Australian Resources & Investment February 2023

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A critical year ahead

TOM PARKER Tom.Parker@primecreative.com.au

It’s no coincidence that our first issue of 2023 focuses squarely on Australia’s critical minerals future, with a burgeoning lithium refining industry taking centre stage.

Australia has a long been a global leader in supplying raw materials to the world; however, its downstream processing capacity is less developed. This is beginning to change.

Last year saw Australia’s first lithium hydroxide produced from IGO and Tianqi Lithium Corporation’s Kwinana plant in May, with Albemarle Corporation and Mineral Resources’ Kemerton plant delivering its first lithium hydroxide soon after.

There are several other lithium refining projects in the works, including Covalent Lithium’s Mt Holland project in Western Australia, which is aiming for first lithium hydroxide production in the second half of 2024.

In our cover story, we chat to PricewaterhouseCoopers (PwC) Australia partner Marc Upcroft about Australia’s downstream processing opportunity. Upcroft expects Australia to represent 10 per cent of global lithium hydroxide capacity in a few years, and double that before the end of the decade.

Arafura Rare Earths is also looking to become part of Australia’s downstream processing industry, with its planned Nolans mining and processing operation set to deliver sought-after rare earths materials to the world.

We chat to Arafura chief Gavin Lockyer about the company’s recent successes, including a cornerstone offtake agreement, more than $160 million of capital raisings and an oversubscribed share purchase plan.

Last year delivered plenty of price volatility, with some commodities enjoying more tailwinds than others.

While China was in COVID lockdown for much of 2022, the key Australian resources customer reopened in December and enters 2023 with a growth mindset. How this will affect demand for metals such as iron ore and copper remains to be seen, but many in the industry are excited.

Elsewhere, we chat to Fitch Solutions about what 2023 looks like for commodities and explore five key themes.

We also profile ASX newcomer and rare earths aspirant VHM Limited, consider what it takes to develop a successful lithium project, courtesy of former Pilbara Minerals boss Ken Brinsden, and reflect on the biggest mergers and acquisitions of 2022.

Tony Featherstone dives deep into the emergence of green-metal Exchange Traded Funds (ETFs), while Regina Meani forecasts how three ASX-listed copper companies will perform this year.

The Australian resources sector has another busy year ahead and we’ll be covering every corner of it, bringing all the relevant investment trends, project developments, commodity prices and executive movements to the page.

Here’s to a big year.

Tom Parker Editor

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FRONT COVER The Kemerton lithium hydroxide  processing plant in WA. Image: Albemarle Corporation

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As a mining superpower and nascent downstream player, Australia has a bright future supporting the world’s net zero transition.

INTRODUCING GREEN-METAL ETFS

BY TONY FEATHERSTONE

Exchange Traded Funds (ETFs) have transformed investing in global technology stocks. Now, ETFs are doing the same for the green-metals boom.

At least six green-metal ETFs were launched on the ASX in the fourth quarter of 2022. More are on the way as investors position their portfolios for decarbonisation.

For the first time, investors can buy a portfolio of global copper producers that will benefit as demand for electric vehicles (EVs) soars. Or focus on lithium, nickel, cobalt or other metals vital for clean-energy infrastructure and technologies.

ETFs are investment funds that track an index over equities, bonds,

commodities, currencies or other assets. Bought and sold like a share, ETFs aim to replicate the price and yield return of their underlying index.

For example, an ETF over the S&P/ASX 200 Index provides exposure to stocks in the index and seeks to closely match the return of the ASX 200.

More investors are using index funds for exposure to mining companies and decarbonisation. But approach with caution.

ETFs are investment funds that track a specific index.

The main benefits of ETFs are diversification, low fees and simplicity. In a single trade, investors can gain exposure to hundreds of stocks. Some ETF fees are less than 0.1 per cent.

The main drawback of ETFs is that they are passive investments (although some investors use them actively to trade markets). Unlike active managed funds that handpick stocks and aim to beat an index, ETFs simply track that index.

ETFs have become a global investment phenomenon as more investors desert higher-cost active funds, most of which underperform their index over time. Increasingly, retail investors are using ETFs rather than investing directly in stocks.

Green-metal ETFs are a type of thematic fund. Thematic ETFs typically provide exposure to investment megatrends or emerging investment themes. During the tech boom in the previous decade, thematic ETFs took off on the ASX.

ETFs over cloud computing, artificial intelligence, cybersecurity, video games and other tech sub-sectors were launched. These ETFs provided diversified exposure to tech megatrends that have low representation through ASX-listed companies.

A similar trend is emerging in green metals. As investors seek exposure to resource companies benefiting from rising demand for green metals, ETFs are filling a void.

Consider copper. After BHP’s expected takeover of OZ Minerals, there will be few large ASX-listed copper stocks left. Investors who want exposure to copper, which is used in EVs and other clean-energy technologies, have to buy global copper producers.

Thematic ETFs can seduce investors who believe backing megatrends, such as green metals and decarbonisation, is a sure-fire way to make money. But care is needed.

ETF issuers have a habit of launching thematic ETFs after a sector booms or a trend captures investor imagination. Thematic tech ETFs were all the rage when the global tech sector was hot, but most have had heavy losses in the past 12 months.

Sustainability ETFs that invest in companies developing climate-change solutions also took off a few years ago. They also disappointed last year after the sell-off in global tech stocks and other speculative growth companies.

Academic research shows thematic ETFs mostly underperform over longer periods. A 2021 US study, Competition for Attention in the ETF Space, found that thematic ETFs lose an average of 30 per cent in riskadjusted terms over their five years after launch.

Underperformance of thematic ETFs was “driving the overvaluation of underlying stocks (in the ETF’s index) … Overall, (ETF) providers appear to cater to investors’ extrapolative beliefs by issuing specialised ETFs that track attention-grabbing themes.”

In other words, thematic ETFs on average underperform over five years because issuers usually launch these funds after stocks take off. Investors believe the boom will continue long into the future but end up owning an index of overpriced stocks.

This is especially important for greenmetal ETFs. Few investment megatrends are as compelling as decarbonisation. As

Thematic ETFs can seduce investors who believe backing megatrends ... is a sure-fire way to make money. But care is needed.

The recent success of lithium has driven relevant ETFs to soaring heights.

Tony Featherstone is a former managing editor of BRW, Shares and Personal Investor magazines. The information in this article should not be considered personal advice. It has been prepared without considering your objectives, financial situation or needs. Before acting on information in this article consider its appropriateness and accuracy, regarding your objectives, financial situation and needs. Do further research of your own and/or seek personal financial advice from a licensed adviser before making any financial or investment decisions based on this article. All prices and analysis at January 11, 2023.

the transition from fossil fuels to clean energy quickens, the price of green-metal commodities should have strong support.

Lithium is an example. Early investors in the global lithium market achieved staggering gains. Grand View Research, a prominent US research firm, predicts the global lithiumion battery market will be $US135 billion by 2030.

If Grand View is correct, the lithium market will have compound annual growth of about 18 per cent this decade. Few sectors have such growth prospects.

GREEN METAL ETFS ARRIVE

In Australia, the Global X Battery Tech and Lithium ETF (ACDC) has starred. Launched in August 2018, ACDC had $530 million in assets in December 2022, ASX data shows.

The ETF, which invests in local and global resource companies that supply materials for batteries, has a three-year annualised return of 22 per cent. That makes it the top-performed ETF over that period, although ACDC’s one-year return is negative.

ACDC’s success has encouraged other green-metal ETF launches. In November 2022, Global X launched the Global X Copper Miners ETF (WIRE) on the ASX.

WIRE provides exposure to 40 global copper producers in Canada, Australia, China, Japan and other markets. They include Freeport-McMoRan, Ivanhoe Mines, First Quantum Minerals and other wellknown copper producers.

Copper has appealing long-term prospects. The metal is becoming harder to find and mine and there has been underinvestment in new copper mines. At the same time, copper demand has solid fundamentals as more people switch to EVs.

In October, BetaShares launched the BetaShares Energy Transition Metals ETF (XMET). XMET tracks an index of 36 global companies that provide raw materials for renewable-energy generation, battery storage and EVs.

About a third of XMET is invested in Australian green-metal stocks such as Pilbara Minerals, IGO and OZ Minerals.

Global X in October launched the Global X Green Metal Miners ETF (GMTL) to provide exposure to 46 global resource and chemical companies. Around 40 per cent of GMTL is invested in China, giving the ETF a more speculative flavour.

In June, BetaShares launched ETFs over companies involved in solar and uranium. The BetaShares Solar ETF (TANN) provides exposure to a range of solar-energy suppliers, producers and manufacturers.

The BetaShares Global Uranium ETF (URNM) provides exposure to companies involved in uranium exploration and production, modern nuclear energy and/or companies that hold physical uranium or uranium royalties.

URNM is an interesting, albeit speculative, idea for investors who believe nuclear energy will be increasingly accepted as a safe, reliable and low-carbon energy source, whereby uranium would be the key raw material.

Although these and other green-metal ETFs have a strong sales pitch, much can go wrong. Global X in October 2020 launched the Global X Hydrogen ETF (HGEN) to much fanfare, amid booming interest in hydrogen as an emerging clean-energy source.

HGEN has burnt investors since launching. The ETF lost 36 per cent over 12 months to end-December 2022, ASX data shows. Hydrogen has interesting long-term prospects, but as an investment it is too early and speculative for most people.

LONG-TERM PROSPECTS APPEAL

Nobody doubts demand for green metals will rise as the world transitions towards clean energy. More copper will be needed to make EVs; more lithium and nickel will be needed for batteries; and more uranium for nuclear energy.

New ETFs are focused on the raw materials needed to create renewable energy infrastructure.

But investors who buy thematic ETFs in green metals today do so after a strong rally in parts of that market. Buying into a sector after it booms is often a recipe for short-term losses, meaning investors need to take extra care with green-metal ETFs.

Underlying commodity prices for the companies owned by the ETFs can be highly volatile and hard to predict, at least in the short term. There is little room for error when stocks trade on high valuations in anticipation of higher commodity prices.

Nevertheless, green-metal ETFs are a useful tool. Prospective investors who use them should have at least a 3-5-year investment horizon, preferably longer. They should also have the ability to withstand short-term losses and high volatility, should they occur.

The key is positioning green-metal ETFs in investment strategies. Green-metal ETFs should be considered a portfolio “satellite” that can produce higher returns (with higher risk) than portfolio “core” investments, such as an ETF over the ASX 200 Index.

Investors should also consider how they combine portfolio exposure to fossil-fuel

producers and green-metal companies. In the next few years, the smart play could be higher exposure to coal and energy producers, with a view to transitioning gradually from fossil fuels to green-metal companies, depending on price movements.

The key is watching and waiting for better value. Buying green-metal ETFs during market or sector corrections makes a lot more sense than chasing them higher

after price rallies. For now, green-metal ETFs should have a spot on portfolio watchlists.

The good news is that Australian retail investors finally have more tools to invest in global resource stocks in green metals and other mining sub-sectors. The lack of resource ETFs made no sense in a sharemarket with such a high weighting in resource stocks.

— ANALYSIS — WITH REGINA MEANI

Copper continues to hold its status as an economic bellwether. Its failure to break away through its peak zone in the $US4.70–5 per pound (lb) area in early 2022 confirmed the peaks in both the US and Australian markets.

It went on to set the stage for the global decline through much of 2022 as depicted by the MSCI World Index (see below) which represents a broad cross-section of global markets. In early 2023 the copper price led global markets higher.

The 2022 copper price decline turned from a low at $US3.14/lb in mid-July 2022 with the price recovering and initiating a reversal phase. This

produced volatility in the $US3.25–3.75/lb zone from July into October before the price regained momentum to break through $US4/lb.

Early January 2023 saw the price rise strongly to reach resistance between $US4.20–4.40/lb aligning with its next testing point for higher prices. A breakaway through $US4.50/ lb would signal another stage higher towards $US4.75/lb and potentially towards $US4.90–5/ lb where the previous peak would be tested.

Over the near-term a drop below $US4.05/ lb could delay the upward path and see the price drop back towards support located in the $US3.75–3.90 area. A fall through this area would indicate a more severe setback in prices.

Some high-profile Australian copper stocks are Sandfire Resources, Aeris Resources and Cyprium Metals.

An award-winning and pioneering company, Sandfire Resources owes much of its success to the high-grade DeGrussa copper-gold deposit, located 900km north-east of Perth in Western Australia.

The strong cash flows from this project provided the company with the means to obtain the MATSA mining operations in Spain, and the development of a new long-life copper project in Botswana, the Motheo copper mine.

Sandfire holds an impressive, high-quality exploration portfolio traversing Australia, the Kalahari copper belt in Botswana and Namibia, Montana in the United States and the Iberian Pyrite belt in Spain and Portugal.

The company is committed to running environmental and social operations as evidenced by its pioneering move into renewable energy with the largest off-grid solar farm in Australia at DeGrussa.

The share price history for Sandfire has been volatile with the price action from 2010 allowing wide price swings between $2.75 and $10 but with much of the action contained between $4.60 and $8.60.

When the price fell outside this range to $3.28 on October 20 last year it hit a turning point, spurring a break through $4.30. This action empowered the price to rise to the $5.60–5.70 area in December where it paused to consolidate before beginning to rise again with the copper price early in January this year.

The price will meet its next barrier zone in the $6.50–7 area where another pause may occur while maintaining the potential to head towards the top of the range in the $8–8.60 area

The copper bell keeps ringing

Comex Copper (priced in cents) against the MSCI World Index.

and potentially beyond. A drop below $5.60 could produce a fall to support around $5.20 with risk of a further fall to $4.75 which would delay the upward path.

A mid-tier base and precious metals producer, Aeris Resources holds a diverse portfolio of operating mines and development assets. Its Tritton copper operation is a long-life, underground copper mine in the Cobar region of central New South Wales.

In north Queensland, the company’s operations comprise the underground Mt Colin copper mine, the Barbara development project and a prospective, 1102-square-kilometre tenement package in the Mt Isa-Cloncurry region.

Elsewhere in Queensland, Aeris owns the established Cracow gold operation – which it acquired in July 2020 – while in Victoria and Western Australia, the company owns the

advanced Stockman copper and zinc project in East Gippsland and the Jaguar zinc, copper and silver project in the Eastern Goldfields, respectively.

In a similar fashion to Sandfire, the Aeris share price has experienced wide price swings, largely contained between $0.125 and $1.80 from 2013.

In November last year, the price achieved a higher low at $0.275 and performed an island reversal. This action boosted a strong recovery with the price rising rapidly to locate resistance at $0.67 on December 5, 2022. In reaction the price pulled back within a potentially broader reversal to consolidate above $0.50.

The price may continue this process, oscillating between $0.50 and $0.70 with a breakaway through $0.75 preceding a potential move towards $0.85 and then $1 and potentially higher. The threat to this scenario would be a drop below $0.50 for a price fall into the $0.40–0.45 range.

Cyprium Metals has advanced exploration and development projects located in Western Australia. Cyprium’s current portfolio of assets includes more than 1.6 million tonnes of contained copper.

The Nifty copper mine is an advanced restart heap-leach project, while the Maroochydore copper project is one of Australia’s largest undeveloped copper deposits. The Paterson exploration project is a prospective joint venture with IGO and the land package is contiguous with much of the Nifty copper mine and Maroochydore copper project tenement boundaries.

The Murchison copper-gold project comprises the Cue and Nanadie Well copper mines and represents an earlystage development opportunity for the company.

Cyprium’s heap-leach processing methodology reduces the environmental footprint of copper mines.

The Cyprium share price followed a long and volatile downward path from 2004. In December 2017, the price broke away from the downtrend and oscillated in a broad range as it attempted a change in direction.

In mid-2021, this attempt failed and the price fell to a new low point at $0.057 by October 2022. A reversal has progressed through its second stage to reach $0.15 in early January. The price may pause ahead of tackling its next barrier at $0.20-0.21, with the potential towards $0.35 and possibly higher.

Note: as prices rise to new target levels, stop loss levels should be adjusted higher.

The Sandfire share price in recent years.

The Aeris share price in recent years.

Commodities in 2023: Exploring five key themes

After the whirlwind of 2022, how will commodities perform in 2023? We enlist Fitch Solutions’ Sabrin Chowdhury to provide some commodity predictions for the year ahead.

The global resources sector has had to become accustomed to volatility, with the market in a constant state of flux due to compounding occurrences.

When mining companies aren’t navigating supply chain disruptions, they’re weathering labour shortages or extreme weather events that bring operations to a halt.

Then there’s the broader geopolitical and economic uncertainty which is largely out of a miner’s control. All of these happenings have an effect on commodity prices.

So how will commodities perform in 2023? We take a look at five key themes that could play out in the year ahead, focusing our gaze on metals and energy commodities.

IRON ORE’S REDEMPTION

Iron ore prices largely hinge on the situation in China. When China is driving stimulus and development then it requires more iron ore as a foundation of steel, which is the backbone of new infrastructure.

According to the Australian Government’s Resources & Energy

Quarterly: December 2022, China comprises 69 per cent of global iron ore imports, with Japan and the European Union (7 per cent each) and South Korea (5

per cent) other buyers of the commodity.

After a tumultuous 2022 that saw prices bottom out below $US80 per tonne (t) in late October before surging in the last few months of the year, iron ore continued its run into 2023, scaling a six-month high of more than $US125/t in January.

This is still lower than 2021 levels, where iron ore rose above $US200/t, and even early 2022 when the metal was buoyed by the Russia–Ukraine conflict and reached $US150/t.

Fitch Solutions head of commodities analysis (global) Sabrin Chowdhury said the outlook for iron ore prices was strong due to China’s easing of COVID-19 restrictions and subsequent reopening of the economy. But it won’t ramp up until the second quarter (Q2) of 2023.

“The easing of COVID restrictions means factory activity should gear up by Q2 or so, because in Q1, we’re still seeing a lot of disruptions due to the rise in COVID cases and also the seasonal lull due to the Chinese New Year,” Chowdhury told Australian Resources & Investment

“We’re still expecting to see iron ore demand or metals demand still weak compared to the sentiment in the market. The sentiment is very strong towards metal prices due to China, so things should gear

up by Q2 and the latter half of the year.”

But continued economic uncertainty will remain a headwind.

“We also must take into account that there are many risks surrounding the global economy so global demand is set to remain weak as the economy slows,” she said.

“China is obviously the outperformer and dictates most of the metal prices, so our outlook remains positive, but we are wary of global risks that could cap price strength going forward.”

The Conference Board forecast US economic weakness to intensify through the first months of 2023, plagued by persistent inflation and a hawkish Federal Reserve.

The non-profit US research organisation expected real GDP growth to slow from 2 per cent in 2022 to 0.2 per cent in 2023.

When asked whether there was a risk China would return to a COVID lockdown in the future, Chowdhury said “it’s so hard to tell”.

“For now, I think they will stick to this policy shift that they have taken up,” she said.

“We do see less lockdowns than we have seen last year, but there is a risk if they reinstate these policies once again, if healthcare facilities are struggling to cope with the number of cases, then there could

The case for uranium continues to intensify globally.

be a return to previous strict lockdowns. But for now, we’re positive.”

HOW WILL COPPER PERFORM?

While copper prices reached an all-time high in early 2022 as the Russia–Ukraine war began, the base metal cooled during the second six months of the year, affected by weaker economic activity in China.

But the outlook has improved, with Fitch Solutions recently revising up its 2023 price forecast from an average of $US8400/t to $US8500/t.

“The outlook for copper is … strong,” Chowdhury said. “It’s not only because of a weaker US dollar or a rebound in mainland Chinese demand, but also because there are significant supply issues to copper.

“The copper market is … in deficit and the deficit will only get deeper over the coming years. There are so many issues to copper supply, especially in Latin America. In countries like Chile, Peru, we have seen so many strikes as well as resource nationalism, disputes with governments for which production has remained halted. These issues are not going to subside any time soon.

“We do expect resource nationalism in Latin America only to get worse in the coming years, especially this year, as well as the global economy slowing. This will definitely place a floor under copper prices, so the outlook for copper is definitely strong even in the short term.”

Fitch forecasts copper to edge higher year by year, reaching $US9100/t in 2024, $US9400/t in 2025 and $US9800/t in 2026. By 2031, copper could reach $US11,500/t.

While there is a significant pipeline of copper projects to come online in the coming years, particularly in Chile, Peru, Australia and Canada, Fitch expects supply improvements to be outpaced by demand growth from around 2026, primarily driven by the electric vehicle (EV) market.

“Our Autos team forecasts global EV sales to increase 279 per cent from 2021 to 2031 and reach 24.7 million units per year by the end of the forecast period,” Fitch said in a recent report.

ANY MORE BATTERY METALS SURPRISES?

Battery metals such as lithium, cobalt, nickel, graphite, manganese and vanadium

will become increasingly important raw materials in the global green transition.

That narrative hasn’t changed in recent times and Chowdhury doesn’t expect any big surprises from battery metals in 2023.

“The (battery metals) market is gearing up once again, especially from the auto sector in China,” she said. “But lithium prices have risen to such high levels just last year, and they are on a weakening track since November, so I don’t think prices will spike much higher than they already have last year.

“A lot of supply is … coming online in Australia and other markets, so I think supply strength is likely going to cap lithium prices.”

Emerging Australian lithium projects include Core Lithium’s Finniss project in Northern Territory, Liontown Resources’ Kathleen Valley project in WA and Covalent Lithium’s Mt Holland project in WA.

Core began shipping a direct shipping ore (DSO) product from Finniss in early 2023 as a precursor to imminent spodumene concentrate production. A 2021 definitive feasibility study indicated Finniss would have the capacity to produce

Copper is buoyed by an increasing demand profile in the years to come.

173,000 tonnes per annum of lithium concentrate.

Liontown expects to achieve first production at Kathleen Valley in mid-2024, with an initial production capacity of 500,000 tonnes per annum of spodumene concentrate, while the Mt Holland is forecast to achieve first production in the second half of 2024, with 45,000 tonnes per annum of a refined lithium hydroxide product to follow.

Chowdhury said the outlook was similar for cobalt, with prices to be affected by new supply coming online in the coming years, such as Cobalt Blue’s Broken Hill project.

While there are varying grades of nickel produced around the world, a class one (high grade) nickel product is required for EV manufacturing. Chowdhury expected class one nickel prices to rise amid

continued Russian supply concerns.

“I can only expect high-grade nickel prices to keep going up,” she said. “Russia was one of the largest producers of highgrade nickel and there’s such a limit on high-grade nickel production globally.

“So I would expect high-grade nickel prices to continue being high until the tensions with Russia subside, which could take years.”

A July 2022 report from Fitch indicated that Russia ordinarily accounted for about 21 per cent of the global class one nickel production, with Canada comprising 17 per cent, Australia 14 per cent and China 10 per cent.

Russian company Norilsk Nickel (Nornickel) – the world’s largest producer of high-grade nickel – produced 59,000 tonnes of the base metal in the third quarter

of 2022, a 22 per cent rise from the quarter before.

However, in December the company said it was considering reducing nickel output by about 10 per cent in 2023 as European buyers refuse Russian supplies. The US has sanctioned top Nornickel shareholder, Vladimir Potanin, but the company itself hasn’t been hit with any penalties.

But Nornickel has still been affected by the Russia–Ukraine war, with disruptions to logistics, insurance and shipping. Finland’s state railway ended freight traffic from Russia at the end of December, cutting off Nornickel’s transport route to its Harjavalta refinery in Finland.

WILL THE COAL BOOM SUSTAIN?

Last year was the year of coal, with the energy commodity benefiting from the advent of the Russia–Ukraine war, which quelled energy supplies from Russia, a leading exporter of oil, gas and coal.

As European nations scrambled to access alternative energy supplies amid sweltering summer conditions, coal prices surged, benefiting the Australian coal sector.

This saw the likes of Whitehaven Coal and Yancoal enjoy record coal prices and soaring profits. Whitehaven’s average coal price for the September quarter of 2022 was $581/t, while Yancoal’s average coal price was $481/t across the three months.

I think coal demand is set to remain strong for at least 2023, if not also 2024. But it should ease a little bit compared to late 2021 and 2022.

The situation in China continues to have a big influence on commodity prices.

But windfalls were quelled by extreme La Niña-induced rainfall, with production affected at many New South Wales and Queensland coal mines throughout 2022.

Chowdhury said she expected coal demand to remain high in 2023 as the energy crunch continues.

“The energy crisis isn’t resolved yet,” she said. “And as summer comes (in the northern hemisphere) coal will remain the

fuel of choice for most of Asia, which is the case anyway, but also for quite a large part of western nations as well.

“I think coal demand is set to remain strong for at least 2023, if not also 2024. But it should ease a little bit compared to late 2021 and 2022.”

Another interesting development that could affect coal demand is the partial lifting of China’s ban on Australian coal.

News emerged in early January that as China was seeking more coal for its power and steel plants amid disruptions caused by the Russia–Ukraine war, it was planning to partially lift the ban and allow three central government-backed utilities and the country’s top steelmaker to resume imports.

The Resources & Energy Quarterly: December 2022 forecast Newcastle thermal coal futures to decline from $US360/t in 2022 to around $US200/t in 2024, but prices are not expected to drop to pre-COVID lows anytime soon.

The report also forecast prices for Australian premium hard coking coal to decrease from $US377/t in 2022 to around $US230/t in 2024.

IS IT URANIUM’S YEAR?

As more and more countries turn to nuclear power amid the Russia–Ukraine war, uranium is becoming increasingly popular.

The uranium price hovered around $US50 per pound (lb) during 2022, which is significantly higher than pre-COVID levels, where the energy commodity averaged below $US30/lb between early 2016 and early 2020.

The Resources & Energy Quarterly: December 2022 expects uranium prices to rise to almost $US60/lb in 2024 but increased global uranium supply is forecast to contain prices long-term.

Boss Energy is looking to bring Australia’s next uranium mine online in late 2023 with the restart of the Honeymoon project in South Australia. And with the US, Europe and Japan looking to boost their nuclear capacity, looks like Boss has timed its run nicely.

The Vogtle plant in Georgia, US is expected to start up in 2023, making it the first new US reactor in 30 years, while Sweden, Germany, Poland and France are either expanding their nuclear strategy or extending the life of nuclear plants that were originally scheduled to close.

It was announced in late 2022 that Japan would adopt a new policy promoting greater use of nuclear power to reduce carbon emissions and ensure stable power supply amid global fuel shortages.

This is a significant change from previous anti-nuclear sentiment, which was influenced by the 2011 nuclear disaster at Fukushima.

The iron ore outlook is strong as China relinquishes its zero-COVID policy.

Arafura rises up the ASX ranks

Arafura Rare Earths was one of the ASX success stories of 2022, with the company’s share price jumping from around $0.20 in February to above $0.40 in April.

By year’s end, Arafura had trumped $0.50 and ticked over a market capitalisation of $1 billion.

Investors are buying into Arafura’s rare earths story, which is underpinned by the planned Nolans mine and processing operation in Northern Territory, set to commence construction by the third quarter (Q3) of 2023 paving the way for first production in the second half of 2025.

Arafura secured more than $160 million across two share placements in August and December 2022, while its recent share purchase plan (SPP) was 580 per cent oversubscribed, attracting $81.5 million in applications (5510 applications in total) over the desired $12 million goal.

The company chose to accept $8 million of oversubscriptions due to the insatiable interest, having to scale-back applications as a result.

Arafura managing director Gavin Lockyer said investors are starting to realise the criticality of rare earths in the green transition.

“Without NdPr (neodymiumpraseodymium) magnets, a lot of the

new (renewable) applications will not be effective,” he told Australian Resources & Investment

“Most analysts are now forecasting a significant supply gap and when you look around at all the other projects being developed, there’s only a handful that are likely to get into development in time to help the looming supply-demand shortage and I think Arafura is obviously one of those.”

NdPr, which will be Nolans’ main product, are two of the world’s most soughtafter rare earth elements. Every electric vehicle (EV) drivetrain requires up to 2kg of NdPr oxide, whereas a three-megawatt (MW) direct drive wind turbine uses 600kg.

When you consider the expected growth of the EV sector, NdPr will be in high demand. Fitch Solutions forecasts global EV sales to increase 279 per cent from 2021 to 2031, reaching 24.7 million units per year.

UBS has forecast a 20,000-tonne rare earths deficit by 2030.

Lockyer said the appeal of rare earths has also heightened in the wake of China’s zero-COVID policy, which saw the country and rare earths superpower in lockdown for large portions of 2022.

“What COVID has highlighted is when China has such a huge influence over the (rare earths) supply chain and when the Chinese suppliers of rare earth magnets had to close their factories due to COVID, that

With first construction of its Nolans rare earths project on the horizon, Arafura is realising its place as one of the world’s most important critical minerals companies.

Arafura aims to commence construction of the Nolans project in the third quarter of 2023.

I think we’re the only rare earths project that I know of globally that has publicly announced a binding offtake agreement with a Tier-1 motor vehicle manufacturer.

had a real ripple effect around the world, particularly in the auto sector as well as the offshore wind turbine sector,” Lockyer said.

“Suddenly, large automotive groups realise that for a little component that only represents about 0.05 per cent of the cost of the vehicle, without it they don’t have an electric vehicle.

“So over the last two years with COVID, I think that’s really changed the way that governments, but also the OEMs (original equipment manufacturers) are looking at this sector.

“That’s why I think you’re seeing things like binding offtake agreements being signed with Hyundai and other investors coming into the (rare earths) sector.”

In November last year, Arafura signed a binding NdPr offtake agreement with Hyundai Motor Company and Kia Corporation.

Under the seven-year offtake agreement, Hyundai and Kia will have access to 600 tonnes per annum (tpa) of NdPr oxide in year one, increasing to 1500tpa in years four to seven to align with Nolans’ ramp up.

Lockyer said this offtake agreement was the culmination of years of work.

“The cream on the top of a number of years of lots of hard work and lots of meetings and lots of travel from my team was the binding agreement with Hyundai,” he said.

“I think we’re the only rare earths project that I know of globally that has publicly announced a binding offtake agreement with a Tier-1 motor vehicle manufacturer, so I think that’s a really positive sign of the quality of our project and the fact that our product is in great need.”

Lockyer said the offtake agreement cemented Hancock Prospecting’s decision to invest in Arafura, where the company, led by mining magnate Gina Rinehart, committed to invest $60 million across two tranches as part of Arafura’s $121 million share placement in December.

When asked how Hancock, an iron ore major, would be involved in a rare earths project, Lockyer said discussions had been around Hancock primarily being a financial investor.

“Our discussions with them have been around simply (them) as a financial investor,” he said. “But certainly, they do have a great deal of experience in terms of large project execution. So me personally would certainly be looking to draw on that expertise if the opportunity arose.”

Early 2023 will see Arafura make a final investment decision (FID) regarding Nolans, before pre-construction preparations continue, including further financing.

Lockyer said Arafura had effectively already achieved FID in his eyes.

“FID is an interesting one because it means lots of different things to different people,” he said. “Typically, I think it reflects terminology that’s probably more aligned with large organisations that have many projects on the go and it’s a board decision that they’re going to go ahead with that particular project.

“I think the fact that we’re doing onground work as we speak, and we’re starting to commit to long-lead items, I would personally say that we’ve gone through FID without actually declaring as such.

“Our plan (for the months ahead) is we’re starting the commencement of procurement, we’re starting commencement of early earthworks and then on the financing side, we’re finalising term sheets with the lenders.

“We would target having all our lending package – the debt and the equity – nicely bound up by about the middle of the year. And then we’d be going into full blown construction by around Q3 this year.”

With a hunk of cash, investors and a cornerstone offtake partner behind it, Arafura is strongly placed to enter the rare earths production ranks.

Its arrival will be welcome news for EV manufacturers all over the world, while it will also elevate Australia’s stature on the global critical minerals stage.

Arafura plans to mine and process ore to oxide at a single site.

A pre-construction site inspection took place in December 2022.

The rise of Australia’s lithium refining industry

Australia produced its first refined lithium in 2022. We take a closer look at this growing industry and Australia’s broader critical minerals imperative.

While Australia is the world’s biggest producing country of lithium raw materials, it only exports a small amount of refined lithium.

China dominates the global lithium refining industry, producing close to 60 per cent of the world’s lithium chemicals and 80 per cent of the world’s lithium hydroxide, according to International Energy Agency (IEA) data.

Lithium hydroxide is a key ingredient in the lithium-ion batteries used in electric vehicles (EVs).

But the winds are changing, and Australia is beginning to complement its global-leading spodumene concentrate production with a means to process it.

The Morrison Government supported the onshore lithium refining industry through its $1.3 billion Modern Manufacturing Initiative (MMI).

This supported ventures such as the ‘midstream’ lithium project being developed by Pilbara Minerals and Calix, where lithium salts will be produced via an innovative refining process.

If successfully developed and proven, the new process could mean spodumene concentrate is replaced by a higher-grade lithium salts product.

Pilbara Minerals and Calix advanced their partnership from a memorandum of

The Kwinana lithium hydroxide plant sources spodumene concentrate from the Greenbushes mine in WA.

understanding (MoU) to a joint venture agreement in November last year, paving the way for a final investment decision (FID) to be made on a demonstration plant in the June quarter of 2023.

Covalent Lithium’s Mt Holland project in WA, aiming for first production in the second half of 2024, aims to produce an initial 45,000 tonnes per annum of lithium hydroxide.

Liontown Resources is also investigating the potential for an integrated refinery at its Kathleen Valley lithium project in WA. This would see spodumene upgraded to lithium hydroxide monohydrate, another form of refined lithium.

Australia’s first refined lithium was produced in the form of lithium hydroxide from the Kwinana plant in WA in May 2022. Kwinana is shared in a joint venture (JV) between Tianqi Lithium Corporation (51 per cent) and IGO (49 per cent).

The JV partners will look to ramp up Kwinana to a nameplate production capacity of 24,000 tonnes per annum.

Then there’s the Kemerton JV between Albemarle Corporation (60 per cent) and Mineral Resources (40 per cent), which has involved the construction of the Kemerton lithium hydroxide processing facility in Western Australia.

Kemerton achieved first production in mid-2022 and is currently transitioning through commissioning for Trains 1 and 2 of the operation as it looks to achieve a nameplate production capacity of 50,000 tonnes per annum (tpa) of lithium hydroxide.

Albemarle is set to make an FID on Kemerton’s Trains 3 and 4 this year, including plans for construction of a

$100-million-plus accommodation precinct to support construction and increased operations staff over the long term.

This could pave the way for Kemerton’s expansion to 100,000tpa, with over 1000 new jobs in construction.

PricewaterhouseCoopers (PwC) Australia partner Marc Upcroft said Australia’s increasing lithium refining presence was significant.

“In a few years, we’ll make up 10 per cent of global (lithium) hydroxide capacity and double that before the end of the decade,” he told Australian Resources & Investment. “That’s quite meaningful in a short period of time.

“At the other end, you’ve got some people, including government, suggesting we should go the whole way, we should go all the way down to lithium-ion batteries, we should go all the way to building our own EVs on the back of the lithium that’s in the ground.

“Some of that feels like it’s a big challenge but I guess my perspective on this is that each time we take one step forward in that supply chain and that value chain, that then gives us the right to look at the next opportunity.

“And I think if we do that, we’ll find ourselves progressively moving along. As to whether we’ll get to batteries and EVs, I’m not so sure in that specialised area, but certainly when you think of vanadium flow batteries, for example, that should be a sector we should be able to easily jump to.”

Australia has an emerging lithium-ion battery manufacturing industry. Energy Renaissance began manufacturing lithium-ion batteries in October 2021, using imported lithium-ion battery cells.

Energy Renaissance has been building a battery manufacturing gigafactory, called ‘Renaissance One’, in Tomago, New South Wales, which is set to have an initial battery production capacity of 66MWh (megawatt-hours).

The Imperium3 plant in Townsville, Queensland is another proposed Australian lithium-ion battery manufacturing facility. ASX-listed Magnis Energy Technologies owns a 33 per cent stake in the plant.

The project was initially supported by a $3.1 million Queensland Government grant in 2020 where a feasibility study was completed, but there had been no recent updates on the plant’s progress when this article was written in early January.

There are mixed views on the viability of a local renewable battery manufacturing industry within the wider mining fraternity. While Chris Ellison’s Mineral Resources and Andrew Forrest’s Wyloo Metals have endorsed the idea, Wesfarmers, which jointly owns the Mt Holland lithium project in WA with SQM, has been less supportive.

Wesfarmers managing director of chemicals, energy and fertilisers (WesCEF) Ian Hansen told the Australian Financial Review in an August 2022 feature that battery manufacturing in Australia is “a lot more challenging” given there is no local EV manufacturing.

“The more we learn about the battery sector, the more we see the battery manufacturers having very close relationships with the individual car manufacturers, the OEMs (original equipment manufacturers) because the batteries really dictate the car’s performance,” Hansen said.

Kwinana, which lies about 38km south of Perth, is becoming a hotbed for lithium refining.

“The design of the batteries, the nuance of batteries – both the chemistry and packaging – reflect the performance of the car and so individual OEMs want to have their battery suppliers very close to them, so they can rapidly enhance, modify, change the battery design or packaging design to optimise the vehicle design.

“I think the prospect of a battery manufacturing sector in Australia is a little bit more challenging than us getting involved in further minerals opportunities.”

Wyloo chief executive officer Luca Giacovazzi has been more optimistic.

“WA has all the ingredients we need to become a battery producer – we have the metals, the mining expertise, nearby end markets and, by leveraging our abundant renewable energy potential, we could produce some of the most ESG friendly batteries in the world,” he told the Australian Financial Review in an August 2022 feature.

Wyloo recently entered into an agreement with IGO to jointly evaluate the viability of developing a downstream nickel processing facility in Australia. The WA-based company also has investments in Australian mining companies, Mincor Resources, Hastings Technology Metals and Regis Resources.

No matter the scale of Australia’s lithium refining and battery manufacturing industries, there won’t be a shortage of future demand for these offerings.

In order to achieve global decarbonisation, the world is going to need more mines, and more processing and manufacturing capacity to ensure renewable technologies are developed at the desired speed and scale.

Lithium is just one of the metals key to a net-zero reality, with nickel, copper, cobalt, vanadium and rare earths just a few other crucial commodities.

Most of these make up the ‘critical minerals’ that increasingly permeate the mining vernacular.

PwC’s 2021 ‘Aussie Mine’ report was the firm’s first signal that critical minerals were an important thematic for the local mining industry. When PwC prepared the 2022 Aussie Mine report, the narrative had accelerated.

“The last Aussie Mine report was our first signal that critical minerals was that important space ... to watch,” Upcroft said. “A year on, the big change is now we’ve got governments, financiers, mining companies, customers, and to some extent the community all really switched on to what is happening in amongst all of that.

“That’s a really significant change from a year before. It’s a starting point and provides a platform to be able to start to think differently in relation to what can we do, because fundamentally, without really accelerating things from here in terms of exploration, right through to supply of critical minerals, decarbonisation doesn’t happen on the same timeframe that we want it to.”

The 2022 Aussie Mine report reiterates what PwC calls ‘mission critical’, where Australia has the opportunity to take the critical minerals opportunity with both hands, with nationwide economic benefits, jobs and skills, and a sustainable, climatefriendly society the long-term possibilities.

Upcroft said given Australia’s strong critical minerals endowment and stable geopolitics, there is a “significant advantage” to capitalising on critical minerals opportunities.

But to realise these opportunities, Australia is going to have to “think differently”. When asked whether there were any levers Australia can anchor to do this, Upcroft said “I don’t think it’s which lever, I think it’s all of the levers”.

“Some of the things we’ve thrown out there for the industry and government to think about include what can be done at the front end in terms of incentivising exploration for the right minerals,” he said.

“Not necessarily exploration of everything, but for those minerals where we can see that we’ve got an advantage or where the shortage is coming fast. Or it might even be an industry situation where they can’t necessarily fund that riskier front-end process well enough.”

Upcroft said it could also be worthwhile introducing mechanisms to support market stabilisation.

“One of the ideas we had is should there be, for some minerals, strategic reserves of minerals to help stabilise the market, to help those companies that have a great idea and a great project, but the financing sector is not quite ready to throw money behind a company in an industry where you’ve got really high volatility in prices,” he said.

“So could there be some mechanisms there to help stabilise markets, to help the financing and investment markets get over some of their challenges a little easier.”

An example of this in action is Western Australia’s domestic gas policy, where liquefied natural gas (LNG) projects must reserve 15 per cent of LNG production from each LNG export project for domestic use.

PwC sees a strong future for Australia’s lithium refining industry.

This has kept WA gas prices down amid a recent energy crisis, while gas prices have soared on the east coast where a less explicit “gas trigger” is in place at the whim of the Minister of Resources.

It is an exciting time for Australia’s lithium industry, where a globally-renowned mining sector is complemented by growing refining capabilities.

Lithium is the poster child for Australia’s critical minerals aspirations, and its continued evolution in Australia could be a source of inspiration for other battery metals.

Australia is not only trying its hand at lithium refining but also renewable battery manufacturing.

The gold outlook for 2023

The World Gold Council offers its outlook for the gold market in 2023, with a number of factors to potentially act as headwinds or tailwinds for the commodity.

The global economy is at an inflection point after being hit by various shocks over the past year. The biggest was induced by central banks as they stepped up their aggressive fight against inflation.

Going forward, this interplay between inflation and central-bank intervention will be key in determining the outlook for 2023 and the performance of gold.

Economic consensus calls for weaker global growth akin to a short, possibly localised, recession; falling – yet elevated –

inflation; and the end of rate hikes in most developed markets. Here’s our key takeaways for an environment that carries headwinds and tailwinds for gold:

• A mild recession and weaker earnings have historically been gold-positive

• Further weakening of the dollar as inflation recedes could provide support for gold

• Geopolitical flare-ups should continue to make gold a valuable tail risk hedge

• Chinese economic growth should improve this year, boosting consumer gold demand

• Long-term bond yields are likely to remain high but at levels that have not historically hampered gold

• Pressure on commodities due to a slowing economy is likely to provide headwinds to gold in the first half (H1) of 2023

On balance, this mixed set of influences implies a stable but positive performance for gold.

That said, there is an unusually high level of uncertainty surrounding consensus expectations for 2023. For example,

The interplay between inflation and central-bank intervention will be key to gold’s 2023 performance.

central banks tightening more than is necessary could result in a more severe and widespread downturn.

Equally, central banks abruptly reversing course – ie halting or reversing hikes before inflation is controlled – could leave the global economy teetering close to stagflation. Gold has historically responded positively to these environments.

On the flipside, a less likely ‘soft landing’ that avoids recession could be detrimental to gold and benefit risk assets.

Excluding the global financial crisis and COVID, this would mark the slowest pace of global growth in four decades and meet the International Monetary Fund’s previous definition of a global recession – ie growth below 2.5 per cent.

Policy and inflation: Higher for longer

It is almost inevitable that inflation will drop this year, as further declines in commodity prices and base effects drag down energy and food inflation. Furthermore, leading indicators of inflation tell a consistent story of a moderation.

This brings us to the implications for monetary policy. The policy tradeoff for nearly every central bank is now particularly challenging as the prospect of slower growth collides with elevated, albeit declining, inflation. No central bank will want to lose its grip on inflationary expectations, resulting in a strong bias towards inflation fighting over growth preservation. As a result, we expect monetary policy to remain tight until at least mid-year.

In the US, markets expect the Fed to start cutting rates in the second half of 2023. Elsewhere, markets expect policy rates to come down more slowly than in the US, but by 2024 most major central banks are expected to be in easing mode.

MACROECONOMIC IMPLICATIONS FOR GOLD

Gold is both a consumer good and an investible asset. As such, our analysis shows that its performance is driven by four key factors and their interactions:

• Economic expansion – positive for consumption

• R isk and uncertainty – positive for investment

• Opportunity cost – negative for investment

• Momentum – contingent on price and positioning

These factors are in turn influenced by key economic variables such as GDP, inflation, interest rates, the US dollar, and the behaviour of competing financial assets.

Recession: Portfolio ballast

A challenging combination of reducedbut-still-elevated inflation and softening growth demands vigilance from investors, with the likelihood of a recession looming large.

Gold, on the other hand, could provide protection as it typically fares well during recessions, delivering positive returns in five out of the last seven recessions. Furthermore, a recession is not a prerequisite for gold to perform. A sharp retrenchment in growth is sufficient for gold to do well, particularly if inflation is also high or rising.

BUMPY ROAD AHEAD

Economic growth: Short, sharp pain

There are now many signs of weakening output due to the speed and aggression of hiking moves by central banks. Global purchasing manager indices (PMI), now in contraction territory, indicate a deepening downturn across geographies, and economists are warning of a material recession risk.

Consensus forecasts now expect global GDP to rise by just 2.1 per cent this year.

The World Gold Council believes it is almost inevitable that inflation will drop this year.

Inflation: Disinflation ahead

While inflation may indeed come down this year, there are several important considerations that impact the gold market.

First, central bankers have inflation targets and while a lower inflation rate is necessary, it is insufficient for central bankers to withdraw their hawkish policies. Inflation needs to get to target or below for that to happen. This raises the risk of an overshoot, in our opinion.

Second, our analysis suggests that the retail investor segment appears to care more about inflation than institutional investors, given a lower level of access to inflation hedges. They also care about the level of prices. Even with zero inflation in 2023, prices will remain high and are likely to impact decision-making at the household level.

Lastly, institutional investors often assess their level of inflation protection through the lens of real yields. These rose over the course of 2022, creating headwinds for gold.

In 2023, we could see some reversal of the dynamics at play in 2022, which were high retail investment demand but weak institutional demand.

Indeed, any sign of yields moving down could encourage more institutional interest in gold. On balance ,however, lower

inflation should mean potentially diminished interest in gold from an inflation hedging perspective.

US dollar: Trending down

After strengthening for nearly two straight years, the US dollar index (DXY) has recently seen a steep drop, despite continued widening of actual and expected rate differentials. It seems that reduced demand for dollar cash was the likely culprit.

We see a more complex dynamic driving the US dollar this year. First, the shoring up of energy needs in Europe will, in the immediate future, continue to reduce pressure on the euro.

Second, as central banks in Europe, the UK and Japan continue to take a more hands-on approach to their respective currency and bond markets, some of the pressure on domestic exchange rates could ease.

All things considered, the dollar is likely to be pressured, particularly as falling inflation and slower growth take hold. And a dollar peak has historically been good for gold, yielding positive gold returns 80 per cent of the time 12 months after the peak.

Although currently very high in real effective exchange rate (REER) terms and likely one of the catalysts for the recent turn, the starting valuation for the DXY has been less important in determining the magnitude of gold returns.

Geopolitics: A tightrope

If the past five years has taught us anything, it’s that shocks – trade war, COVID, war in Ukraine, and so on – can upturn even the most considered economic forecasts.

The latest conflict further undermines the existing model of global trade and capital integration, emphasising geopolitics’ return as a source of economic and financial risk.

And while macro factors form the basis for much of the impact on gold, geopolitical flareups could lend support to gold investment, which we saw in the first quarter of 2022 as investors look to shield themselves from any further turbulence.

Moreover, we attribute a large proportion of gold’s resilience in 2022 to a geopolitical risk premium, with gold’s return not fully explained by its historically important drivers.

China: A cautious rebound

Following a challenging 2022, we expect consumer gold demand in China to return to 2021 levels thanks to fewer COVID disruptions, a cautious economic rebound and a gradual pick-up in consumer confidence.

China’s economic growth is likely to improve this year. Signs that COVID-related restrictions are easing after the local authority optimised its zero-COVID policy in November should improve consumer confidence and boost economic activity.

Meanwhile, Chinese regulators announced measures to support the local property market, including credit extension to developers and loosening of home-buyer restrictions.

These stimuli may help stabilise real estate investment and housing demand and encourage an upturn in consumer demand.

Europe: A tale of two winters

European gold bar and coin investment is likely to remain robust in 2023 as retail investors – especially in Germanic markets – look to protect their wealth. Even a decline in inflation is unlikely to encourage lower demand, given underlying risks.

Europe is facing a severe energy crisis (as is the UK), driven by a reduction in natural gas from Russia. While gas storage levels have been raised to almost 90 per cent capacity, some question whether this will be sufficient for the current northern winter.

The World Gold Council considers the interplay of all relevant economic factors when completing its annual gold outlook.

There are also concerns about energy supplies to the region ahead of next winter, if the supply of Russian natural gas remains limited and recovery in China intensifies the global demand for energy.

CROSS-ASSET IMPLICATIONS FOR GOLD

Bonds: Holding on Consensus forecasts suggest a bull-steepening of the US yield curve. With the yield curve already more inverted than at any time since 1981, the long end already appears to have factored in a recession and further inversion seems unlikely.

We therefore see a stickier long end of the curve, even if the short-end drops significantly. Adding to this, both risk and term premia are likely to be higher, putting pressure on long-term yields to stay put. The former from an elevated bond-equity correlation and the latter from higher supply – through issuance and quantitative tightening.

Given gold has a stronger correlation to 10year than shorter-term yields, we see less of a rates-driven benefit to gold in 2023.

Although higher bond yields are associated with lower gold returns and might now be deemed attractive by some investors, current yield levels are historically not a hindrance to gold doing well   particularly when accounting for a weaker US dollar.

Equities: Ever the optimists

If 2023 is to bring us a mild recession, equities are headed for continued volatility. Moreover, current consensus EPS (earnings per share) estimates seem conspicuously robust against the deteriorating macroeconomic backdrop and what earnings typically do during periods of recessions.

Commodities: Caught in the crossfire

Despite a severely constrained supply outlook for many commodities, an economic slowdown is likely to dominate price action, at least in H1 as they get caught in the crossfire of housing and manufacturing weakness. As a result, gold – which is a sizeable component of the two main indices BCOM and S&P GSCI – could suffer due to its meaningful average correlation of 0.44 over the last 20 years.

RISKS TO ECONOMIC CONSENSUS

Gold’s return in the environment consensus in 2023 is likely to be stable but positive, as it faces competing crosswinds from its drivers.

But with the impact of the monetary shock still rippling through the global economy, any forecasts for 2023 are subject to more uncertainty than usual.

Severe recession/stagflation

In this scenario, inflationary pressures remain as geopolitical tensions spike.

Hypervigilant central banks risk overtightening, given the lag of policy transmission in the economy. This results

in a more severe economic fallout and stagflationary conditions.

The hit to both business confidence and profitability would lead to layoffs, driving unemployment materially higher. This would be a considerably tough scenario for equities with earnings hit hard and greater safe-haven demand for gold and the dollar.

Soft landing

Downside risks also exist for gold via a softlanding scenario, where business confidence is restored and spending rebounds. Risk assets would likely benefit and bond yields remain high – a challenging environment for gold.

Strength in income-driven consumer demand would be offset by weaker institutional investment. Some retail investment could abate on higher confidence, but lingering inflation would unlikely result in a material drop.

The case for a soft landing hinges largely on hard economic data not yet confirming the case presented by soft economic data. In the US, non-farm payrolls growth has remained firm and there was a GDP uptick in Q3 2022. The Atlanta Fed GDPNow indicator pointed to an even stronger Q4 2022.

While a soft landing won’t be great for gold, it is unlikely to be synonymous with a ‘goldilocks’ environment until at least H2 2023, which we see as a remote risk.

This feature was originally published on the World Gold Council website.

Geopolitical flare-ups, such as the Russia–Ukraine war, can lend support to gold investment.

Far East Gold hits bonanza gold and silver at Woyla

Australian Resources & Investment spotlights Far East Gold, one of the ASX success stories of 2022.

When a company is operating as intelligently as Far East Gold, it’s no wonder it was one of the IPO success stories of 2022.

Since floating in March 2022, Far East Gold’s share price climbed from $0.20 to as high as $0.74 in September. The company was trading just below $0.50 when this article was written in mid-January.

Far East Gold has achieved many milestones in the past 12 months as it advances its Woyla, Wonogiri and Trenggalek projects in Indonesia, and its suite of Australian projects in Queensland.

Perhaps most significantly, Far East Gold gained permission to drill Woyla – one of the most promising gold projects in SouthEast Asia – before commencing the project’s maiden drill program in September.

Woyla had been explored by Barrick Gold and Newcrest Mining in the past, however neither received the permissions to drill the project.

Having identified four main epithermal vein systems at Woyla, Far East Gold has targeted the Anak Perak and Rek Rinti prospects to begin with.

In mid-December, Far East Gold announced bonanza-grade gold and silver hits as part of Phase 1 drilling targeting Anak Perak and Rek Rinti, with the bonanza grades achieved from three separate drill holes.

Far East Gold considers the three holes to be ‘discovery holes’, with the potential for high-grade gold and silver resources within three separate quartz vein-breccia zones.

Rek Rinti returned bonanza grades of 78 grams per tonne (g/t) gold and 631g/t silver over 0.5m (from 108.6m) at drill hole RRD004, while RRD003 intersected 59g/t gold over 1m (from 192m).

Other significant assays at RRD004 included 4.9g/t gold and 68.6g/t silver over 13m (from 98–111m), including 8.1g/t gold and 113.8g/t silver over 7.6m (from 102.4–110m).

RRD004 was drilled to test a projected vein occurrence to the southeast of holes RRD001–003, with assay results indicating multiple zones of gold and silver mineralisation which are open along strike and to depth.

RRD004 intersected a 61m wide zone of massive quartz from 98–159m, representing an apparent true width of approximately 56m. RRD004 has also showed a very rare occurrence of fine-grained electrum mineralisation at 108.8m downhole in a narrow zone of ginguro-banded quartz. This was associated with the 78g/t assay.

Far East Gold has also received drill results from Anak Perak drill holes APD001–011, with significant assays including 3.2g/t

gold and 10.4g/t silver over 10.75m (from 49.35–60.1m), including 7.8g/t gold and 17.5g/t silver over 3.5m (from 50–53.5m). Within this, there was a 24.91g/t gold and 25.2g/t silver hit over 0.3m.

These results were pulled from eight completed drill holes at Rek Rinti (for 1218.6m of drilling) and 17 completed drill holes at Anak Perak (for 2312.2m of drilling).

“It is very exciting for the company that our Phase 1 drill program has successfully produced a discovery hole in three different veins from two separate vein systems,” Far East Gold chief executive officer Shane Menere said.

“This confirms our belief that Woyla has the potential to host a significant high-grade epithermal gold-silver resource. Our aim is to advance these discoveries to a maiden JORC resource estimate as quickly as possible.”

Aerial view of drill rig at Woyla’s Anak Perak prospect in September 2022.

FAR EAST GOLD INDONESIA PROJECTS

Far East Gold chair Paul Walker said the company was buoyed by the early findings of the drill program.

“We are seeing very different characteristics in Rek Rinti from Anak Perak,” he told Australian Resources & Investment

“Anak Perak is a long and wide quartz vein system that’s basically a 4.7km road of quartz, whereas Rek Rinti is a 1.5km vein system with lots of little vein shoots.

“The earlier holes we did at Anak Perak were quite high in the system. The next six were about 100 to 150 metres lower in elevation, and then Rek Rinti is another couple 100 metres lower again. So we’re seeing quite different features the deeper in the system we go which is very encouraging.”

With Far East Gold currently owning 51 per cent of Woyla, for the company to increase its

interest to 80 per cent, it will need to achieve two milestones by August 2024: a maiden JORC resource estimate and a feasibility study.

Once Far East Gold has completed the first phase of drilling at Woyla, the company will define and complete a follow-up program to delineate the resource estimate.

Completion of the feasibility study will also unlock Woyla’s next phase of contract of work (CoW) to support the project’s construction and operation. CoW is a specific form of Indonesian mining tenure that provides Woyla with the highest levels of rights and protections available for a mining company.

Walker said what further enhances Woyla is CoWs are few and far between, with approximately 20 mining-specific CoWs remaining in Indonesia.

“The very first contract of work was granted to Freeport McRoRan, which owns 60 per cent of the Grasberg mine, one of the world’s largest copper and gold deposits,” he said.

“When we start production, we have a 30-year life under the contract of work which we can extend for two 10-year periods. So we have 50 years to operate on that contract of work, which gives us the sole right to explore, mine, process, refine and sell any mineral deposits within that tenement.”

Far East Gold completed an institutional placement and share purchase plan (SPP) in late-2022, with $6.5 million raised through the initiatives. The company aimed to raise $1.5 million in the SPP, but it was oversubscribed by nearly 200 per cent, leading to $4.4 million in SPP proceeds.

“The $6.5 million raised from both the recent placement and the SPP will enable us to progress exploration activities at the Woyla project,” Walker said. “It is a significant achievement to considerably exceed our SPP target and we would like to thank all shareholders for their strong support.”

With the excitement surrounding Woyla, and the opportunities that lie within the company’s broader Indonesian and Australian portfolio, Far East Gold has several value-creation avenues for its shareholders.

The company was a star performer in 2022, but even greater success beckons in 2023 and beyond.

It is very exciting for the company that our Phase 1 drill program has successfully produced a discovery hole in three different veins from two separate vein systems.

SUNDA MAGMATIC ARC

The Sunda Magmatic Arc hosts world class copper gold porphyries such as Batu Hijau and the Tujuh Bukit discovery. Vast portions of the area remain underexplored.

Far East Gold’s Indonesian projects.

A Pilbara gold mine with unlimited potential

The Homeward Bound gold mine, which could start producing gold right away, is up for sale by Hedland First National Commercial. Australian Resources & Investment takes a closer look at the mine’s attributes.

Not only known as Australia’s hottest town, Marble Bar in the Pilbara region of Western Australia also has a long gold mining history.

Two years after gold was discovered near Marble Bar in 1891 the settlement was declared a town. A rush of gold prospecting followed with Marble Bar’s population increasing to 5000 in the late 1890s.

Several large gold nuggets were discovered near Marble Bar during this time, including the 413 ounce ‘Bobby Dazzler’ at Shark Gully.

But when the Goldfields region of WA started delivering its own discoveries, it was enough to see prospectors abandon their diggings and head south. Marble Bar remained largely unexplored.

More recently, former Tasmanian dairy farmers Murray and Elaine Millwood have been drilling and

developing the Homeward Bound gold mine near Marble Bar. They believe it is “the best prospect in Western Australia” and have the backing of a respected geologist.

Regular exploration and mining has taken place at Homeward Bound since 1894. Between 1898 and 1935, the mine produced 5036 tonnes of ore for 4496 ounces of gold, equating to 26.78 grams per tonne gold recovered.

Shortly after the Millwoods first arrived at Marble Bar in 1973, revered Australian geologist Graeme Hutton showed them the Outward Bound – a prospect containing 32 ounces of gold per tonne and 29 grams of gold over three metres.

A government closure on mining beneath a 35m-deep water table meant Homeward Bound could not be developed at the time, but this was lifted in 1985.

And after numerous attempts to buy the mine, the Millwoods were eventually successful and became owners in 2001.

“If I was 20 years younger, I wouldn’t be selling this mine,” Murray told Australian Resources & Investment. “But I’m 80 and I feel to start building the crushing plant and go online is beyond me.

“So reluctantly, I want someone to come along and do the right thing.”

All mining permits and approvals at Homeward Bound are current, with 69 hectares of leases included. A 46m-deep level and sub-level development are at a stage where production can commence immediately.

Homeward Bound’s geological report outlines several economic targets, including the eastern unit, central unit, western unit and dolerite unit.

The chemical signature of past assays in the central unit are typical of the ‘felsic intrusive’ that hosts De Grey Mining’s recent Hemi discovery near Port Hedland in WA.

“This chemical signature is an excellent parameter for substantial deeper gold orebodies

Murray and Elaine Millwood have been drilling and developing Homeward Bound since 2001.

within this rock unit and of the whole project area,” the geological report stated.

The central unit contains the Outward Bound reef structure, which has historically produced 3441 tonnes of ore for 2830 ounces of gold at 25.91g/t, and the Homeward Bound reef structure, which has historically produced 1339 tonnes of ore for 1424 ounces of gold at 33.51g/t. This gold was extracted no deeper than the 35m water table.

Respected consultant geologist Laurie Molloy, who completed Homeward Bound’s geological report, said these reef structures have “substantial potential” beyond previous gold production.

“The reef structure that Murray has exposed in his underground workings, I doubt that horizon is related to the previous mine reef structures,” he told Australian Resources & Investment

“I took one sample which was about oneand-a-half metres of quartz and heavy sulphide material that had 85 grams per tonne of gold. That is an almost three-ounce-per-tonne sample, and it is exposed over 12–15 metres of down-dip extent.

“From all the other reef structures that are continuous in a strike direction, I think there is enough potential in that one section to go in there straight away and mine over a period of 18 months to two years.

“I estimate that you could pay for the cost of the mine and setting up a little mill out of that revenue alone.”

Previous drilling above the 46m-deep main shaft at the Homeward Bound and Outward Bound reef structures has returned high-grade assays of 81.2g/t gold over 1.5m.

Given this zone is unexplored over 500m, it remains an excellent drill target which could produce 20,000–100,000 tonnes of ore at more than 30g/t gold if detailed drilling was carried out.

Another economic target is located at the footwall basal contact zone of the central unit which contains the Outward Bound and Homeward Bound reef structures.

A darker, more sulphide-rich zone is located approximately 30m above the basal zone. This has small silica stringers (no quartz reef) and assayed at 16.65g/t gold over 2m.

“This target zone has never been previously recognised and represents an attractive target for both open pit … and underground resources,” the geological report stated.

The Stray Shot, which has produced more than 4000 tonnes of ore for 7783 ounces of gold at 60.39g/t gold, represents another key prospect at the Homeward Bound mine.

For 120 years, a flaw in prior geological records of the Marble Bar region suggested goldbearing quartz veins were underlain by granite. This perception was later found to be false, with the rock type being dacite.

Molloy said this offers its own mineralogical advantages, given there is a presence of copper sulphides associated with the dacite.

“A drill hole Murray identified that included three metres at 30 grams per tonne gold, the bottom six inches assayed at over 900 grams per tonne,” he said. “That’s a layer of strong copperbearing sulphide.

“That association with copper and strong sulphide in the volcanic rocks tells you that it’s got better potential than if it was underlain by granite.”

Molloy said Homeward Bound is a “very good small-scale mining operation for a small syndicate”.

“With a lot of gold operations, many millions of dollars is spent on drilling out a JORC resource,” he said. “Then you’ve got to build the mill and the infrastructure to actually start mining.

“With Homeward Bound, there’s already a crosscut into a high-grade zone that you can mine right away. And because you’re excavating two-to-three-ouncegrade dirt, you only need 10 to 20 tonnes per day and you’re pulling in a very nice revenue.”

Approximately 16km from the Homeward Bound mine is Calidus Resources’ Warrawoona project, which, after pouring first gold in May 2022, produced 12,657 ounces of gold in the September quarter.

Calidus’ 2.4-million-tonne-per-annum processing plant recently achieved nameplate capacity following a ramp-up period.

The company is initially targeting 90,000 ounces per annum of gold production at Warrawoona, with an expansion to increase production to 130,000 ounces per annum.

Homeward Bound is not only productionready but also still largely unexplored, leaving a mountain of opportunity for the lucky owner that chooses to buy the mine.

Murray and Elaine Millwood couldn’t have done anything more to demonstrate Homeward Bound’s potential. Now it’s time to hand over the baton.

Contact Hedland First National Commercial on 0417 428 667 for more information on Homeward Bound.

Visible gold on rocks at Homeward Bound.

Proactive planning vital for decarbonised mines

It is vital that incorporating renewable technologies is considered at a project’s design stage.

How can mining companies ‘future proof’ their projects so they can incorporate advances in mine design that lower carbon emissions?

That question is testing the mining sector like never before. Most mining companies understand the benefits of reducing carbon emissions as part of their environmental, social and governance (ESG) strategy. But planning for that change is complex.

Oliver Shaw, a senior mining engineer at SRK Consulting, said existing conventional mining projects often find it challenging to transition to renewable technologies when they are part way through their mine life, with technologies more viable when used over longer timeframes.

“Some of these systems require significantly different design parameters than those applied for conventional methods,” Shaw told Australian Resources & Investment. “Also, typically these technologies are economically more advantageous when evaluated over longer timeframes. Projects with short remaining mine lives often cannot justify transitioning to the new systems.”

Shaw gives the example of electrification of mining projects and the development of renewable energy sources to power them –a hot topic in the resources sector.

Electrifying a mine might involve in-pit crushing and conveying (IPCC) systems; ex-pit conveying; trolley-assisted truck haulage technologies; ore sorting;

material handling systems, just to name a few. Autonomous mining technologies, which might already be used at the operation, are another advancement that can synergise well with electrification initiatives.

“It all gets back to planning,” Shaw said. “Even if a company isn’t incorporating electrification or renewable technologies immediately, to future-proof projects they must understand how these technologies would work and apply the associated parameters within their initial mine plans to set the project up for success in the future.”

This is not only an issue for new projects. Shaw said mining companies should consider how established projects

A mine site where SRK was engaged to develop an integrated mining and mine closure plan.

can incorporate renewable technologies or how these technologies could be used to aid mine closures.

A mining company, for example, could consider if the design of an open-pit mine will allow for the pit to be progressively backfilled and rehabilitated, or repurposed into a pumped-hydro storage (water battery) facility when the mine eventually closes. These potential options require nonconventional thinking, and early iterative planning.

“Mining companies that don’t do this type of planning are missing opportunities,” Shaw said. “We are still seeing a lot of ‘low-hanging fruit’ across the industry. By implementing best practice mining processes, companies can make projects more efficient and have a more positive effect on the surrounding environment.’

Shaw said some mining companies might not realise the potential benefits of incorporating ESG thinking into pitshell selection, pit staging, life-of-mine scheduling, progressive mine closure and other aspects of mine design.

Benefits include reducing overburden removal requirements or using overburden for other aspects of mines, such as pit backfilling, tailing storage facilities or infrastructure foundations.

Appropriate application of fundamental mine planning principles can complement ESG aspects. For example, less economic material being sent to waste dumps, less sub-economic material being processed, and less unnecessary rehandling of materials, all result in less energy used.

Ensuring mine design can incorporate renewable technologies is also about risk management. Miners that lag on ESG performance could find it harder to attract investors or face a higher cost of capital.

“No mining company wants to be in a position where it has to quickly incorporate renewables technologies to lower carbon emissions at their project – only to realise that it is too costly to do so, or that the current mine setting does not enable this transition,” he said.

Shaw worked on a study for an IPCC and trolley-assisted truck-haulage system at a large open-pit mine in South East Asia, but there were issues. The trolley system was viable, but the IPCC was unviable due to remaining mine life and tonnage issues.

“We evaluated an IPCC solution for a project when the mine was around 70 per cent of the way through its life,” Shaw said. “Had an IPCC system been evaluated at the start of the project, it might have been justified. The point is: companies need to do this planning early in the design process.”

DE-RISKING PROJECTS

Mining projects should have a comprehensive mining/technology options study as part of the normal project study cycle. Typically, this options study is completed between or as part of the scoping and pre-feasibility studies for a project.

“Mining companies should engage in a structured planning process to consider how they de-risk future projects or ensure future opportunities are left on the table,” Shaw said. “If not well managed it can become a challenge to make this transition later in the mine’s life.”

Shaw said fundamental design principles of renewable technologies should be incorporated into projects, even if the technologies are not intended to be implemented from the start of mine life.

“It’s all about creating and maintaining options,” he said. “Through strong upfront planning processes, the mining company knows its project can operably transition to electrification and other renewable technologies when the time is right. There are fewer potential surprises and setbacks.”

Examples of this planning include ensuring there is suitable pit staging and sequencing to facilitate IPCC and/or trolley-assist implementation at mines. Having sufficient ramp and mining widths to facilitate an autonomous fleet is another

Miners not proactive in their decarbonisation planning could find it harder to attract investors.

consideration, as is ensuring suitable stockpiling configuration and size for managing different grade bins.

Shaw said modelling and reporting of greenhouse gas emissions (to support Scope 1, 2 and 3 GHG emissions) can also be undertaken concurrently with the development of the mine plan, at all levels of the project study.

“With some key input parameters, GHG emissions can be modelled as part of the development of a project’s life-of-mine production schedule.”

GROWING USE OF OPTIONS STUDIES

More mining companies are incorporating technology options studies into their planning process.

“We’ve seen a lot more of these studies in the last few years – it’s definitely something we recommend and can support,” Shaw said. “Mining companies that design projects without thinking sufficiently about how renewable technologies could be incorporated are taking a significant risk that could be very costly in future years.”

Advances in mining technologies are enabling better incorporation of ESG thinking into mine design.

“Only recently have some key industry tools been configured to allow in-depth consideration of more modern mining practices,” Shaw said. “There are more tools available to help mining companies plan for the incorporation of renewables.”

The key is being prepared to challenge conventional thinking.

“Mining management teams and boards must consider what technologies will be required at their mine in the next 10, 20 years and beyond, and whether the existing mine design can incorporate those expected changes,” Shaw said.

“They should ask: What can we do today to ensure our projects can adapt in the future as ESG expectations evolve?

SRK Consulting is a leading, independent international consultancy that advises clients mainly in the earth and water resource industries. Its mining services range from exploration to mine closure.

SRK experts are leaders in fields such as due diligence, technical studies, mine waste and water management, permitting, and mine rehabilitation. To learn more about SRK Consulting, visit www.srk.com.

SEVEN IDEAS FOR MINE CLOSURE PLANNING AND IMPLEMENTATION

1. Know what’s at stake: future-proofing and de-risking mining projects must be done early in the study/ planning cycle. It can be difficult, costly or uneconomic to incorporate electrification and renewable technologies lat mine’s life.

2. Be structured: technology options study is a normal part of the planning process. This study considers how technologies can be incorporated in the future and should be done as part of or between the scoping and pre-feasibility studies.

3. Think ahead: technologies could be incorporated in a mine during its lifetime. Be open-minded to possibilities and challenge conventional thinking. The application of renewable technologies in mining is moving quickly.

4. Consider different mine stages: How could renewable technologies be incorporated into a new project or help

Early planning is critical to a successful decarbonisation project.

DO YOU KNOW A DRIVER OF CHANGE?

WOMEN IN INDUSTRY NOMINATIONS ARE NOW OPEN. Now is your chance to nominate an industry leader who you believe is advocating for positive change and deserves to be recognised.

WOMENININDUSTRY.COM.AU

THURS

8 JUNE 2023

The Women in Industry Awards recognise outstanding women leaders from across Australia’s industrials sector.

A lithium project’s recipe for success

The recent Resources Rising Stars Summer Series in Melbourne had a series of fascinating insights into the sector’s emerging companies, including Ken Brinsden’s new lithium venture.

Former Pilbara Minerals managing director and chief executive officer Ken Brinsden enlightened the Resources Rising Stars Summer Series about what is required to develop a Tier-1 lithium project.

“You need great geological hosts, you need coincident infrastructure and support to grow a big mining operation,” he said. “And, of course, you need the market. They’re the things I’m going to hit on … as I talk about the direction Patriot’s taking with the Corvette discovery.”

After Brinsden officially stepped down as managing director and chief executive officer of Pilbara Minerals in late July, he was appointed as ASX-listed Patriot Battery Metals’ non-executive chair in late August.

Located in the upper James Bay region of Canada, Patriot’s Corvette project boasts the CV trend, first discovered by the company in 2017. Patriot owns over 210 square kilometres along a 50km lithium pegmatite trend.

“The James Bay region itself is becoming particularly important in the lithium world,” Brinsden said. “There has already been some discoveries, and there may well be more. But it’s a great place to be building a mine.

“It’s exciting because of the scale that’s emerging in the (Corvette) discovery. The key outcrop is what’s called the CV5 trend – that’s where we’ve done the bulk of our drilling – but the outcrops are dotted over a serious ... strike extent. And that’s where a parallel to Pilgangoora (Pilbara Minerals’ flagship operation) is important to reference.

“When you stood at the centre of the Pilgangoora operation … you could look five kilometres to the north and see the monster outcrop, you could look four-and-a-half, five kilometres to the south and you’d see Altura’s outcrop, and you’d see the south end.

“As it stands today, Pilgangoora’s strike extent in the key project area is roughly 13 or 14 kilometres. So here we are at Corvette with about 20 kilometres of strike extent of key outcrops known to host spodumene.”

Brinsden said Corvette is not only sizeable but also fertile.

“We’ve now centred on the first 2.2 kilometres of drilling, this is the CV5 trend,” he said. “In there, you have some incredible intercepts. A couple that come to mind –160 metres at 1.6 per cent lithia, another 75 metres of about two-and-a-half per cent lithia, within which 40 metres is over three per cent.”

Corvette’s potential is what motivated Brinsden’s next chapter post-Pilbara Minerals.

“There is a lot of what you might call coincidence and or deja vu in my experience getting introduced to Patriot (Battery Metals) and the Corvette discovery, given what happened at Pilbara Minerals,” he said.

“Going back over time, in 2015, I was looking at the Pilgangoora project with a view to participating at Pilbara Minerals. And as much as I knew very little about the lithium world at that time, when I rolled out to geological maps on the kitchen table, I was excited about what I saw because there was huge potential in the geology.

“The area – Pilgangoora – felt like and, on the face of it, the geology indicated that it was going to be a big body of mineralisation.”

Brinsden said seven years on, Pilgangoora has become one of the biggest lithium mines globally, generating plenty of cashflow to boot.

Drilling at the Corvette lithium project in Canada. Image: Patriot Battery Metals

But his time at Pilgangoora was coming to an end.

“Roll forward to May 2022 and I’m winding down at Pilbara Minerals and having a look at the Patriot geological maps … and thinking to myself, this is feeling a lot like Pilgangoora in 2015, because the geology at the Corvette discovery feels like it’s going to support another big project over time,” he said.

“It’s early stages in exploration but already there’s evidence to indicate that it’s going to be one of the bigger discoveries in the last decade or so.”

Patriot has commenced the winter phase of its 2023 drill program at Corvette, with a minimum of 20,000m of drilling planned between January and April, which the company said is the largest single lithium drill program in Quebec in recent times.

At least five drill rigs will be utilised to complete the program, with the objective to extend the 2200m strike length of the CV5 pegmatite system to the east and west. Patriot will also continue delineation of the recent CV13 discovery, situated 4.3km along trend to the west-southwest.

In September 2022, Patriot announced it had intersected spodumene pegmatite in the first drill hole targeting CV13, with the intercept extending from surface to 25.5m deep.

Patriot Battery Metals president, chief executive officer and director Blair Way said he expected 2023 to be a transformative year for the company.

“The 2022 drilling has defined something very special at Corvette and this winter season will further expand on this significant discovery,” he said in a press statement.

“With five drill rigs we will be better positioned to continue to drill out the CV5 pegmatite cluster at an aggressive pace, while also further testing the CV13 pegmatite cluster. The year 2023 will be a transformative year for the company as we advance to an initial mineral resource at CV5.”

Brinsden is not the only senior executive in the Australian resources sector to make the move to Canada. Former Core Lithium managing director Stephen Biggins was recently appointed as Winsome Resources’ new non-executive chair, while former Mincor Resources managing director and CEO David Southam joined Cygnus Gold as managing director.

Winsome is advancing its flagship Cancet and Adina lithium projects in Quebec, while Cygnus is developing its Pontax lithium project in James Bay.

Cygnus completed an $8 million share placement in December, which left the

company with approximately $15 million in the bank to fund a multi-rig drilling program aimed at delivering a maiden mineral resource at Pontax in mid-2023.

Cygnus is aiming to complete 10,000m of drilling at Pontax over the first half of 2023, which will follow up mineralisation that has already been identified over a 620m strike length.

Aerial view of the Corvette lithium project.

Image: Patriot Battery Metals

Pegmatite outcrops at the Corvette lithium project.

Image: Patriot Battery Metals

An ASX newcomer with a fascinating rare earths story

VHM Limited may have only just listed, but the company has an advanced Australian rare earths and mineral sands project at its disposal.

Early 2023 saw one of the most anticipated ASX listings in recent times with the emergence of established rare earths explorer and future producer VHM Limited.

VHM is not a new company, nor is it immature. Founded in 2014, VHM has been steadily developing and de-risking its Goschen rare earths and mineral sands project in Victoria to where it is today.

For VHM’s Graham Howard, who began as the company’s managing director in September 2016, the Goschen dream commenced in 2015.

At this time, Howard, a mining industry veteran with more than 35 years’ executive leadership and operations management experience, including at Newcrest Mining, and VHM chair Don Runge, who led the initial development of the gold-industry-defining Cadia-Ridgeway deposit, were working together in the Philippines.

“In 2015, we (Howard and Runge) were sitting in the Philippines talking and I said, ‘Look, we really need to build a major renewable or critical minerals project in Australia, it’s clearly a missing piece’, and we set out to do that soon after,” Howard told Australian Resources & Investment

“VHM was established by two previous directors, who were looking for zircon and titania. And we were looking for the critical minerals, which were the rare earths, but we also had a view that zircon and certain species of titania, if you like, were going to be very critical in the years to come.”

But Goschen was not only identified as a project with rare earths and mineral sands potential, there was more to the geology than that.

“Goschen has a very unique granite,” Howard said. “You might know about

Greenland and this giant granite it has. Well, we also have one in Australia – the Lake Boga granite – and VHM’s tenements cover this. The Lake Boga granite is full of rare earths pegmatites.”

The mineral sands are seen a critical valueadd to the rare earths material.

“From our (Howard and Runge’s) background, we’re used to large, low-cost, open pit and underground mining operations, and because of this, we knew we had to look for a dual commodity stream,” Howard said.

“So the by-products we wanted to see would pay for the operating costs and the primary minerals, we would actually be able to sell those and we would be able to produce those at an exceptionally low cost.

“An example was Ridgeway – where the copper paid for all the gold costs. So when we went into this project, we were looking at zircon and titania as the by-products and the rare earths as the primary minerals targeted.”

Howard said Goschen is a “rehabilitation mining story”, meaning the project is designed to be progressively rehabilitated as it produces.

“You dig the material out, but you replace it with the sand and the slimes, and it’s codisposed and rehabilitated as you go,” he said. “So there’s no surface tailings, there’s no permanent waste dumps and there’s no visual scars.

“This process allows you to extract critical minerals such as the rare earths and rehab the ground as you go. This is a really important segue on why we did it – we were looking at how we could mine in a sustainable manner in the future.”

VHM delivered its maiden resource for Goschen in 2016, and successive resource upgrades followed between 2017 and 2022. The company has also released a series of engineering and metallurgical studies,

including bulk samples, a pre-feasibility study and in March 2022, completed its definitive feasibility study (DFS).

The DFS was based on rigorous testwork completed by Mineral Technologies and Australian Nuclear Science and Technology Organisation (ANSTO), which validated the flowsheet and demonstrated Goschen’s capacity to produce in-demand heavy mineral concentrate (HMC), rare earth mixed concentrate (REMC) and mixed rare earth carbonate (MREC) products.

This will involve the open-pit mining of ore at a feed rate of five million tonnes per annum (Mtpa) into Goschen’s processing plant.

VHM believes Goschen could be a “nation-building exercise”.

But Goschen doesn’t involve your typical open-pit mining procedure.

“What we’re doing is mining and processing the material on the flanks of this giant (Lake Boga) granite,” Howard said.

“Why is this unique? Well, the sea has been washing over this island, but unlike other rare earth deposits around the world, which are effectively all hard rock, the sea has removed the rare earths, and in that process it chemically and physically removes the gangue minerals – the feldspar, the quartz and the mafic minerals – that actually join onto the rare earths. So you end up with this incredibly pure rare earth matrix.”

Howard said this supports the processing of the material.

“If it is a hard rock rare earths project, typically you would have a drill and blast operation, the rock would be crushed, and then put through a comminution circuit where it is grinded and turned into sand.

“The sand unfortunately has all that gangue minerals around the rare earths. So even though you’ve turned it into sand, you still have this huge energy and capital equation to create the product.

“The beauty about this project is the sea has done all the work, so we remove all that step and the sea has concentrated the rare earths into horizons which can be economically mined using conventional mining.”

The material then goes through a conventional, low-cost processing phase before the HMC, REMC and MREC products are produced. Howard said the Goschen project has the potential to be a “nationbuilding exercise”.

“What we (Howard and Runge) were thinking in 2015, is we could see that we could kickstart a major manufacturing phase on the eastern seaboard by creating exceptionally low-cost critical minerals, which could then feed into the supply chain,” he said.

“The other thing we picked up is that the sheer scale of the opportunity would probably allow the company, with sufficient and appropriate exploration and project development, to establish significant deposits which could feed global markets.”

To complement its own belief in the Goschen project, VHM has the backing of leading Chinese rare earths mining and

processing company Shenghe Resources, with which it has signed a memorandum of understanding (MoU) for dual products based on a take or pay offtake agreement over an initial three-year term.

Goschen has also been granted ‘Major Project Status’ recognition from the Australian Government, which recognises projects that are significant to the Australian economy.

Having recently listed on the ASX – in combination with a $30 million initial public offering (IPO) – and with the backing of PFS, DFS and other important scoping studies, VHM is targeting a final investment decision in the second half of 2023.

This will coincide with the goal to achieve primary approvals in 2023 and secondary approvals in the first half of 2024, before construction can commence in 2024 and commissioning of the Goschen treatment facility can begin in the first half of 2025.

It may have only just floated but VHM is well on its way to becoming a producer, with a lucrative dual commodity stream at its disposal.

VHM managing director Graham Howard.

How BHP expedites exploration

BHP is thinking of new ways to accelerate exploration at its operations. So how is it doing this?

“This all seems very obvious, but it is actually quite hard.”

That is BHP chief technical officer Laura Tyler discussing the need for the major miner to continue growing if it wants to continue delivering what its customers need.

And the key to that growth is exploration, but looking for new mineral resources is a difficult, costly and timeconsuming undertaking.

“It is difficult to find new deposits,” Tyler said at a Melbourne Mining Club luncheon in late 2022. “They are becoming deeper, harder to access in more challenging regions.

“We identify some promising geology and we start sampling and drilling. This process can be not only invasive but takes time.

“We all know how exploration works now.”

But there is light at the end of the exploration tunnel.

“There are some amazing new solutions in the technology and innovation and data space that are making this process so much more efficient and less invasive,” she said.

“At BHP, we use mineral systems methodologies to identify the terrains we think are interesting, and then we can use

a range of non-invasive land and airbornesensing techniques that allow us to better understand the subsurface, both greenfield and brownfield.

“New technologies allow us to target drill holes much more effectively. And the additional detail we can see between drill holes allows more efficient mine planning through more accurate resource characterisation.”

All of this new technology is great and makes for a relatively easier exploration process, but even for majors, collaboration – and a certain level of humility – is vital.

“That means we have to embrace new ideas, new ways of working, different ways of thinking,” Tyler said. “Not always easy for a company the size of BHP.

“We have to acknowledge we don’t have all the answers.”

EXPLORING NEW IDEAS

BHP does not limit its exploration activities to drilling for new deposits.

In acknowledging it does not have all the answers, the company understands it needs to look to others to help broaden its knowledge base. This has come in the form of investing in start-up companies like Kobold and SensOre in Australia, and SRK and DeepIQ in Chile.

These innovators use advanced artificial intelligence (AI) to enable BHP to widen its search space and cover ground more efficiently.

BHP has also launched its own processes for finding better exploration ideas.

“Opening ourselves up and inviting good ideas in will only make us stronger,” Tyler said.

“In that spirit, we launched a program called BHP Xplor this past year, looking for new concepts ... in early-stage minerals exploration that we can help accelerate.

“Xplor is a global program that searches for start-ups in the early exploration stage by supporting prospectors with innovative and breakthrough ideas to find new mineral deposits.

“It merges concepts from both venture capital and early-stage accelerators, offering mentoring and networking.”

INTERNAL OPERATIONS

Looking inward, BHP has also taken strides in implementing new ways of working that are designed to make better use of digital technology.

The company understands that it can improve its exploration activities by making better use of the massive amounts of data the resources industry generates every day.

The BHP Operating System is designed to empower employees from the ground up. Image: BHP.

“Our technology team has set up digital factories for each of our operated assets to find, curate and use the data already available to define new solutions,” Tyler said.

“Together with product owners, they are changing the relationship of BHP operations with the data they collect.”

Of course, leveraging that information requires skilled people but finding – and keeping – those people is not as easy as it once was.

“How do we attract and retain these skills from mining engineers to stack developers to industrial engineers and venture capitalists?” Tyler said.

“We have to talk differently about the work we offer.”

One of the systems the major miner has in place is the BHP Operating System (BOS), which offers a holistic mindset to operational structure and is designed to empower employees from the ground up.

“We’ve been working on the BHP Operating System since 2017,” Tyler said at the BofA SmartMine conference in late June 2022.

“Our goal was to create a way of working that makes improvements central to everyone’s role in the pursuit of operational excellence, taking inspiration from the leading car makers such as Toyota and the Toyota method.

“It (BOS) builds on foundations that we’ve built over the previous decades, including … increasing digitisation, implementation of centres of excellence, and our move to the cloud more recently.”

Tyler said that as it introduces greater digitisation and new ways of working, BHP needs “more electricians, more digitally savvy operators and maintainers, more robotics experts”.

She highlighted recently visiting a coal mine and meeting a maintainer completing field checks with an iPad as an example of the benefits of these new ways of work in action.

“He took me through how he completes the check on the new autonomous fleet at Goonyella,” Tyler said.

“He could point to the very real benefits of his new way of working, from the connectivity to the predictive maintenance plans and uploading of issues in real-time, to the assurance of a job well done by his cross-shift due to standardised work methodologies, to the new skills he had gained that had given him the confidence to join Facebook with his grandkids.

“He was engaged and pleased with the change – the tools had made his work better and more reliable.”

BHP has been rolling out advanced exploration techniques at its Olympic Dam mine in South Australia. Image: BHP.

BHP chief technical officer Laura Tyler. Image: BHP.

Biggest mining deals of 2022

With another big year of M&As in the books, Australian Resources & Investment looks at the biggest mining transactions that went down in 2022.

Mergers and acquisitions (M&As) continue to increase in volume and value, and 2022 was another big year for activity in the resources sector.

While gold companies continued to make up a large proportion of resources M&As, the driving force of inorganic growth has been the pursuit of critical minerals.

This motivated deals from Tier 1 miners such as BHP, Rio Tinto and South32, while IGO boosted its nickel exposure by acquiring Western Areas.

The market saw a uranium merger in 2022, while coal was also involved, with the Dartbrook mine in New South Wales the subject of a bidding war.

Lets take a look back at some of the biggest mining M&As of 2022.

ACTIVE BHP

BHP’s OZ Minerals takeover

While this transaction hadn’t been completed at the time of publication in January, it was easily the biggest mining deal to be announced in 2022.

The two companies entered into a scheme implementation deed in December, with the OZ Minerals (OZL)

board unanimously recommending its shareholders vote in favour of the transaction.

BHP will be paying $28.25 per share for the copper miner, which represents a 49 per cent premium to OZ Minerals’ closing share price on August 5 – the last trading day prior to BHP’s initial proposal.

BHP’s initial offer of $25 per share was swiftly rejected by OZ.

“The combination of BHP and OZL’s assets, skills and technical expertise provides a unique opportunity not available under separate ownership, with complementary resources including the Oak Dam exploration prospect and existing facilities within close proximity, backed by BHP’s strong balance sheet, capital discipline and commitment to sustainable development,” BHP chief executive officer Mike Henry said.

BHP’s coal divestment

BHP completed its divestment of the Poitrel and South Walker Creek coal mines to Stanmore Resources in May 2022.

Stanmore acquired BHP’s 80 per cent interest in BHP Mitsui Coal (BMC) as part of the transaction.

When announced, BHP Minerals Australia president at the time Edgar Basto said the deal continued the company’s transition away from large carbon-emitting operations.

THE HUNT FOR CRITICAL MINERALS

Rio Tinto’s copper prize

It may have taken nine months of back-andforth, but Rio Tinto finally acquired full ownership of Turquoise Hill Resources in mid-December.

Ownership of Turquoise Hill means the major miner now holds 66 per cent of Oyu Tolgoi, one of the largest copper deposits in the world, with the Mongolian Government holding the remaining 34 per cent. Prior to the takeover, Rio owned 51 per cent of Turquoise Hill.

Rio had to stump up $US3.1 billion for the transaction after initially offering $US2.7 billion in March.

Rio Tinto grows its lithium footprint

Rio completed its acquisition of the Rincon lithium project in Argentina in March 2022, adding a large undeveloped lithium brine project to its portfolio.

Copper was a key M&A driver in 2022.

With its Jadar lithium project in Serbia struggling to get out of first gear, Rio Tinto has been eager to expand its lithium exposure in other ways.

Rio hasn’t ruled out the possibility of further lithium M&As as it looks to develop itself into a leading battery materials business by 2030.

IGO and Western Areas

IGO completed its Western Areas acquisition in June 2022, adding Western Areas’ Forrestania and Cosmos nickel assets to its WAfocused portfolio.

The miner had to increase its bid from $3.36 per share to $3.87 for the transaction to proceed, reflecting nickel’s bright future in the renewable energy transition.

Around the time the initial transaction’s shareholder vote took place in March 2022, the nickel market destabilised as the Russia–Ukraine war began.

Western Areas initially encouraged its shareholders to vote in favour of the $3.36-per-share offer; however, following the destabilisation – which saw nickel prices momentarily soar above $US100,000 per tonne – the company consulted KPMG to investigate the implications of

the scheme. The revised $3.87-per-share offer eventuated.

South32 grabs Sierra Gorda stake

In February 2022, South32 completed its acquisition of a 45 per cent interest in the Sierra Gorda copper mine in Chile from Sumitomo Metal Mining Co, paying $US1.4 billion in cash upfront plus a price-linked consideration of up to $US500 million.

South32 chief executive officer Graham Kerr said the acquisition was key to the company’s low-carbon aspirations.

“By adding copper to our portfolio, along with our recent commitments to substantially increase our green aluminium production, we are making significant progress reshaping our portfolio for a lowcarbon future,” he said.

Sierra Gorda’s payable copper production increased 11 per cent from approximately 20,300 tonnes in the June quarter of 2022 to around 22,600 tonnes in the September quarter of last year. The increase was attributed to higher copper grades.

Sandfire enters Spain

At the same time mining was winding down at Sandfire Resources’ trusty DeGrussa

The combination of BHP and OZL’s assets, skills and technical expertise provides a unique opportunity not available under separate ownership.

An expanded uranium company emerged in 2022 from the merger of Deep Yellow and Vimy Resources.

copper operation in Australia, the company was ramping up its MATSA mining complex in Spain.

Sandfire completed its $US1.865 billion transaction of the operation in February 2022 and has a production guidance of between 60,000–65,000 tonnes of copper and 78,000–83,000 tonnes of zinc from MATSA in FY23.

Sandfire expects MATSA to be a longlife and low-cost operation, with around 12 years of mine life remaining based on resources and exploration potential.

MERGERS

A gold mining behemoth

Kirkland Lake Gold and Agnico Eagle Mines completed their merger of equals in February 2022.

Agnico Eagle acquired the Fosterville gold mine in Victoria and Detour Lake operation in eastern Ontario, Canada, from the merger, the former of which is regarded as one of the lowest cost gold operations in the world.

Having produced more 712,824 ounces of gold in 2021, Agnico Eagle expects Detour Lake to average between 680,000 and 720,000 ounces of annual gold production from 2021 to 2024, increasing to approximately 800,000 ounces in 2025.

In the long term, Agnico Eagle believes Detour Lake has the potential to produce one million ounces (Moz) per annum.

Meet Hoover House

The Leonora region of WA was a hotbed for consolidation talks in 2022. St Barbara and Genesis Minerals finally pulled the trigger

on a transaction in mid-December, merging to create a new entity called Hoover House.

St Barbara will acquire 100 per cent of Genesis’ shares via a scheme of arrangement to create the new gold house, with Genesis shareholders to receive 2.0338 St Barbara shares for each Genesis share as part of the transaction.

St Barbara will also move to demerge its Atlantic, Simberi and other assets (including St Barbara’s shares in various ASX-listed entities) to St Barbara shareholders in conjunction with the merger. The new company will be called Phoenician Metals and aims to list on the ASX.

This means Hoover House will be focused exclusively on the Leonora gold district, with which St Barbara and Genesis both hold assets.

The Leonora region of Western Australia was a hotbed for consolidation in 2022.

The new entity will have a production target of more than 300,000 ounces (oz) of gold per annum, compared to St Barbara’s 2022–23 financial year (FY23) production guidance of 145,000–160,000oz per annum.

The merger is expected to be implemented by May 2023 following relevant approvals.

A new uranium player Vimy Resources and Deep Yellow completed their merger in August 2022, consolidating Vimy’s Mulga Rock uranium project in WA with Deep Yellow’s Tumas uranium project in Namibia.

Mulga Rock’s potential production capacity of 3.5 million pounds of per annum (Mlbpa) and Tumas’ potential production capacity of 3Mlbpa will make it the largest uranium producer on the ASX.

Deep Yellow aims to announce its Tumas definitive feasibility study (DFS) in the first quarter of 2023, while a revised Mulga Rock DFS exploring the project’s value-added critical mineral potential is targeted for completion in mid-2024.

GOLD, GOLD AND MORE GOLD

Newcrest Mining acquires Pretium

Newcrest Mining added the Tier 1 Brucejack gold mine in Canada to its portfolio after completing its acquisition of Pretium Resources in March 2022.

After four months of owning Brucejack, Newcrest had already enjoyed an additional 114,421 ounces of gold production, EBITDA (earnings before interest, taxes, depreciation, and amortisation) of $109 million and free cash flow of $88 million.

While a fatality at Brucejack in late October halted production until midNovember, the mine’s production, cost and capital expenditure guidance for the 2022–23 financial year (FY23) remained unchanged despite the incident.

Brucejack complements Newcrest’s Red Chris gold operation in Canada, the company’s Cadia and Telfer gold operations in Australia, as well as the Lihir gold operation in Papua New Guinea (PNG). Newcrest is also developing its Havieron joint venture project in Australia and its Wafi-Golpu joint venture project in PNG.

Evolution Mining snaps up Ernest Henry

The Ernest Henry mine in Queensland has been a key player for Evolution Mining since the company took full control of the operation in early January 2022.

Ernest Henry produced 84,145 ounces of gold at a record low all-in sustaining cost (AISC) of negative $1680 per ounce in FY22, which Evolution said was driven by increased copper production in the second half of FY22.

Evolution hopes to achieve FY23 production of 82,000 ounces of gold and 55,000 tonnes of copper from Ernest Henry but has big expansion plans for the operation.

In August, the company announced Ernest Henry’s copper resources had jumped 28 per cent to 1.13 million tonnes, while gold resources rose 24 per cent to 2.07 million ounces, improving the potential for mine life extension as a result.

Genesis adds Dacian Gold

Before merging with St Barbara, Genesis Minerals purchased struggling Leonora gold miner Dacian Gold for $111 million.

Genesis said the deal achieved appropriate regional consolidation by combining its organic growth and highgrade resources with Dacian’s large-scale Mt Morgans strategic milling infrastructure.

Dacian Gold suspended mining at Mt Morgans in June 2022 amid rising cost pressures.

While the takeover offer was still ongoing when at the time of publication early January (offer closing on January 16), Genesis announced it had acquired majority control of Dacian in September.

The 2.9-million-tonne-per-annum

Mt Morgans processing plant will play an important role for Hoover House, supporting the emerging Tower Hill deposit (previously owned by St Barbara).

Others

Other 2022 acquisitions included Gold Road Resources’ takeover of DGO Gold in August – seen a strategic move to gain access to DGO’s 14.4 per cent stake in De Grey Mining, owner of the 9Moz Mallina gold project in WA.

St Barbara also completed its acquisition of Bardoc Gold in April 2022, adding the advanced Aphrodite and Zoroastrian deposits to its portfolio in the process. These assets have since been carried across to Hoover House.

COAL ACTIVITY

Dartbrook coal mine

The Dartbrook coal mine in NSW was seemingly the most attractive mining asset in Australia for part of 2022.

After months of tussling between several entities for the ownership of Australian Pacific Coal (AQC) and its Dartbrook mine, AQC announced in September that it had entered into a binding term sheet with Trepang Services (AQC’s largest shareholder), M Resources and Tetra Resources for a strategic partnership.

The aim of the parties is to see Dartbrook rejuvenated as a coal-producing mine as soon as practicable. During the bid, Australian Pacific Coal received two separate bids from former AQC managing director and ex-billionaire Nathan Tinkler, via entities Nakevo and Pacific Premium Coal.

The Epiroc evolution

Epiroc acquired 11 companies in 2021 and 2022, expanding its automation, electrification and digitalisation offerings. What’s behind the company’s inspired acquisition strategy?

Atruly consummate business is one that doesn’t settle for the status quo, and it’s the constant desire to push the boundaries and achieve excellence that drives Epiroc forward.

The original equipment manufacturer (OEM) is already one of the mining industry’s key innovators, but as the company evolves it understands that growth isn’t only achieved organically.

As Epiroc realises its future in automation, digitalisation and electrification, it is regularly adding new businesses and capabilities to the fold. The company completed 11 acquisitions in 2021 and 2022, with new additions varying from automation and electrification infrastructure providers to battery conversion specialists and software companies.

Epiroc Australia acquisitions integration project manager George Aslanis said the rapid push to harness new capabilities and technologies underlines the company’s acquisitions strategy.

“The whole aim is to help accelerate our ambitions in those pillars of automation, electrification and digitalisation. That’s what really drives some of these acquisitions that happen locally,” he told Australian Resources & Investment.

“It’s about accelerating our capabilities and assisting customers on that journey to transformation and sustainability. We are focused on collaborating closely with all our customers and partners.”

Late 2022 was an especially busy period.

In December, Epiroc completed the acquisition of leading mining automation

solutions provider Remote Control Technologies, which the OEM said would enable it to be the “world-leading automation solutions provider” for not only surface and underground rock drilling but also underground load and haul.

Headquartered in Perth, Remote Control Technologies provides automation and remotecontrol solutions for single machines or entire mixed fleets regardless of manufacturer or equipment type.

November saw Epiroc complete the acquisition of a 53 per cent stake in Radlink, an Australian company that provides mine sites with wireless connectivity solutions.

“Radlink’s powerful network connectivity solutions will support Epiroc as we continue to provide mining companies with automation

Epiroc continues to expand its offerings and personnel with new acquisitions.

and digital solutions that make operations safer and more efficient,” Epiroc president and chief executive officer Helena Hedblom said.

Epiroc’s first Australian acquisition of 2022 was JTMEC, a Perth-based electrification solutions provider for underground and surface mines.

Established in 2005 and home to 190 employees, JTMEC’s offerings include highvoltage installation and maintenance work, transformer servicing and testing, engineering design, feasibility studies, and training.

The company also manufactures electrical products, including substations and mine chargers, and is currently providing services for Australian mining operations such as Olympic Dam and Northparkes.

Aslanis said Epiroc has already received positive feedback from its JTMEC offerings, while inter-business synergies are also taking place.

“We are cross-training staff between JTMEC and Epiroc to support our ambitions,” he said. “We’ve also helped JTMEC secure new business, whereby having the backing of a global company has allowed them to pursue larger opportunities in markets such as tunnelling.

“The JTMEC story has been a successful one so far. They’re supporting their overseas customers and ambitions while also working closely with the relevant division to support our ambitions.

“We’re exploring some exciting opportunities to showcase that Epiroc can be a broader solutions company to the mining industry and beyond.”

While some transactions are completed with a single product in mind, Epiroc’s ability to acquire companies with multiple capabilities is setting the OEM up for success.

This is the case with Remote Control Technologies, Radlink and JTMEC in Australia, while Canadian company FVT Research is quickly enhancing Epiroc’s holistic offerings.

FVT Research designs diesel-to-battery conversion kits and rebuilds mining machines into electric versions.

In 2021, FVT participated in a successful project to convert the diesel-powered Epiroc Scooptram ST1030 loader to battery-electric.

“Bringing the strong team at FVT Research into the Epiroc group fits perfectly into our strategy to provide emissions-free batteryelectric vehicles,” Hedblom said.

“Our customers are increasingly discovering the significant benefits that come with using battery-electric vehicles, and FVT Research’s technical expertise and

competence will be key assets for Epiroc as we continue to provide more solutions in this area.”

More resource-focused is Epiroc’s acquisition of Perth-based Geoscan, which is known for its flagship offerings, Corescan and Coreshed.

As the demand for minerals increases as the world decarbonises, mines will need to come online faster and more regularly. This means quicker and more accurate geological analysis has never been more important.

Providing a rapid and reliable mineralogical profile of each drill core, Corescan improves mining companies’ decision-making across exploration, resource modelling and ore processing.

This is complemented by Coreshed, which provides an advanced digital core storage, visualisation, management and data integration solution for drill core and other geological samples.

“Mining companies continue to strive for greater orebody knowledge to strengthen productivity and consistency in their operations, and Geoscan’s solutions play a vital role in achieving that,” Hedblom said.

Epiroc’s acquisitions strategy will continue to be based on the pillars of automation, electrification and digitalisation in 2023.

“Epiroc’s ambitions won’t change for acquiring companies,,” Aslanis said.

“The corporate acquisitions team will prioritise it and say, ‘Okay, where are the gaps where we can strengthen our ambitions and capabilities?’.

“We’ve got a lot more strings to our bow than we did this time last year, so that could open up even more doors for us in 2023.

“We know the miners want choice and we can provide a more diverse mix of capabilities. It’s really exciting to see Epiroc growing, becoming more capable and more engaging with our customers.”

The JTMEC story has been a successful one so far. They’re supporting their overseas customers and ambitions while also working closely with the relevant division to support our ambitions.

Epiroc recently acquired Geoscan, which is known for its Corescan and Coreshed offerings.

Blu Horseshoe: An investor’s best friend

Australian Resources & Investment chats to Blu Horseshoe about the new digital capital-raising platform taking the equity market by storm.

Blu Horseshoe labels itself as “a new, fast and fair way to invest in companies raising funds”.

The digital platform enables investors to see more deals faster, putting them at the front of the queue for a wider range of ASX capital raises.

Blu Horseshoe chief executive officer Antony Tolfts said it is currently difficult for investors to be across all offers available in the equity market.

“The bulk of the opportunity in the Australian equity market is only available to a very small number of folks because it’s fragmented across nearly 200

brokers,” he told Australian Resources & Investment

“All the compliance and regulation –which is not a bad thing – means opening accounts these days takes a long time and maintaining them is a hassle. Very few people can have enough resources to open 200 broker accounts.

“What you tend to find is most investors are unable to access the opportunities they want to access. In that situation, there’s investors losing out, companies losing out, brokers losing out.”

This is where Blu Horseshoe enters the equation.

“What Blu Horseshoe does is aggregate all of the opportunities from brokers and gives the investors access to those transactions through only opening one account,” Tolfts said. “We don’t offer trading or research. We’re just a giant billboard.”

Since the platform’s soft launch in May 2022, Tolfts said Blu Horseshoe had hoped to support 50–60 transactions in its first year. As of mid-November, the company had already supported 167 deals.

“The response from the market has been much greater than our expectations,” he said. “In addition, we hoped to get an

Blu Horseshoe has been focused on the Australian market, but international markets are also on the radar.

allocation rate of between 30 and 35 per cent. Our allocation rates are averaging 64 per cent to date across every deal.”

This means that more money is reaching the right transaction, supporting investors, companies and brokers. Blu Horseshoe ensures that everyone gets a fair go.

Tolfts said while the platform has supported IPOs (initial public offerings) and pre-IPOs, it is primarily focused on postIPO raisings.

Often post-IPO offers are only open for a few hours, meaning investors must be incredibly organised if they want to participate, or they can tap into Blu Horseshoe.

“The reason the platform is particularly important is the average post-IPO offer – the bread and butter of our business – is only open a couple of hours, so the investment window is really tight,” Tolfts said. “It’s not unusual that we see one hour to 90 minutes being available.

“So the offers on the platform, it’s distributed to our investor base, who are only those folks who are pre-verified 708 professionals or people who are allowed to invest. And it’s a quick process.”

While it has been initially focused on the Australian market, Blu Horseshoe will be casting its net wider as it embarks on 2023, with international markets on the radar.

“When we launched in May, we were really focused on the Aussie market getting the Australian investors in and we continue to do so,” Tolfts said.

“That said we are now casting our net wider to broaden our investor base. In particular in Singapore, (which has a) very convenient time difference and the German markets where there’s about 700 Aussie companies that are dual quoted on the Frankfurt open market.

“A lot of the German brokers are very familiar with the ASX space and we’re trying to give them access through the Blu Horseshoe platform.”

For a company looking to conduct a capital raise, Blu Horseshoe would typically engage with a lead manager.

“We tend to add to an existing lead manager’s distribution,” Tolfts said.

“We want everybody to win, and we want to add to the Aussie market. We don’t see ourselves as a competition to anybody, but we bring everyone together.

“We come into our own when a transaction is not as easy to access. If a company’s listed and it’s only available to professional investors or 708 (sophisticated) investors, that’s more our sweet spot.”

Post-IPO offers are only available to a subset of private investors that qualify as sophisticated or professional investors. Sophisticated or 708 investors must prove they’ve earned at least $250,000 in

pre-tax income in each of the prior two years or have net assets of $2.5 million, including property.

“According to the Australian Financial Review, there’s about 3.2 million folks who qualify as a 708 investor in Australia,” Tolfts said. “All those folks have benefited from the property market and a lot of them won’t realise they are eligible for these incredible investment opportunities.”

Blu Horseshoe is backed by a team with extensive financial services experience, who are there to support anyone who engages with or enquires about the digital platform, whether it be ASX companies, investors, brokers or anyone in-between.

When asked if other capabilities would be incorporated into Blu Horseshoe, such as research or analysis, Tolfts reiterated that, for now, the platform prioritises service first and foremost.

“Our place in the market is very much just bringing together a book of clients with the right transaction,” he said. “We really want to add to the industry without causing any negative impact.

“Our core business is not research … We don’t give advice which is a critical point. We simply make the offer available and our investors, we imagine, would be given their own advice.”

A digital platform where all capital raises are in the one place. Sounds like Blu Horseshoe is an investor’s dream.

Blu Horseshoe enables professional and sophisticated investors to beat the rush.

FOLLOW THE LEADERS

THE LATEST EXECUTIVE APPOINTMENTS

Ian Wells recently resigned as chief financial officer (CFO) of Fortescue Metals Group.

Wells has been with Fortescue since 2010 and held various senior executive finance roles, notably as CFO since 2018.

Wells said that he is keen to “spend with family and friends” and that Fortescue remains in a strong position to deliver on its decarbonisation strategy.

“The next phase of Fortescue’s growth will be extraordinary and I am so proud to have been a small part of bringing it to where it is today, along with the rest of our 20,000-strong team,” Wells said in comments provided by the company.

“Fortescue is in a strong position to be able to deliver on short-, mediumand long-term growth options through the Iron Bridge magnetite project, Fortescue’s decarbonisation, and FFI’s (Fortescue Future Industries) portfolio of opportunities.”

In a statement announcing the exit, Fortescue said Wells had resigned to pursue other opportunities.

Wells’ resignation came two months after the departure of another of Fortescue’s senior financial executives, Guy Debelle, who transitioned from FFI CFO to the board of FFI Australia to focus on his health.

Debelle was involved in a serious bicycle accident in August 2022 and had been managing the CFO duties during his recovery; however, he has now decided to step back.

It is also the latest in a string of senior resignations at Fortescue – nine executives in two years. Wells will finish his time at Fortescue on January 31.

Gerry Spindler, chief executive officer (CEO) of Coronado Global Resources, recently announced his retirement, with Douglas Thompson to take the helm.

Spindler will retire from the role after the company’s annual general meeting, set to be held on or around May 25, and then transition to the position of executive chair.

“On behalf of the board, I want to thank Mr Spindler for his leadership, outstanding contributions and dedication during his 11 years as Coronado’s chief executive,” Coronado deputy chair and lead independent director William Koeck said.

“We are grateful that he has agreed to stay on as executive chair and assist the board, given his extensive experience and understanding of our growth strategy.

“We are also fortunate to have an executive of Douglas Thompson’s calibre to replace Mr Spindler. The board was

unanimous in the decision on Douglas Thompson’s appointment to lead Coronado at a time when we have great momentum and significant growth opportunities.”

Thompson has been the company’s chief operating officer – Australia since September 2021 and has more than 25 years’ experience in the mining industry, including as managing director and chief executive officer of Thiess.

Group CFO Gerhard Ziems will assume an expanded role following the annual general meeting, taking responsibility for all sales and marketing as well as strategic investment activity.

Hancock Prospecting recently made a raft of executive changes, with subsidiaries Roy Hill and Atlas Iron no longer having separate bosses.

Roy Hill CEO Gerhard Veldsman has been appointed as Hancock’s chief executive of group operations, where he will oversee the Roy Hill and Atlas Iron operations.

Atlas Iron chief executive officer Sanjiv Manchanda will become Hancock’s chief executive of growth projects. This comes as the company looks to boost its production capacity to 100 million tonnes a year.

Barry Fitzgerald, Roy Hill’s inaugural chief executive who moved into board

roles in March 2021, will return to a key management role as iron ore technical director.

Hancock has been very active over the summer months, with the company engaged in a takeover battle with Strike Energy for oil and gas explorer Warrego Energy.

Chalice Mining has appointed Mike Nelson to the newly-created role of general manager – project development.

Nelson will lead all aspects of the studies and development of the Julimar nickelcopper-platinum group elements (PGE) project in Western Australia, bringing more than 30 years’ experience in operational and project technical leadership roles to the role.

Nelson has been instrumental in leading the development of several mega-projects, including Barrick Gold Corporation’s Reko Diq copper-gold project and Teck Resources’ Quebrada Blanca Phase II.

He was chosen for the Chalice role due to his metallurgical, engineering and project management expertise in large-scale precious and base metals operations.

“Mike’s unique skill-set will be critical in ensuring that the technical foundations for the Julimar project are well laid and that our development plan is de-risked,” Chalice boss Alex Dorsch said.

“Given that Julimar is one of the most significant PGE-nickel-coppercobalt discoveries in recent times, Mike’s experience leading some of the world’s largest recent mega-projects makes him uniquely qualified for the role.”

Green Critical Minerals (GCM) has appointed Mark Lynch-Staunton as its new CEO.

Lynch-Staunton has more than 15 years’ experience in project feasibility, development and operations across gold, base metals, rare earths elements (REE) and iron ore, and has the expertise to support the advancement of Green Critical Minerals’ McIntosh graphite project in Western Australia.

“The expertise Mark will bring to GCM from his many years working for some of the world’s largest mining companies was a significant attraction for the GCM board and is exactly what is required for the McIntosh project,” GCM executive chair Leon Pretorius said.

“Mark has successfully delivered feasibility and optimisation studies on numerous global projects, including most recently a multi-million-ounce gold-copper deposit in Tanzania.”

Melanie Leighton has been appointed as the new CEO of Titan Minerals.

A geologist with more than 20 years’ experience in the resources sector, Leighton is a founding director of Leighton Geoservices, a consulting firm providing corporate and geological services to the mining sector with the mantra of bridging the gap between technical, corporate and investors.

Leighton has previously held senior management and geological roles with Hot Chili, Harmony Gold and Northwest Resources, where she has established a broad repertoire of skills.

Leighton has worked in a consulting capacity for Titan Minerals over the past six months.

“Melanie has worked closely with our technical and corporate teams over the past six months and brings a wealth of relevant experience in this sector,” Titan chair Peter Cook said.

“Melanie is armed with the skills and background to assist Titan in navigating the next phase of exploration and development of its projects in southern Ecuador.”

Interim CEO Matthew Carr will continue as part-time executive director for the ensuing quarter as part of the handover process.

AUSTMINE 2023 | ADELAIDE | MAY 9–11

Taking place at the Adelaide Convention Centre, the Austmine 2023 International Conference and Exhibition showcases the leading technologies, groundbreaking innovations and transformative solutions that are provided by the Australian mining equipment, technology and services (METS) sector. Held over three days, the event will encompass workshops, plenary sessions, tech talks, the ‘Meet the Miners’ event and interactive breakout discussion groups. There will be networking opportunities aplenty throughout the conference, while the Industry Leaders’ and Awards Dinner will celebrate and recognise the achievements of leading innovators in the sector.

With more than 100 exhibitors expected at the event, Austmine 2023 will boast everyone from start-ups to multinationals from pit to port, with displays including the latest in digital, decarbonisation and environmental, social and governance (ESG), and new solutions set to transform our industry. In partnership with the South Australian Government, the Copper to the World Conference will be held in conjunction with Austmine 2023, bringing a spotlight on this key strategic mineral.

• austmineconference.com.au

WORLD MINING CONGRESS | BRISBANE | JUNE 26–29

Inaugurated in 1958, the World Mining Congress (WMC) is the leading international forum for the global mining and resources sectors.

The 2023 iteration is a unique opportunity for international representatives of the world’s leading resource economies to meet, find new partners, discuss current challenges, and share the latest research, technology and best practice. WMC events have set the scene for international agreements and high-level discussions that have influenced mining practices and the resource industry for decades.

Join senior mining industry owners, investors, national and international government representatives, researchers, educators, regulators, suppliers and operators from around the world in Brisbane for this opportunity to demonstrate real leadership and presence on a world stage.

• wmc2023.org

DIGGERS AND DEALERS | KALGOORLIE | AUGUST 7–9

Diggers & Dealers combines 70 corporate presentations by listed mining and exploration companies with a large exhibition housing more than 150 exhibitors from the sector. Delegates include miners, explorers, brokers, bankers, investors, financiers and mining service industries from around the world.

The event provides a unique opportunity for industry professionals to meet and network, visit regional mine sites, mix with media members, raise finance, invest in projects and engage with the resources sector at an executive level.

An entertainment program ensures that delegates experience the best of the style and hospitality of Kalgoorlie, the unofficial gold mining capital of Australia.

• diggersndealers.com.au

INTERNATIONAL MINING AND RESOURCES CONFERENCE (IMARC) | SYDNEY | OCTOBER 31–NOVEMBER 2

After recently celebrating its first in-person event in three years, IMARC is returning to Sydney from October 31 –November 2 2023.

A vivid showcase of all the elements that make the mining industry great, IMARC is where the most influential people in the sector come together to share ideas and inspiration, with groundbreaking technology and world-class content on display. Learn from more than 450 mining leaders and resource experts throughout six concurrent conferences with a program covering the entire mining value chain.

The likes of BHP, Newcrest Mining, Agnico Eagle and OZ Minerals presented at the 2022 event, along with original equipment manufacturers (OEMs) such as Caterpillar, Epiroc and FLSmidth, so attendees can expect another slate of worldclass presenters for 2023.

• imarcglobal.com

AUSTRALIAN MINING PROSPECT AWARDS | BRISBANE | NOVEMBER 9

Taking place in Brisbane in 2023, the Australian Mining Prospect Awards are a great opportunity to recognise and acknowledge the people and companies in the mining sector for their outstanding work.

Having recently celebrated the 2022 Prospect Awards winners, nominations are now open for 2023, with awards honouring categories such as Indigenous and Community Engagement, Mine Project Success of the Year, Outstanding Mine Performance, Sustainability Project of the Year, Discovery of the Year and more.

Some of the 2022 award winners included Kestrel Coal for Australian Mine of the Year, Roy Hill for Mine Project Success of the Year, and Flexco Australia for Excellence in IIoT Application.

This year, the awards will return to Brisbane in appreciation of the vibrancy and importance of Queensland’s thriving mining sector.

• prospectawards.com.au