in a state-of-the-art workshop complex of 55,000m3 and with company owned branches throughout Australia.

Head Office Pinjarra Facility 54 Munday Avenue, Pinjarra WA 6208

Kalgoorlie Office Branch 48 Kakarra Road, Kalgoorlie WA 6430

Head Office: +61 8 9550 5800

SERVICES PROVIDER WITH A GLOBAL FOOTPRINT

From Automation in Africa to Emission Control Solutions in Europe and Electrical Installations in China, the common thread is Murray Engineering.

ELECTRICAL MECHANICAL FABRICATION

Mt Isa Office Branch 4 Engineering Road, Mount Isa QLD 4825

Email: sales@murrayengineering.com.au www.murrayengineering.com.au

CONTROL SYSTEMS EQUIPMENT HIRE & SALES

Newcastle Office Branch 431 Masonite Road, Heatherbrae NSW 2324

SUPPLIER PROFILE

Murray Engineering is one of the largest and most diversified mining services providers in Australia.

It is headquartered in Western Australia with branch locations throughout the country. Its products and services are used from the face to the factory above and below ground and exported to 5 continents of the world.

One of the foundations of its business is in Mechanical Maintenance. Full mobile machine rebuilds are undertaken where the machine is disassembled into its individual parts and then rebuilt to conform with the latest manufacturer’s specification often in as little as 6 weeks turnaround. To minimise not having the use of a production machine whilst undergoing a rebuild, Murray Engineering will hire a machine from its rental fleet to augment their clients’ production.

Long term site-based maintenance and repair contracts are undertaken for mobile machinery with KPI’s undertaken for the client so as to guarantee machine availability, machine operating cost and agreed maintenance manning.

Shane Dunn, Mechanical Manager for Murray Engineering explains: “We have the advantage of 26 years of maintenance data on one of the largest underground mining mobile machinery fleets in the world. Risk sharing is facilitated through having such an enormous pool of historical data”.

The Electrical Division assembles, installs and maintains a vast array of Electrical Components to suit mining applications and includes a range from electrical distribution panels to 60 tonne transportable switchrooms.

“With decades of experience with mining applications worldwide, we often tackle those applications which clients place in the too hard basket. St Barbara approached us to lower a single stage 1400 metre suspended HV cable so as not to disrupt production. Notwithstanding the forces associated with 26 tonnes of suspended cable, the job was completed on time and budget without incident” cites Craig Shales, Electrical Manager.

The diversity of services provides clients with a unique availability of single sourcing. A recent pump station project in Asia necessitated the installation of wireless communications between dewatering pumps and controllers which was automatically activated by face-mounted water level and temperature monitors. The pump controllers were housed in a fully enclosed fabricated station. All was completed in house by the Automation, Fabrication and Electrical divisions of Murray Engineering.

Murray Engineering continues to expand due to its worldwide scale and diversity of services.

MINING

Annual

$500 million revenue largest gold mine in Australia. First ore was sent to the crushing circuit in August 2013, first gold was poured on 26 September, ahead of schedule and on budget, and the processing plant successfully achieved its ramp-up target of 95 percent plant availability at a throughput rate of 5.8 mtpa within six months. For IGO, Tropicana has been, and continues to be a fun ride, says Bradford. “Once the startup and first production were behind us we started to unlock additional value in the project. One opportunity is ongoing exploration along the Tropicana belt for the next Tropicana, so watch this space because we think it may be there. Another is by “drilling at depth

beneath the existing Tropicana pits, most of which bottom out on the lack of drill information, where we expect to be able to significantly expand the known resources through this drilling.”

Additionally, there’s room to optimise production. Work to expand plant’s nameplate capacity from 5.8 mtpa to more than 7 mtpa is coming to its final stages, he says. “The joint venture partners recognised that major items of equipment like the crushers, the high pressure grinding rolls and the ball mills all had spare capacity, this allowed us to expand capacity by working through the bottlenecks in the materials handling of the crushing circuit and

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INDEPENDENCE GROUP (IGO)

slurry circuits, upgrading conveyors and pumps.� All that remains is to complete the additional capacity in the carbonin-leach circuit, to bring residence time back to design levels, so that recovery levels are maintained at the higher throughput rate.

Tropicana is remote and that has meant that, till now, some 1,500 road trains a year have

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MINING

been needed to fuel its plant and vehicles. To derisk delivery of fuel and decouple the risk of fluctuating oil prices, in mid-2014 the joint venture partners committed to a A$140 million gas project. The Eastern Goldfields Pipeline, constructed and operated

by APA Group was commissioned in February this year cutting the number of road train movements down to

less than 500. “Changing to gas will reduce operating costs over the life of the project,” says Bradford. “We are in the process of transitioning the power house from diesel operation to gas, and we expect to finish that work by mid-year.” The joint venture works on a simple basis, with IGO writing a monthly cheque for its 30 percent share of capital and operating

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Barminco is an international leader in mechanised hard rock underground mining, delivering world best standards and productivities.

A COMMITMENT TO BEST PRACTICE AND DELIVERY OF VALUE

• • • • • •

Over 25 years of experience and knowledge Safety records that exceed global benchmarks Service excellence and flexibility supported by a ‘can do’ attitude Leading edge production information systems Proven maintenance and support practices State of the art fleet with over 300 mobile units

www.barminco.com.au

Supplier Profile

Nova Project bolsters Barminco’s already impressive track record Australian based Barminco is a specialist hard rock underground mining contractor and one of Independence Group’s closest partners.

The company has been delivering its production, development, drilling and support services to Australian and international mining sites since it began operations in 1989, underpinned by values of safety, excellence and integrity. In 2007 Barminco established African Underground Mining Services, a joint venture, to facilitate the expansion of its service offering into West Africa. ser Barminco’s track record is unrivalled in terms of safety, speed of delivery and output, often exceeding expectation and agreed terms with development records set on a number of the company’s projects.

Chief Executive Officer Peter Stokes comments: “Once we establish ourselves with mining companies we stay for the long haul and build deep, innovative partnerships, which is what is happening with Independence Group. We have been with them ever since they took over the Nova Project back in January 2015.”

Stokes adds. “This is very much a variable rate contract as opposed to fixed, meaning the productivity is up to us to deliver and we will ensure that both parties are rewarded. There is a real mutual incentive.”

Barminco has also been busy above ground, building a batch plant and investing in local infrastructure to help address the challenges caused by the sites remote location. It is also working with Independence Group to employ local people and support the micro-economy of the area.

The focus for this partnership moving forward is to maximise the success of Nova. Stokes says, “The real focus for both companies is to make sure that Nova is successful and keeps beating targets.”

By continuing to commit to a zero harm safety approach, operate with integrity and invest in excellence by driving continuous improvement through innovation and new technologies, Barminco is well-placed to support many underground projects and grow its portfolio.

Barminco has been involved in the development of the world class Nova nickel reserve in Western Australia from the very beginning, initially with Sirius Resources. Drawing on its state-of-the-art mobile equipment fleet and experienced teams, the project is several hundred metres ahead of expectation. Barminco has carried out all of the capital development work and is now moving full ca speed into production which is expected to start by the end of the year.

“The key to this work has been high speed development and making sure we do it safely,”

Peter Stokes - Barminco CEO

www.barminco.com.au

MINING

costs and receiving 30 percent of that month’s gold production. With gold prices on the upturn that means Tropicana contributed around 45 percent of IGO’s A$499 million revenues in the 2015 financial year, its first year of full production.

Spread betting Australia is enjoying good gold prices, and like other Australian gold producers, IGO is enjoying good margins from its share of gold production at Tropicana.

At the same time base metals prices have been weaker. IGO is diversified and has irons in both fires: “Nickel and gold are somewhat counter-cyclical,” says Bradford.

“Over the last twelve months nickel prices have come down by around 30 percent and as a result of that,

worldwide it is estimated that 50 percent of the nickel industry is losing money on a cash basis. It is a miserable time for the metal. However our Nova project combines high grade with low cost structures, therefore even at current low nickel prices we will achieve an average 40 percent cash margin on the project, which is outstanding. But this is at the bottom of the nickel market and with the commodity expected to be in a supply deficit this year we expect prices to start rebounding” When the company acquired the Long deposit from BHP Billiton 14 years ago it was perceived to be at the end of its life, with only a few months of reserves in front of it. It has been a remarkable achievement, through a combination of investment and exploration, to keep it producing. Long has yielded more than 100 tonnes of

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INDEPENDENCE GROUP (IGO)

“The lifeblood of any mining company is its pipeline” – Peter Bradford, MD & CEO

nickel since being acquired by IGO and the Company has been able to consistently replace production with new reserves. This is an underground mine, the ore being removed by trucks, stockpiled and then moved to BHP’s nearby concentrator for processing.

More recently, in 2011, IGO purchased the Jaguar copper and zinc mine 300 kilometres north of Kalgoorlie and close to the small town of Leonora. Today this operation, together with Long, gives IGO the other half of its revenues. Both mines continue to generate positive free cash flow margins, despite current low copper and nickel pricing. Both these assets are wholly owned and operated

by IGO. Jaguar is mined using a fleet

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of R1700 Caterpillar Load Haul Dump (LHD) trucks, 60 tonne Caterpillar trucks and other equipment. Ore is processed at the nearby Jaguar concentrator which produces both zinc and copper concentrates, the latter having silver and gold in it too. The concentrates are trucked to the port of Geraldton where they are shipped to IGO’s customers.

This year the business will be transformed by the advent of the Nova nickel mine. Instead of being split evenly between Long and Jaguar, and Tropicana respectively, more than 50 percent of future combined revenues will come from Nova.

This is not to deny the continuing significance of Jaguar and Long:

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The Mesh Experts, Australian Steel and Wire were established in 2007. Based in East Rockingham, Western Australia and Brisbane, Queensland, are well positioned to supply to the local Australian Mining Industry and the world with specialised Coal mesh, Hardrock mesh, Straps and excellent service.

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Email: sales@aswhome.com Web: www.aswhome.com

4 Lodge Drive, East Rockingham, WA 6168 Ph: +61 8 9439 3778 | Fax: +61 8 9439

MINING

what it will mean though is that from 2017 onward we will see IGO emerge as a truly diversified, mid-tier mining company. “Gold, nickel and copper are all cyclical commodities. For single commodity companies: it’s fun at the top of the market with good operating margins being made but not much fun at the bottom! At the bottom of the market tough choices have to be made about what costs you continue to wear, and that can result in capability that is needed long term in the business having to be retrenched because you can’t fund it at that time.

Some discretionary expenditures vital to long term growth, such as exploration, have to be reduced.

Our strategy is to be diversified, with a mix of commodities in the portfolio, currently gold and base metals, so the risk to the business due to single commodity fluctuations in any one year is reduced.”

Natural hedging between the metals

means IGO is really unlikely to have all of the commodities it produces at the bottom of the market at the same time. In turn that ensures the regular cash flow required to keep capability within the company and to keep the focus on those long term growth projects that he always has his eye on.

People and places Bradford said he also wants IGO to continue to play its part in developing talent for the company and the industry at large. “We support scholarship programmes for degrees students and we have a programme of vacation work while they are studying to give them access to the industry.” The company also runs a graduate programme, taking people on two year internships and introducing them to varied aspects of the business and aiming to turn out fully functioning professionals.

Close to its operations IGO supports

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“By drilling at depth under the existing Tropicana pits, most of which bottom out on the lack of drill information, where we expect to be able to significantly expand the known resources” – Peter Bradford, MD & CEO

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Peter Bradford MD & CEO

Mr. Bradford is a senior mining industry executive with many years’ experience in gold and base metals mining operations, exploration and development within Australia and internationally.

Mr. Bradford graduated as a metallurgist at the Western Australian School of Mines and commenced his career with various gold, nickel and mineral sands operations in Western Australia and lead the development and early operational phases of a number of projects.

Internationally, Mr. Bradford has worked extensively in Africa, including Ghana and the DRC in a number of senior and chief executive roles for Australian, London and North American listed companies, providing leadership in the development of strategy and growth for many of these companies.

Mr. Bradford a fellow of the AusIMM and a member of the Society of Mining Engineers and a member of the AMEC Council.

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Delivering mining efficiency Since 2008, Deswik has been partnering with clients like IGO to deliver efficiency-focused solutions to the mining industry through our software, consulting, and training offerings.

Our customized, solution-driven consulting flows through innovation to our software providing our customers with additional benefits when they choose to work with Deswik.

CUSTOMER DRIVEN INNOVATION In May 2015, Stephen Rowles and Luke Waller from Independence Group NL began work at the new Nova Project in Western Australia. Tasked with setting up best-of-breed systems for the survey department, they worked with Deswik (whose solutions were already in use by the planning team) to extend the Deswik.CAD platform to meet the site’s needs and simplify the typical surveying processes.

DESWIK.COM

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the community by funding leadership programmes in the schools and communities around its mining operations. We are also committed to building capacity and providing opportunities for the traditional owners in the areas we operate “At Nova, for example, we are putting in place a targeted training programme to improve the job skills of indigenous employees who may not have had the opportunity to do formal work before. They can then apply for jobs at the project. We want to have a lasting impact and leave a legacy so we’d like to help individuals and groups to form businesses. We have been working to support two different contracting initiatives that

provide opportunities for indigenous groups at Nova and Jaguar.”

Peter Bradford’s eyes are constantly looking outward to identify the next big project, a future Tropicana or Nova. “The lifeblood of any mining company is its pipeline,” he declares.

“We continue to be very active on the exploration side to discover the projects of the future.” One area of interest is the large tract between Nova and Tropicana, an underexplored geological province that has delivered two of Australia’s best gold and base metal discoveries in the last 10 to 15 years. “We are uniquely placed for investment and exploration of that province.”

In another part of Australia

“Gold, nickel and copper are all cyclical commodities: for single commodity companies, it’s fun at the top of the market with good operating margins being made but not much fun at the bottom!”

– Peter Bradford, MD & CEO

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Hardie Finance Corporation Pty Ltd the landlord of Perth’s premier non-CBD office and retail complex at 85 South Perth Esplanade, South Perth is very proud to have the highly successful and leading diversified mining company, Independence Group, as its major office tenant.

Independence Group is joined by a number of other successful, mining and financial companies occupying the A grade office facilities with its spectacular views of the City of Perth and the Swan River.

Hardie Finance Corporation Pty Ltd Level 5, 85 South Perth Esplanade, South Perth WA 6151 Telephone: +61 (08) 9367 9333 Facsimile: +61 (08) 9367 9555 Email: info@southshoreshoppingcentre.com.au Website: www.southshoreshoppingcentre.com.au

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Registered

2000

listed

2002

altogether, 400 kilometres northwest of Alice Springs IGO in a joint venture with ABM Resources with licences covering what Bradford describes as a 400 kilometre long, major continental-sized structure that can be discerned from space.

Initial drilling at the Bumblebee deposit has given promising results with gold, copper silver, lead zinc and cobalt. As he says, that is quite a suite, that will emphatically seal IGO’s diversity credentials. But, as he also points out, “this is just the first drilling on the first prospect on what is a prospective 400 kilometre long belt and many additional prospects have already been identified.�

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D o

Deep at the heart of Limpopo

Written by John O’Hanlon Produced by Glen White

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MINING

For one of the poorest areas in South Africa, Palabora Mining Company (PMC) is a lifeline. Faced with closure in recent years it is now secured for the next two decades – and is working to leave a positive legacy for much longer

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he great Palabora copper mine could well be history by now. At the time of the global financial crisis in 2008, the implementation of an expansion plan to extend the mine’s life for a further 20 years was in doubt. The high copper volumes obtained from the original open cast mine, which created the ‘biggest hole in South Africa’ having been largely exhausted, and the ‘Lift I’ underground mine, whose production capacity reached 30,000 tonnes of ore per day, was nearing the end of its life. A number of years later Palabora’s other main product, iron ore in the form of magnetite, was also in decline as world mineral prices plummeted.

The simple fact that today Nick

Fouché is in his position as General Manager for Growth and Major Projects Delivery at Palabora Mining Company (PMC) shows that this situation has changed radically.

In 2011 Fouché was working in Salt Lake City with the Capital Projects Group of the mine’s then principal shareholder Rio Tinto when he was asked to lead an ‘order of magnitude’ study at Palabora as part of a process to determine whether the massive investment that would be needed to open up a deep mine below the one we have mentioned, would be feasible.

“Because we had good drill results and good modelling from previous years we were able to run that study in a nine months as opposed to the couple of years it would normally

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What the company does Francks Engineering specialises in hydraulic cylinders and line boring whether it is at our workshop or in the field. We also do turning and milling of specialised parts.

Contact us francks@mweb.co.za info@francksengineering.co.za Tel nr : 087 630 0288 Mobile : 083 282 7386 / 084 811 3672 Nr 5 Second St, Extension 5, Phalaborwa

Who we are Francks Engineering was founded

by Ockie Franck in 1999 just outside Phalaborwa and initially started out as a general engineering business, the focus of the company quickly shifted when the decision was made to specialise in hydraulic cylinders and line boring.

Francks Engineering does not only offer the best quality and pricing but also the best possible service available. We pride ourselves in our turn around times and delivery schedules.

The company has since grown significantly due to our good name, service and warranties. With more than 45 years experience in the engineering industry you can be assured about the level of workmanship and quality provided by Francks Engineering.

Our Services • Hydraulic Cylinder repairs and manufacturing • Bore Repair & Line-Boring • Turning & Milling

PA L A B O R A M I N I N G C O M PA N Y

take,” he says. Time was of the essence, because the new mine, Lift II, needed to take up production and human capacity seamlessly as Lift I declined. Palabora is Southern Africa’s only producer of copper rod and many local industries like cable manufacturers depend on it for their supply. A hard stop on one followed by a hard start on the new mine would have made no economic sense.

Rio Tinto decided following a feasibility study that the proposed mine would be viable and backed

“This kind of initiative really energised the project: we are doing things here that are pushing the boundaries of conventional mining!”

– Nick Fouché, GM, Growth and Major Projects

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the initial investment to construct the declines that would connect the Lift I and Lift II ore bodies.

“We started those ramps in early 2012,” Fouché explains. “At that stage we realised we would have to optimise the design. If the upfront capital requirement was too high the grade of our reserve would not support it. We had to leverage the existing shaft infrastructure, and build a second bock cave under the existing one, connect them all up and still make a positive business case

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out of it!” They decided on a twin-decline ramp system to connect the ore bodies. One decline is for people and supplies, the other is a conveyor decline each 3.6 kilometres in length.

Pushing the boundaries

The key requirement was to get the tunnels advanced quickly. “We started rather late, so we called for a 10.5 metre daily advance on two faces, though most contractors wouldn’t commit to more than seven.” The challenge was taken up by the Australian contractor Byrnecut, which managed to achieve this unprecedented

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www.bgrimm.com

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Projects

Safe, Quality & Cost Effective Mining

Mvusuludzo Projects (Mvuso) is a proudly South African underground mining contracting company which specialises in high speed TMM (Trackless Mining Machinery) tunnelling and associated construction works.

Mvuso is 100% Black owned and a Level 1 B-BBEE Company The company possess world class human capacity and we strive to be the lowest cost producer on the African continent by the year 2020.

MINING

advance rate, at the same time as training a local workforce in the skills needed for high speed mechanised development. An innovative contract was devised to spread the risk between owner and contractor in recognition of the uncertainties of the project and the fact that the advance rate was at the threshold of previous mining practice. It still couldn’t have been done without the deployment of a massive 21 tonne LHD. “We lowered the machine using our existing shaft infrastructure, and that is the

biggest piece of mobile equipment that has been lowered in a shaft in Africa,” recalls Nick Fouché. “We had to do some clever engineering.

We built a special skeleton for the machine so that we could stay within the loading limits of our winder. This kind of initiative really energised the project: we are doing things here that are pushing the boundaries of conventional mining.”

An additional uncertainty was injected in 2013 when Rio Tinto withdrew from Palabora and PMC was acquired by a consortium

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PA L A B O R A M I N I N G C O M PA N Y

led by the Industrial Development Corporation (IDC) of South Africa Limited and China’s Hebei Iron & Steel Group. The investment case had to be sold to the new shareholders. The fact that much of the infrastructure was in place impressed the new shareholders and they supported the Lift II project despite the fact that their primary interest had been the magnetite, of which there was a 250 million tonne stockpile at the mine.

In November 2014 the board approved the Lift II investment programme of more than a billion

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dollars says Fouché : “We took the view that though prices were depressed we had enough financial carry to cover a lot of the upfront work from our own balance sheet, and went to the market for some of the funding.” At the same time, with the copper price on the floor contraction set in among other copper projects as some were shelved, mothballed or abandoned.

“We have taken a positive view of the long term copper price.

The supply and demand position projected post 2020 indicates that copper prices would potentially be

“We had to leverage the existing shaft infrastructure, and build a second bock cave under the existing one, connect them all up and still make a positive business case out of it!”

MINING

– Nick Fouché

on the rise. To develop an underground copper mine takes many years,” he adds. Four years from now PMC may face competitive supply in an improving world minerals environment.

Cutting the cloth But copper prices are still low and Palabora needs to guard its margins. One way it is doing this is by taking out cost and using local contractors where possible.

Byrnecut was successful but cost was dollar based and potential existed for a lower cost approach, so in March it was decided to change to a small South African company Mvuso which would have a lower cost base.

“The goal was to share our knowledge and help them to reach a competitive mining rate. We have a lot of in-house expertise: we have been tunnelling with Byrnecut for more

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Darner Engineering is a South African based company, providing quality and cost effective control and instrumentation engineering and consulting services to local and international commercial, industrial and mining clients.

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We are a Level 1 BBBEE service provider to the shipping industry.

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MINING

than three years, and we have been running a block cave for 15 years after all. Reconfiguring and repricing the tunnelling work has taken out hundreds of million’s of Rand,” he says, and the move has been justified since the local contractor has added 2.5 kilometres to the tunnels and has reached the access point to the undercut, from which the ore will flow.

The focus now is on ventilation.

To connect the Lift I and Lift II ventilation systems PMC has sunk two 450-metre shafts, 4.5 metres in diameter. The contractor, Murray & Roberts will then connect the undercut and production levels with a number of raisebores. That’s going smoothly, however the twin ventilation shafts being sunk from the surface present a real challenge. The contractor Master Drilling is once again approaching the limits of mining capability: the company designed and built the RD8 raiseboring machine specifically for the PMC project, which entails the construction of

two 6.1-m-diameter ventilation shafts, each with a recordbreaking depth of 1.2 kilometres.

The RD8 machine operates faster and is significantly cheaper than the conventional blind-sinking technologies, and requires only two operators per shift. But raiseboring has never been tried at this depth and diameter in combination. “The driver for us is that we were looking to maximise the vent requirement without doing multiple holes: the bigger you go the lower the cost is a theme running throughout the project. We need to stay in the cost envelope and engineer accordingly.”

The traditional approach to project management is that the owner’s team oversees the EPCM and the EPCM oversees the contractors. On Lift II it made sense to leverage the expertise of the people who had been involved in Lift I construction – after all they are very similar in design.

Accordingly, Fouché and his team have worked out a more integrated management approach with the

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PA L A B O R A M I N I N G C O M PA N Y

We are Mining & Plant Specialists RSV is a leading engineering and project management group of companies serving the mining, metallurgical and industrial markets.

We have extensive experience in the design and operation of the entire spectrum of mining activities – from exploration through to full production – covering all aspects of access to the ore-body.

www.rsv.co.za / rsv@rsv.co.za “We are proud to be associated with Palabora Mining Company”

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EPCM contractor RSV (Reid Swatman & Voigt).

“It saves us a lot of money and the teams I manage are so much more positive since there are no shadow roles. Decision making is quicker, team dynamics are better – we do things together and there’s no ‘them and us’ blame culture.”

Special cases The 40 year old process plant at Palabora has become more costly and inefficient, so it’s being replaced. “We are building a brand new flotation plant with just 14 major float cells (the current plant has around 78 float cells), so you already get huge economies of scale on energy, pumps, maintenance and other things. The new plant will be The year that Palabora volumtrically more substantial, which means Mining Company more recovery time and improved recoveries. was founded We will push recoveries up from around 83 percent to 88 or 89 percent,” explains Fouché. The plant is under construction by Beijing General Research Institute for Mining and Metallurgy (BGRIMM), which is fast becoming a major player in Africa. Another major project he is overseeing is an ore sorter to remove granite content which can linger in the autogenous mills, taking up space that should be filled with ore and reducing throughput But by far the largest upgrade will be the smelter which produces copper rod for the domestic market. It was built to cater for the original open cast operation which produced 80,000 tonnes

1956

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PA L A B O R A M I N I N G C O M PA N Y

“I set a vision for the project: when we leave we must leave something substantial behind” – Nick Fouché

per annum (tpa) of pure copper from a throughput of up to 120,000 tonnes per day (tpd) of ore. The present day operation produces about 41,000 tpa from 3,000 tpd.

“The size of the furnace does not match our production footprint, and that means huge inefficiencies through heat loss and a very costly downstream process,” he says.

The smelter is being retrofitted at a total cost of $55 million, the entire furnace is being replaced and new technology introduced throughout, it will be effectively a new smelter. At the time of writing

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the project was still under tender.

As mentioned earlier PMC is not a pure play copper producer. The magnetite circuit, upgraded last year with the purchase of a new separation plant and a drying plant that can handle six million tpa adding a price premium of five to eight dollars a tonne to the product, is of immense importance to the company. This revenue goes a long way to fund the Lift II project, says Fouché “Now that everyone is struggling with iron ore, it is the ones with the low grade that are falling out of the market. We are in a good position to continue to produce

MINING

iron ore to supply foreign markets.”

A future for Phalaborwa With so many major projects to oversee it is a miracle that Nick Fouché has time for anything else, but he retains his passion for PMC’s sustainability agenda. Thanks to Lift II the mine will still be here till 2033, maybe a little longer, but it will run out one day and PMC’s responsibility will not end there. “I set a vision for the project: when we leave we must leave something substantial behind more than just a mine. I want to see new contractor

companies that are sustainable going forward and can be part of the mining economy.” We want the project to contribute to the transformation agenda of the country and the region, encouraging and supporting previously disadvantaged groups to be long term sustainable suppliers to our industry. In addition to this we want the existing Palabora Foundation which has been a flagship in the mining industry, he adds to be able to continue its good work in its support to our community and the sustainability of our business.

It supports many initiatives in

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our community from small scale farming to harvesting amarula, a tree found only here and from which liqueur and cosmetics are made.

It also runs after-school programmes for AIDS orphaned children, clinics and job creation schemes as well as supporting supplier development start-ups. We have started a process where many small construction companies in the district, whose expertise was limited to small dwellings and community buildings, have been invited on to the mine and given small surface projects and then in collaboration

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with larger contractors they are brought underground to construct sub-stations and the like. “As a result of this process we have spent large sums of money on contracts for black-owned and women-owned enterprises,â€? says FouchĂŠ. My hope is that these contractors will reach a point where they are tendering across multiple mines and industries not only in Palabhorwa but across the country.

Another form of contribution towards sustainability has been to contractually define the hiring policy of semi skilled and unskilled labour. For the last two years it

MINING

“We had to leverage the existing shaft infrastructure, and build a second bock cave under the existing one, connect them all up and still make a positive business case out of it!”

– Nick Fouché

has been a condition of any contract at the Lift II project that all unskilled and 80 percent semi-skilled labour is sourced from the Ba-Phalaborwa district’s of 150,000 population. It’s a policy with real impact in a region with upward of 50 percent unemployment. I think that is one project that has found real traction,” he concludes.

“I am proud of what we have done with the magnetite upgrade, the Lift II construction, the downstream plant and the communities.

Palabora is a flagship in southern Africa.”

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KEEPING faith with nickel

Independence Group’s Nova Project on the Fraser Rang Australia is a world class nickel mine comparable with C Voisey’s Bay – and it is coming on stream at just the righ

Written by John O’Hanlon

ge in Western Canada’s ht time

I N D E P E N D E N C E G R O U P ( I G O ) N O VA P R O J E C T

Independence Group’s Nova Project on the Fraser Range in Western Australia is a world class nickel mine comparable with Canada’s Voisey’s Bay – and it is coming on stream at just the right time

W

ith nickel prices languishing below $10,000 a tonne compared to the end of 2010 when this key base metal was selling for nearly three times as much, you might wonder why anyone would be excited about a new nickel project. It’s hardly necessary to review factors like China’s growth slowdown and the fact of over-supply for the last three years, however nickel remains a vital commodity for industry. Some 2.0 million tonnes of nickel are produced and sold

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globally every year, of which 65 percent is consumed in the manufacture of stainless steel.

Another twelve percent is used in super alloys and non-ferrous alloys.

Peter Bradford, Independence Group’s Managing Director and CEO, who is driving forward with the development of the world class Nova nickel Project in Western Australia, is convinced that there are benefits building a mine at the bottom of the market, particularly when that project can be brought in at lower cost and can return a profit even at current

AUSTRALIA

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prices. The minerals markets are cyclical by nature, and a mine with an initial ten year life like the Nova project, will certainly live through at least one peak and one trough.

Thanks to a combination of smart design, canny contracting and a programme of cost optimisation, when it comes into production towards the end of this year Nova will have an operating margin of 40% even at current depressed nickel prices.

The mine is slated to ship an average

of 26,000 tonnes of nickel a year once it ramps up to full production next year, plus 850 tonnes of cobalt and 11,500 tonnes of copper.

Perth-based, Independence Group (IGO) was formed in 2000 initially with a focus on gold. Soon after it diversified with the acquisition of the Long nickel mine in Kambalda, Western Australia that it acquired from BHP Billiton in 2002. Independence also has a revenue stream from its 30 percent interest in the Tropicana

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I N D E P E N D E N C E G R O U P ( I G O ) N O VA P R O J E C T

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“Given the remoteness of the site, we invested in robust infrastructure” – Peter Bradford, MD & CEO

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gold project which it pegged at the time of its IPO in January 2002 and developed in partnership with AngloGold Ashanti. IGO then acquired the Jaguar copper and zinc mine near the town of Leonora in 2011.

“These are all great assets,” affirms Bradford who was appointed to lead the group early in 2014. “When I joined IGO, I immediately recognised that we needed growth assets, so we set about a strategy of identifying the best available prospects. That resulted in our entering discussions with Sirius Resources and acquiring the Nova project in September 2015.

We are now focused on bringing

that transaction to account and progressing construction at Nova and bringing it into production.”

Fast track to production Progress has been fast by any standards, when it’s considered that the deposit was only discovered in July 2012, only got its mining lease in August 2014 and, yet will be producing first concentrates by the end of December this year. This is a remarkable achievement for an underground mine, with all the infrastructure and construction work entailed in an operation that relies on a combination of sub-level stoping with

“This is the first discovery of its type in this new belt in Western Australia, and the first discovery of this style of mineralisation in the whole of Australia” – Peter Bradford, MD & CEO

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paste fill (derived largely from tailings) and longhole echelon retreat methods.

“Our rapid progress is attributable in part to the location of the orebody.

From an underground mining perspective Nova is quite shallow, with the 1,000 metre long orebody positioned about 200 metres from surface down to a maximum of 500 metres,” he points out. “It is a large flat-lying

orebody somewhat in the shape of a banana!”

Had it been deeper, shaft access may have been considered but given the proximity to surface the orebody is being accessed by declines which have been dug to accommodate the 60-tonne trucks that will bring out the ore. Thanks to being

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Global process engineering group providing innovative and cost effective mineral production solutions  EPC & EPCM

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able to get the best contractor and the best contractor team to do the development work the pace of the development work has been better than planned with over five kilometres of development completed as at the end of May 2016, he says. “Our feasibility study projected progress rates of 50 metres a week on a single heading underground and we have been achieving 70-90 metres per week.

The rock conditions are good so we have not needed to immediately install the mass of ground support originally anticipated. We have been very fortunate in being able get what we believe are the best in class contractors in Western Australia.” Underground development is the province of Barminco while GR Engineering Services has been building the processing plant and associated infrastructure under

a lump sum EPC contract.

The ore will be processed in a plant with 1.5 million tonnes per annum (mtpa) capacity, comprising an open circuit SAG mill and a ball mill before separation into nickel and copper concentrates. All the copper concentrate and half the nickel concentrate will be shipped out through the port of Esperance, 380 roadkilometres to the south, the remainder of the nickel concentrate will be delivered to BHP Billiton’s Kamblada site 294 roadkilometres to the north. The site is remote, located on the Eyre highway 150 kilometres east from the small settlement of Norseman. “Given the remoteness of the site, we invested in robust infrastructure,” says Bradford.

“We built a 35 kilometre sealed road to the Eyre Highway and a two kilometre sealed airstrip to make sure we can reliably bring our employees in and

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I N D E P E N D E N C E G R O U P ( I G O ) N O VA P R O J E C T

“There are a lot of benefits to building a project at the bottom of the cycle” – Peter Bradford, MD & CEO

out on a fly-in-fly-out basis.” They are accommodated in a 492-person camp designed and built by Kerman Contracting in the space of just eight months last year, he adds.

For the moment Perth is the primary source of people but one of his priorities is to focus back on the region. Population centers like Norseman, Esperance and Kalgoorlie have many skilled people with a great deal of mining experience and he believes smaller drive in-drive-out or fly-in-fly-out operations from those towns would be cost effective. “With lower commodity prices, there’s

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been a pullback in employment in the region, so there are skilled people available and we’d like to give them an opportunity. There are a lot of benefits to building a project at the bottom of the cycle,” he adds. “The best time to build is at the bottom of the market. All the materials and expertise needed to build the project are readily available. If we had tried to build this project five years ago we’d have been waiting in a queue

at the factory to have components built and all the best people and contractors would be tied up.”

Long term sustainability The Nova site has no mains services.

To provide the project with reliable water supply and management and waste water treatment, Tristar Water of Perth was brought in. Power supply was more complex. The power provider, a joint venture between

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I N D E P E N D E N C E G R O U P ( I G O ) N O VA P R O J E C T

Zenith Pacific and Solea of Germany, is providing a state of the art hybrid generating station under a buildown-operate-maintain contract that means IGO will bear no capital cost.

The first phase of a 20 MW diesel-fired plant was commissioned at the end of March. The second phase is expected to come on stream in October, and at the same time work will commence work on a 7MW electro voltaic solar plant. The use of solar power will save 8,000 tonnes of CO2 a year as well as more than three million litres of diesel and the associated road trains to bring it to site. In all, the power component of the Nova nickel mine will set the

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standard for future remote hybrid power stations. This is the first time a project of this nature in Australia has been commercially viable and not reliant on subsidies or grants.

Christmas this year will be a significant milestone for Independence Group as it celebrates first production from Nova, and as the deposit’s full name is Nova-Bollinger there’s no prize for guessing how Peter Bradford, his teams and contractors will toast it. But the mine’s slated ten year life is far from the end of the story.

The Long nickel deposit was all but exhausted on acquisition but is still productive more than a decade later,

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which should tell the world that IGO know how to optimise an asset. “We believe the prospects for extending Nova’s life are very good,” Bradford says. “That is one of the attributes that attracted us to the project. This is the first discovery of its type in this new belt in Western Australia, and the first discovery of this style of mineralisation in the whole of Australia. It has features in common with Canadian deposits like Thompson, Raglan and Voisey’s Bay. We have opportunities to extend the mineralisation immediately around Nova, and also to look for additional occurrences further afield on the Fraser Range-Tropicana belt.

This underexplored province has delivered two of Australia’s best gold and base metals discoveries in the last 10-15 years and we believe that there are more discoveries waiting to be made” So expect IGO to be very active on all these fronts.

“By drilling at depth under the existing Tropicana pits, most of which bottom out on the lack of drill information, where we expect to be able to significantly expand the known resources” – Peter Bradford, MD & CEO

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