ACI Num 2 2020 by Prime Creative Media

VOLUME 14 NUMBER 2 | 2020

Australian Resources & Investment EMBRACING RENEWABLES FOR ONSITE ENERGY

ALL THAT GLITTERS IS NOT BLOCKCHAIN

GOLD IN THE TIME OF COVID-19

BATTERY OF THE FUTURE

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AUSTRALIAN RESOURCES & INVESTMENT

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–1–

CONTENTS

3 3

I N T H I S I S SU E

iners scramble for nickel assets, M by Tony Featherstone

A focus on flexibility and client care

Performance under pressure

Analysis with Regina Meani

ast-track potential for Canyon F Resources, by Barry FitzGerald

Growth through tungsten

ritical paths for decarbonisation C and winning over social investors, by John O’Brien, Deloitte

nearthing new areas of mineral U exploration

he importance of the social licence T in mining, by Sherif Andrawes, BDO

MINE DE VELOPMENT

26 All that glitters is not blockchain, by Dr Andrzej Gwizdalski, The University of Western Australia

70 Rising to the challenge,

measure of critical infrastructure

40 Combining big data and experience for safer tailings dams

opper’s roller-coaster ride, C by Steve Freeth

tandalone plant in the works for S Peel Mining, by Barry FitzGerald

GOLD

FitzGerald

46 Gold rush, by Anthony Fensom by Barry FitzGerald

50 Mako making its way, by Barry FitzGerald

old during a pandemic, content G supplied by IBISWorld

54 Royal gains in Ecuador, by Barry FitzGerald

56 Apollo Hill soars to new heights, by Barry FitzGerald

58 Gold in the time of COVID-19,

by Andrew Naylor, World Gold Council

60 A golden opportunity, by Barry FitzGerald

62 Calidus Resources’ golden ticket, by Barry FitzGerald

64 Nelson consolidates position on the ground, by Barry FitzGerald

COPPER

44 Potential in the Pilbara, by Barry

68 Rumble in the jungle, by Barry FitzGerald

38 VEGA sensor products have the

YI Resources closing in on high F purity alumina production, by Barry FitzGerald

aking the lead in the future of T workforce and digitisation, by Hendrik Lourens and Gary Wong

spree before coronavirus – here’s why, by Drew Woodhouse, Sheffield Hallam University

by Barry FitzGerald

48 Chalice’s Julimar continues to shine,

photogrammetry in the mining space, by Adam Kerr, Cartledge Mining and Geotechnics

–2–

Embracing renewables for onsite energy, by Andrew Van Zyl, SRK Consulting South Africa; and Rebecca Getty and Anne-Marie Ebbels, SRK Consulting Australia

20 Unmanned aircraft and

with a little help from science, by Mike McRae, CSIRO

F E AT U R E D

66 Why countries went on a gold-buying

30 A post-mining future looks golden

T H E F E AT H E R S T O N E REPORT

28 The mining power specialists

NICKEL

lon Musk drives nickel higher, E by Anthony Fensom

78 Chasing big targets at depth, by Barry FitzGerald

80 LITHIUM

80 Battery of the future, by Mahdokht Shaibani, Monash University

84 Galan Lithium is earning its stripes, by Barry FitzGerald

86 Energising a greener future, by Anthony Fensom

88 P O TA S H

88 Reaping the rewards, by Barry FitzGerald

AUSTRALIAN RESOURCES & INVESTMENT

THE

Featherstone REPORT

MINERS SCRAMBLE FOR NICKEL ASSETS BY TONY FEATHER STONE

Surge in demand for electric vehicles fuels battery component’s long-term prospects.

wave of consolidation is sweeping Australia’s nickel sector as miners position themselves for rising long-term nickel demand amid a boom in electric vehicles (EVs). Capital raisings, strategic investments, takeovers and asset purchases in nickel featured in the second quarter of 2020, as large and small miners jostled for pole position. Three factors are driving the nickel fever. Firstly, the emerging New Norcia province, about 100 kilometres north-east of Perth, appears highly prospective for nickel and other base metals. Cassini Resources in April 2020 returned strong nickel results at its Yarawindah Brook project, near New Norica. The company believes the final results from its maiden drilling program confirm the Yarawindah as part of an emerging nickel sulphide province. Secondly, brokers are forecasting a medium-term recovery in the nickel price. Like most commodities, nickel has been hammered this year due to COVID-19, expectations of a global recession this year (and possibly next), and a fall in demand for commodities. After slumping for most of the previous decade, the LME nickel price began to rally in the second half of 2019. Although built on strong fundamentals, the gains were short lived – the LME nickel price fell by almost a quarter from September 2019 to July 2020. Uncertainty surrounding COVID-19 might have driven the nickel price too low. At the time of writing, there was promising news on two vaccine

candidates, and China’s economy was showing signs of stronger recovery. EV demand is nickel’s third tailwind and the key to its long-term growth. Although nickel use in EV batteries remains uncertain, the market expects rising demand. Early EVs used lithium-ion batteries made of lithium iron phosphate and lithium manganese oxide. There was no nickel, but a lower battery life meant a reduced driving range for EVs and a reason for people not to buy them. Second-generation lithium-ion batteries use nickel manganese and cobalt, creating higher energy densities and thus a longer driving range. Overseas research has shown that nickel is quickly gaining a higher share of EV batteries relative to other metals. By 2040, about 30 per cent of the global passenger fleet will be electric, forecasts Bloomberg. If that view is correct, demand for EV batteries and the nickel in them will rise sharply. Consensus analyst projections were for nickel demand to rise from around 150,000–170,000 tonnes to around 500,000 tonnes per annum by 2025, and around one million tonnes annually by 2030, noted Macquarie Wealth Management in its nickel research in July 2020. Those forecasts have been revised to about 400,000–450,000 tonnes per annum by 2025, largely due to COVID-19 and its effect on the global economy and commodities demand. A weaker battery market and reduced nickel demand are likely this year.

–3–

T H E F E AT H E R S T O N E R E P O R T

Even with reduced demand forecasts, nickel’s longterm outlook is improving. The metal’s exposure to the EV boom is attracting significant corporate and investor interest Even with these reduced demand forecasts, nickel’s long-term outlook is improving. The metal’s exposure to the EV boom is attracting significant corporate and investor interest. BHP Group last year decided to retain its Western Australian nickel business despite market expectations that it would divest it. The mining giant clearly saw a stronger future for nickel, and has added to its exposure through acquisitions this year. BHP will acquire the Honeymoon Well nickel project – comprising the Honeymoon Well development project, and a 50 per cent interest in the Albion Downs North and Jericho exploration joint ventures – from a wholly owned subsidiary of Norilsk Nickel Australian Holdings BV. BHP Nickel West is currently a 50 per cent shareholder in the Albion Downs North and Jericho joint ventures. The project, in Western Australia’s Northern Goldfields region, contains a high-grade nickel sulphide resource (the Wedgetail deposit) and a high-quality sulphide resource. BHP Nickel West Asset President Eddy Haegel said in a statement in June, ‘This is an exciting opportunity to enhance our world-class nickel resource base in Western Australia. Proximity to our existing facilities makes us the natural owners of these deposits, and provides potential options to bring the undeveloped resources to market. ‘Nickel continues to be an essential input into new technologies that will improve the battery storage needed for renewables and EV manufacturing. Consistent with our strategy to invest in future-facing commodities, this transaction gives us access to explore and develop these prospective nickel sulphide tenements.’ Elsewhere, IGO Ltd (formerly Independence Gold) added to its strategic shareholding in Mincor Resources after subscribing in June for $13 million of the latter’s successful $50-million institutional placement. Also in June, OZ Minerals agreed to acquire joint venture partner Cassini Resources in the West Musgrave nickel/copper project.

–4–

OZ Minerals says the acquisition was the natural evolution of a strong and effective working relationship with Cassini that has enabled agreement on the best value path forward for both parties. ‘This is a promising project with strong sustainability credentials, both in terms of the copper and nickel to be mined being critical inputs for the renewable economy, and also in relation to its low carbon footprint, with some 80 per cent of power generated through renewable sources, including solar and wind.’ Among mid-term producers, Western Areas in May acquired 19.9 per cent of rival Panoramic Resources, capping a strong period of news flow for the company. Several broking firms have ‘buy’ recommendations on Western Areas given its leverage to a higher nickel price, and the prospect of upgrades to the company’s earnings and valuation at the spot nickel price. Indonesia-focused producer Nickel Mines is also making solid gains. The company listed on the ASX in August 2018, through a $200-million initial public offering (IPO), at 35 cents a share. Nickel Mines was one of the few mining IPOs of note to get away in the past few years, and traded at 61 cents in late July 2020, rewarding investors who bought it during the IPO. The producer of nickel pig iron, a lower-grade, cheaper alternative to nickel, has economic interests in the Hengjaya and Ranger nickel projects in Indonesia. The company also has an interest in the Hengjaya Mineralindo nickel mine, a large-tonnage deposit also in Indonesia. Nickel Mines is building a strong footprint in Indonesia through its strategic relationship with Tsingshan, the world’s largest stainless steel producer, and is within 15 kilometres of the Indonesian Morowali Industrial Park and its infrastructure.

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 30 July 2020.

Bringing more than a century of experience to every transaction

Gordon Brothers By The Numbers

A$1bn

of capital available through our strategic partnership with Gordon Brothers Finance Company (GBFC)

A$75bn

of assets valued annually

A$10bn

of surplus merchandise globally bought and sold each year

A$300M+

in capital available for any single or multi-asset purchased

A$3M

minimum loan facility

Lend against P&E, receivables, inventory, commercial real estate

Fenton Healy Managing Director +61 (0) 407 202 179 fhealy@gordonbrothers.com

Alternative Funding ASSET BACKED LIQUIDITY SOLUTIONS

PROVIDING DIRECT LENDING AND SPECIAL SITUATIONS FINANCING TO CONVERT SURPLUS ASSETS AND EQUITY INTO EFFICIENT WORKING CAPITAL • • • •

Financial flexibility Rental Options Low covenant Quick diligence

• • • •

Sale and leaseback Debt consolidation and refinancing Merger and acquisitions Business consolidation and restructuring

ASSET REMARKETING

VALUATIONS

Unlocking liquidity for clients by buying and selling underperforming or redundant assets.

Providing the insight that companies and their lenders need to make decisions.

F E AT U R E D

A focus on flexibility and client care

Headquartered in Boston, with 26 offices across five continents, Gordon Brothers has brought a combination of expertise and capital to the shores of Australia and New Zealand.

n operation for 117 years, Gordon Brothers is experienced in providing customised solutions in the areas of special situations lending, asset trading, asset advisory and valuations. ‘Gordon Brothers partners with companies to put assets, including inventory, receivables, property, plant and equipment, and brands to their highest and best use. Our capital commitments can range from as low as $1 million to more than $100 million,’ says Fenton Healy, Managing Director of the Australian branch of Gordon Brothers. ‘Gordon Brothers also offers an alternative funding solution via direct lending and special situations financing to convert surplus assets and equity into efficient working capital.’

–6 X–

Other services offered include asset remarketing services (including buying and selling underperforming assets), and asset valuation services, which provide companies further insight on asset liquidity. Healy says that insight into asset liquidity helps companies and their lenders to make informed decisions, where situations require a clear picture of values that can support transition. SUCCESS IN MINING PARTNERSHIPS

In the past three years, Gordon Brothers has become actively involved in the Australian mining industry, undertaking a number of asset advisory and remarketing projects, including the acquisition of surplus equipment, and providing debt refinancing.

Gordon Brothers worked with the operator of the Koolyanobbing mine, assisting them to achieve a smooth exit from the Australian market. The client required a quick, efficient disposal solution for their plant and machinery. At the time, many potential purchasers were only looking at buying parts of it, while auctioneers were only offering to sell the gear on a consignment basis. Gordon Brothers took a risk in acquiring the entire fleet of equipment, and, after securing the deal, quickly sold off almost all of the equipment through private negotiation. In the end, Gordon Brothers provided the operator a solution that wasn’t available anywhere else, giving the client the outcome that they desired.

AUSTRALIAN RESOURCES & INVESTMENT

Another example of a successful mining partnership is the company’s work with Rivet Pty Ltd (previously McAleese). After having entered voluntary administration and significant restructuring, and exiting via a deed of company arrangement, the previous CEO was looking to refinance and reacquire the business. While focusing on stabilising the business and its performance, traditional finance was proving challenging, given that the company had gone into administration under a year ago. Gordon Brothers was engaged to reduce funding costs and create further flexibility through removing the risk of hair-triggers. By conducting a detailed analysis of the equipment base, Gordon Brothers was able to provide an asset-based financing facility. Through focusing on asset value, minimal cash flow and increased leverage under an extended term, the business was provided with the peace of mind that any volatility in earnings wouldn’t have material consequences. As a result of Gordon Brothers’ expertise and experience, the previous CEO was able to reacquire the equity of the business. Gordon Brothers has also worked with large mining and bulk haulage operators, sourcing equipment and structuring flexible funding options for them. Proven experience, combined with company values of flexibility and being client

focused, has resulted in Gordon Brothers creating ongoing relationships within the mining industry that have produced successful outcomes. CHANGES AND CHALLENGES

In the past 20 years, developments in regulation, automation, environmental policies, and health and safety have changed the industry. Some things, however, stay true. ‘The industry remains cyclical and prone to the same challenges posed by exposure to global commodity markets, foreign exchange rates, access to capital, skilled labour and equipment,’ says Healy. Capital’s growing interest in mining is a key trend that stands out in the industry. Healy points out that capital markets follow trends where yields can be maximised, and that following the mining sector’s most recent resurgence, it has become an attractive destination for capital, in both debt and equity. To mining companies looking to expand their business and needing finance, Healy’s advice is short and simple: ‘Get good advice and then get a second opinion’. In addition, the industry is facing several other sources of growing uncertainty for the future – the bushfires, floods and COVID19 crisis have caused companies to feel financial strain, faced with the challenge of staying afloat. As Healy says, ‘What

has invariably proven to be instrumental in survival is a strong leadership team with a good plan, and who are willing and able to make quick decisions and, most importantly, have liquidity or access to funds to manage. The old adage of “cash is king” is never truer than in uncertain times’. A TAILORED APPROACH

Equipped with a deep knowledge and understanding of assets and their real values is what makes Gordon Brothers unique. What sets Gordon Brothers apart from its competitors is a business philosophy that embraces flexibility and a case-by-case approach. ‘In asset-backed lending situations, we look at those situations differently to more traditional lenders and are flexible in finding ways to make those deals work,’ says Healy. ‘I think a key principle is that we always look at every situation from the viewpoint of how we make our involvement work for the customer.’ This business philosophy of flexibility and specificity is what distinguishes Gordon Brothers as a company with the ability to meet myriad customer needs in an environment marked by shifting demands and change. For more information, visit Australia.gordonbrothers.com.

–– Y7 –

F E AT U R E D

Performance under pressure Specialist vibration technology for even the harshest environments.

hen it comes to harsh operating environments, there can be no doubt that mining, quarrying and other mineral processing are right up there with the harshest. From all types of materials – large or small, heavy or light – equipment in these environments is exposed to all types of ‘punishment’ on a daily basis. Many of these facilities work multiple shifts per day, putting the equipment under extraordinary pressure to perform for extended periods. When it comes to selecting the appropriate specialist vibratory motors for bespoke vibrating materials handling and processing solutions, Australian equipment specialists and manufacturers turn to OLI® Vibrators. Aury Australia’s Engineering Manager, Mick Hopkin, explains, ‘The vibratory motors used are really at the heart of everything designed and built, so we need to be absolutely certain that they’re going to perform as specified. We also need to be sure that they’re going to keep on performing for the long term. ‘After all, if the vibratory motor fails, the equipment stops – and that can bring an entire site to a standstill.’ Hopkin adds, ‘We’ve been using OLI Vibrators in our equipment for many years, and we’ve always been extremely happy with their performance. They’re robust and reliable, they perform as specified, and they’re built to last. With OLI Vibrators, we can be sure that our equipment meets our customers’ needs and it won’t let them down’.

–8 X–

Aury Australia AHF0918 high-frequency dewatering screen

The name OLI has been synonymous with expertise in vibration technology for more than 55 years. OLI Vibrators Australia is a leading supplier of specialist vibrators for a range of Australian industry sectors, including mining, quarrying, mineral processing, waste management, recycling and construction. Selecting the right vibratory solution is not a one-size-fits-all proposition. Specific materials respond differently to different amplitudes, explains OLI Vibrators Australia General Manager Mark Thompson. Aury Australia has been designing and manufacturing proven screening products for the mining and extractive industries for more than 10 years. It has gained an enviable reputation for the quality, reliability and performance of its equipment.

‘Once we have the equipment designed, OLI Vibrators provides us with the appropriate vibratory motors to meet the specification,’ Hopkin says. ‘Importantly, OLI has such a comprehensive range of products and spare parts available locally, and [the fact] that these products are supported by staff with both product knowledge and local industry expertise also means we’re able to access products, spares and expertise quickly and easily. That, in turn, helps to minimise both equipment manufacturing lead times and downtime for repairs and/or services,’ Hopkin concludes. For more information, visit www.olivibrators.com.au.

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F E AT U R E D

— ANALYSIS — WITH REGINA MEANI Copper heights.

WHEN WORLD EQUITY markets plunged in March 2020, the metals markets suffered as well, with gold falling 15 per cent, silver 34.5 per cent and copper 31 per cent. As both silver and copper were the hardest hit, it fits that they have experienced the best recoveries during 2020. By August 2020, silver had recovered by a staggering 151 per cent, copper some 50 per cent and gold by 42 per cent. Since the later part of 2019, the world has experienced catastrophic events. In Australia, we have suffered almost biblical occurrences, battling fire, flood, drought and pandemic. In these unprecedented times, and throughout history in times of trouble, the precious metals are sought as safeguards, while copper tends to provide benefits when times improve. Hence, the combination of these three metals provide a substantial insurance policy. From these three metals, it is important to note the activity in the copper price and its potential going forward. Of the three, copper was copper the last to start breaking its downward path. The price broke its two-year downward trend in June this year and approached a significant barrier in the US$3.00–3.05 area, aligning with the longer-term down trend from its peak in 2011. During July and August, the price paused underneath in preparation for a breakthrough and rise towards $330, and potentially into the $370–400 zone. As the preparation phase develops, there may be the need for more volatility, with support located around $275–280 and then lower in the $250–260 area.

– 10 –

Eagle Mountain Mining (ASX: EM2) is located in Arizona, known as the heart of America’s mining industry. The company’s Oracle Ridge is a high-grade, advanced-stage underground copper/gold/silver project. In August this year, Eagle Mountain appointed Boart Longyear as diamond drilling contractor for the Oracle Ridge Mine in an effort to expand the existing mineral resource by targeting high-grade extensions to the known copper mineralisation. The Silver Mountain project is also located in the significant copper porphyry deposits of the Laramide Arc, and boasts multiple small copper/gold mines. In June/July this year, in a similar fashion to the copper price, the share price for Eagle Mountain broke free of its two-year downward trend and rallied into resistance in the 20–24 cents area. As the price pauses in recognition of the barrier zone, it may consolidate further in the 15–20 cents area before continuing its new upward path towards 29–30 cents and potentially higher into the 40–50 cents range. The risk to this scenario would be failure to move through the 24-cent barrier with the expected oscillations breaking down through the 15-cent support. Considering our positive view for the copper price and Eagle Mountain’s propensity to follow its movements, the risk of failure appears minimal. The onward outlook depends on the length of consolidation required to support the resumption of the upward path.

AUSTRALIAN RESOURCES & INVESTMENT

F E AT U R E D

Bauxite drilling

Fast-track potential for Canyon Resources BY BAR RY FITZGER ALD

A pre-feasibility study has confirmed robust economics for the staged development of Canyon Resources’ Minim Martap bauxite project in Cameroon into a worldclass supplier of the key alumina/aluminium raw material.

onfirmation of Minim Martap’s potential has prompted Canyon to step up discussions with potential offtake, equity and project partners. Managing Director Phillip Gallagher says the key message to potential partners was that Minim Martap could be developed using existing rail and port infrastructure, and that it is a massive and high-grade deposit. The pre-feasibility study (PFS) was released in July and envisaged a fivemillion-tonne-per-year operation costing US$120 million, with a 4.2-year payback. The internal rate of return was put at 37 per cent, and the project’s net present value was estimated at US$291 million. Gallagher says the PFS has outlined a fast track to production at Minim Martap, and has highlighted the project’s potential to supply high-quality bauxite independent of the current concentration of supplies from Guinea. The low capex is a result of Canyon being able to leverage off existing rail

–X–

and port infrastructure in Minim Martap’s early years. An existing rail line runs from close to Minim Martap down to the old shallow water port of Doula, a direct distance of 560 kilometres. ‘Initially, we thought the existing rail line and Doula port could handle three million tonnes per annum. But as we got into it and looked at the rail scheduling, we found that we could get five million tonnes per annum down that existing rail line, and through Doula by transhipping,’ Gallagher says. ‘And as the project develops and we end up going through the new Kribi (deepwater) port after a 130-kilometre interconnecting rail extension is built, we will be able get up to somewhere near 10 million tonnes per annum of bauxite,’ Gallagher says. ‘So, that’s the upside for us. And when you’re talking about the scale of the resource (892 million tonnes with less than half of prospective plateaus drilled),

that’s potentially 100 years of mining,’ he says. Gallagher says that various companies have indicated interest in building the ‘missing link’ between the Doula line and Kribi, and that the government is keen to see it built. ‘But at the moment, our project is the only one that can supply the underlying business case to support the link. So, we are going to build our business case to the point where we can show that it works.’ Canyon followed up the release of the PFS by sending key global alumina refiners the technical specifications for Minim Martap bauxite, which will be branded in the market as ‘Camalco Premium Bauxite.’ Gallagher says that Minim Martap has been well received by major companies in the bauxite, alumina and aluminium industry. Many have expressed an interest in the project as partners, and some have requested specification details and samples to send to their own laboratories for independent analysis.

– 11 –

F E AT U R E D

Growth through tungsten Speciality Metals International has closed the acquisition of the Mt Carbine Quarry and two mining leases.

peciality Metals International’s plans of becoming a pre-eminent tungsten producer from its flagship Mt Carbine tungsten project in Far North Queensland is being realised, with the company closing the purchase of the Mt Carbine Quarry and two mining leases (ML 4919 and ML 4867) on 28 June 2019. The company also entered into an unincorporated joint venture with Cronimet Australia Pty Ltd for the development of the Mt Carbine tailings retreatment and stockpile projects, and commenced operating the Mt Carbine Quarry through its wholly owned subsidiary, Mt Carbine Quarrying Operations Pty Ltd, on 1 July 2019. Cronimet Australia is a subsidiary of the German privately owned Cronimet Group, which was founded in 1980 as a raw materials service provider and trader. Since then, Cronimet has grown organically to become a diversified commodity group with more than 5200 employees and activities in over 50 countries. MT CARBINE TUNGSTEN MINE

Historically one of the world’s largest tungsten mines, Mt Carbine delivered

– 12 X ––

40 per cent of Australia’s annual tungsten production. It produced approximately 17,000 tonnes of premium wolframite and scheelite concentrates, extracted from some 13.5 million tonnes of sheeted quartz veining, until low metal prices forced the closure of operations in the mid 1980s. When operations ceased, underground development was well advanced to access high-grade mineralisation extending beneath the floor of the open pit. Most of the required infrastructure to restart the mine is already in place (e.g. granted mining leases, power, sealed roads, tailings storage facilities and first stage environmental approvals), and it is located just 120 kilometres from the Port of Cairns in Far North Queensland. Through its joint venture with Cronimet, Speciality Metals International commenced commissioning the newly refurbished Mt Carbine Retreatment Plant in December 2019, and is currently optimising processes to achieve sustained production throughputs at increasing feed rates. This first stage will focus on the recovery of the coarse scheelite and

fine wolframite still contained within the existing tailings stockpile. The joint venture is also committed to supporting the local communities within which it operates, with the site now employing approximately 25 people, the majority of whom are from the local region. The Tailings Retreatment Stage will be followed by the processing of the low-grade stockpiles, which amount to approximately 12 million tonnes of atsurface stockpiled material. X-ray ore sorting technology will be used to remove tungsten-rich quartz from the stockpiled material. It is estimated that beneficiation of the low-grade material through the sorters will result in a significant upgrade of tungsten units, while maintaining a high recovery. The final stage of the project involves the commencement of open-pit and underground mining. Another significant advantage of this project is the symbiotic relationship that exists between the onsite mining and quarrying operations, as no waste will be generated by the mining operations. All material, once treated, will ultimately become

AUSTRALIAN RESOURCES & INVESTMENT

quarry products for its customer base, thus greatly reducing the environmental footprint of the mine. The company further believes that the present project life will be significantly increased by further exploration of the hard rock resource and its surrounding exploration permits, EPM 14871 and EPM 14872. In this regard, the company’s geological team has completed a review of all historical maps and geological information within, and immediately adjacent to, the Mt Carbine mining leases along with historical drill core samples. Selected drill core will be re-assayed to gain a better understanding of the extent of the scheelite mineralisation zones within the deposit. The board at Speciality Metals looks forward to a long and profitable relationship with Cronimet, it believes that the joint venture and the technical expertise that comes with it will reposition the company’s world-class tungsten deposit to the forefront of tungsten miners globally.

M T C A R B I N E Q UA R R Y

The Mt Carbine Quarry is a fully permitted, established business that has been in operation for more than 20 years within the Mt Carbine mining leases. As of 1 July 2019, the company’s wholly owned subsidiary, Mt Carbine Quarrying Operations Pty Ltd, has been operating the quarry in its own right. The handover from both an operational and customer perspective has transitioned smoothly, with the company retaining all the existing quarry employees and their 60-plus years of combined knowledge within the quarrying industry. This business segment offers substantial growth opportunities and an invaluable revenue stream, not to mention the invaluable synergies the quarry and mining operations have through waste management. The quarry is the largest and most northern hard rock quarry in Far North Queensland with an extensive range of: • road base • crushed rock

• • • • • • • • • • • •

mattress rock crushed fill concrete aggregate crusher dust erosion control rock drainage rock ballast gabion pre-coat aggregate clean sorted rock shot rock fill. The Mt Carbine Quarry’s cost competitiveness comes from the fact that no drill and blast is necessary, as all mined waste rock becomes quarry feedstock with the material only requiring secondary crushing, screening and blending to form a saleable product. All quarry material has been approved for erosion control use along Queensland’s eastern shoreline due to it being clean and non-acid forming. The quarry is also an approved supplier of the Queensland Department of Transport and Main Roads, and of local government councils.

RESOURCE

JORC CLASS

C U T- O F F G R A D E (%)

TONNES (M I L L I O N)

W O 3 (%)

W O 3 (M E TRIC TON NE U NIT - 10 KG E ACH)

Low-grade stockpile

Indicated

0.00

12.0

0.070

840,000

Main-zone hard rock

Indicated

0.05

18.0

0.140

2,520,000

Main-zone hard rock

Inferred

0.05

29.3

0.120

3,516,000

Total

59.3

6,876,000

Table 1. Resource summary – tungsten resource as tungsten tri-oxide

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Critical paths for decarbonisation and winning over social investors BY JOHN O’BR IEN, PARTNER, FINANCIAL ADVISORY, DELOITTE

Australian miners are forging ahead with decarbonisation efforts and creating value beyond compliance in response to pressure from investors; but there are challenges in doing so. – 14 –

AUSTRALIAN RESOURCES & INVESTMENT

HOW TO RESPOND TO THE DEMANDS OF SOCIAL INVESTORS Create value beyond compliance

To respond effectively to investor expectations, mining companies will likely need to move away from a mindset that relegates corporate social responsibility to a discrete function. Instead, they should consider revising their business models to tackle some of society’s biggest issues – from stakeholder engagement and creating a regulatory dividend, to investing in renewable energy, getting proactive about the low-carbon economy, localising procurement, strengthening diversity and inclusion, respecting human rights, and fostering cross-industry collaboration. Change the image of mining

In an age of disruption, shareholder activism, and sometimes a breakdown in corporate trust, miners should try to reclaim control over the sector’s narrative. Often, the industry is viewed critically in many aspects, such as environmental and social responsibility. Stories should highlight the industry’s investment in innovation, collaboration, safety, sustainability, genuine rehabilitation, renewable technologies and diversity. In short, value beyond compliance should become a rallying call. Get better at brand and reputation management

The aim here is to link investor trust to the company’s strategic plan, instil a duty to protect both public and investor trust in all employees and leaders, and gain the capacity to sense risks to this trust so that companies can rapidly respond to crises and emerging threats.

riven by demands from stakeholders and the strengthening business case for decarbonisation, most mining companies are taking steps to reduce their greenhouse gas emissions. While the path is not necessarily easy, it will mitigate climate risks and create value for customers, investors, governments, communities and employees. The drivers of this action are coming from: regulators around the world setting carbon reduction targets investors demanding companies share clear and defendable positions with respect to their climate-risks in line with the Task Force on Climate-related Financial Disclosures (TCFD) framework communities and employees demanding corporate adherence to higher standards of social responsibility customers across the supply chain wanting access to low-carbon commodities to produce carbon-neutral end products. In addition, technology prices have dropped significantly in recent years, making the economic case for diesel replacement and electrification compelling in many cases. Since 2012, the levelised cost of energy (LCOE) for lithium-ion battery storage has fallen by

76 per cent. The decline in solar power costs is even more extreme, dropping 99 per cent since 1980. But it’s about more than just technology. Decarbonisation makes sense operationally because the electrified mine is easier to automate, and the automated mine is easier to electrify. The cost benefits of decarbonisation also cannot be ignored. In traditional mining operations, energy is generally the first or second most significant spend, accounting for 15 to 40 per cent of operating expenses. If we fast forward to a world where energy has no marginal cost, the sector stands to unlock a huge wave of opportunity. Recognising these realities, many mining companies have begun to make strides toward decarbonisation. Rio Tinto, BHP and South32 – among others – have made public statements around their decarbonisation ambitions. To start the journey, mining companies begin by understanding both their current and forecast emissions profiles, and how these compare to science-based decarbonisation scenarios from the Intergovernmental Panel on Climate Change (IPCC). This allows a company to consider abatement targets, and then assess the practicality and cost of options to achieve these targets in the least costly manner. This typically includes the need to undertake fuel switching, recalibrating asset portfolios and investing in new technologies. As the pressure from stakeholders builds over the coming years, companies will also be able to secure strategic advantages from being proactive in their decarbonisation strategies. Tim Biggs, Metals & Mining Leader for Deloitte UK, notes that while the path will not be easy, miners can act to reduce their emissions. ‘Beyond creating value for customers, investors,

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F E AT U R E D

C R I T I C A L AC T I V I T I E S O F T H E PAT H WAY T O N E T Z E R O

governments and communities, committing to decarbonisation can make mining companies more attractive to employees, empower them to make a greater societal impact in the countries where they operate, and contribute to global sustainability,’ says Biggs. In addition to decarbonisation, society and investors are pushing for greater transparency around the true social, economic and environmental impact of the mining sector. Miners are committing to value beyond compliance. The industry must balance its short-term economic performance and longer-term social progress. Compliance earns the right to profits in the next 12 months, whereas value beyond compliance earns the right to make profits for the whole asset life. Companies that fail in delivering value beyond compliance are faced with financial and reputational consequences as investors discount these longer-term earnings profiles. For example, when Vale’s tailings dam collapsed in January last year, the company took a hit of US$19 billion. Its stock price in October 2019 was still reflecting a 26 per cent year-on-year decline. Greater disclosure on all aspects of mining company operations is also being demanded by large investors globally. Miners are being guided not only largely by core environmental, social and governance (ESG) principles, but also by the 17 Sustainable Development Goals (SDGs) introduced by the United Nations in 2015. The SDGs aim to address endemic global challenges, such as poverty, inequality, climate change, environmental degradation, peace and justice. Since their introduction, the SDGs have become a touchstone not just for corporations and government, but also for asset managers and investors around the globe who expect the principles to be embedded into mainstream business rather than being segregated to ‘good works’ managed by their corporate social responsibility departments. The connection between the holistic health of the world is being clearly linked to the financial health of large corporations. If a company is not playing its part in helping to overcome global challenges, then its social licence will be at greater risk and its value will decrease. Companies who fail to prioritise social value are misjudging the trends in the investment community as they start to weigh the shortterm valuation risks driven by long-term global risks.

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• • • • •

Emissions data forecasting Abatement pathway scenarios and target development Operational emissions optimisation (scope 1 and 2) Value chain partnerships (scope 3) Consistent and verifiable internal and public communications • Abatement project development and deployment

In a survey of 347 institutional investors, BNP Paribas Securities Services found a growing number of asset owners and asset managers aligning their investments to the UN’s SDGs. By early 2019, 75 per cent of asset owners (versus 48 per cent in 2017) and 62 per cent of asset managers (versus 53 per cent in 2017) had allocated at least 25 per cent of their holdings to funds that incorporate ESG criteria. The resources sector has responded. In late 2018, Royal Dutch Shell PLC announced plans to link executive pay to short-term carbon emissions targets. BHP has also linked a higher percentage of its chief executive’s bonus to specified climate-related goals. Consistently and authentically demonstrating sustainability to all stakeholders will be vital. Viewing stakeholder relations, community development, safety and health, and environmental issues as multiple dimensions of financial sustainability is critical. By then focusing on balancing the cost of implementation against the financial risks of losing stakeholder support, it is possible to build the business case for funding. It can also enable companies to reduce costs and increase efficiencies, in addition to better mitigating risk and strengthening stakeholder relations. For investors, it enables them to develop evidence-based analysis on the level of sustainability and climate risk that their portfolios carry. The consequence of this can be increased investor demand, and consequently share price, for the more proactive companies. Importantly, this is now clearly more than just being a good corporate citizen, and has become a critical part of the creation of shareholder value. Understanding that company valuations are now driven by both market economics and perceptions of sustainability risk is creating a new way of thinking across the mining sector. With both decarbonisation and, more broadly across the investment community, demanding value beyond compliance, there has been a significant change in the priorities for boards, CEOs and CFOs. These are no longer niche operational issues; they have become fundamental to how companies define, defend and grow value for their shareholders along with all of their stakeholders.

AUSTRALIAN RESOURCES & INVESTMENT

EMBRACING RENEWABLES FOR ONSITE ENERGY BY ANDR EW VAN Z YL, DIR ECTOR AND PR INCIPAL CONSULTANT, SR K CONSULTING, SOUTH AFR ICA; R EBECCA GETT Y, SENIOR CONSULTANT (ENVIRONMENT & MINE CLOSUR E), SR K CONSULTING, AUSTR ALIA; AND ANNE-M AR IE EBBELS, PR INCIPAL CONSULTANT (UNDERGROUND MINING), SR K CONSULTING, AUSTR ALIA

Renewable energy is showing its potential contribution to power generation on mines, with keen interest in South Africa and Australia. The pace of take-up in the two countries, however, has been quite different.

fivefold increase in mining companies’ global investment in renewable energy from 2018 to 2019 is a clear demonstration of the sector’s enthusiasm for this technology and its benefits. While just 900 megawatts of renewable energy projects were committed by mining companies in 2018, the following year saw 4500 megawatts in projects announced. Renewable energy sources are being widely embraced in Australia’s mining industry, with both solar and wind farms being established. A predominantly hybrid model has been adopted, with both renewable and non-renewable sources in use. Neither is this trend limited to the majors, with renewable generation being installed across a wide range of operations, including those of juniors. Projects in the pipeline also include hydropower and geothermal power technologies. A key driving force is the mining community’s transition to decarbonising its energy sources. Many Australian mines face the

issue of lack of access to the main power grid – with long distances making these connections unaffordable. Using renewable energy sources can provide other benefits for remote mines, simplifying their power generation logistics and reducing reliance on deliveries of diesel fuel. While Australia has been able to forge ahead with developing renewable energy supply at a number of mine sites, South Africa remains more or less in the starting blocks, without the regulatory framework on which to build. Earlier this year, South African Minister of Mineral Resources and Energy Gwede Mantashe made some encouraging remarks to the sector at Cape Town’s Mining Indaba – but there has been little follow-up. Such regulations are vital as they will mark an important step away from the monopoly control in power generation that is a traditional fixture of the country’s energy regime. In the meantime, though, most of the country’s larger mining companies are understood to have

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F E AT U R E D

In terms of technical solutions, much progress has been made in Australia. Hybrid models have been successfully installed, with renewable sources augmenting diesel or gas power plants

Andrew Van Zyl

Rebecca Getty

Anne-Marie Ebbels

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plans in the offing and are just waiting for the green light to proceed. There are many good reasons for South African mines to develop their own power generation capacity. National power utility Eskom continues to struggle with providing a reliable supply, and the cost of its electricity – rising rapidly over the past decade especially – will only increase. Mines in South Africa wanting their own largescale renewable energy also have to carefully consider the local community impact, which is a pillar of their social licence to operate. Where mines plan to generate power, they may need to supplement local energy supply in addition to providing for their own use. These issues are unlikely to be simply or quickly resolved. The carbon tax introduced in South Africa last year also adds to the benefits of mines building their own renewable generation capacity. The actual tax rate per tonne of carbon dioxide was introduced at a low level initially, but it is expected to become steadily more comparable with global norms. As the bottomline impact of this tax grows, self-generation with renewables will become more attractive. In terms of technical solutions, much progress has been made in Australia. Hybrid models have been successfully installed, with renewable sources augmenting diesel or gas power plants. With time, the reliability of renewable sources is improving, and advances in battery storage will mean progressively less reliance on the fossil fuel element of these power projects. Although renewable options are becoming more affordable, they are still capital intensive. This hurdle is addressed mainly through medium- to long-term power purchase agreements, and the ongoing maintenance costs are relatively small in comparison to startup construction costs. Avenues for finance support include the Australian Renewable Energy Agency, which provides large-scale funding for renewables, research and development, and innovation – including research into renewable hydrogen technology. Integrating renewable power sources has become a key consideration during project development. There are many changes in mine planning that result from an increased uptake of electrified mining equipment options, and these are important in the design of power and battery-charging facilities. In underground mining, there is a renewed interest in electric haulage to replace diesel trucks to reduce carbon emissions.

Ventilation also requires rethinking at mine-planning stage, as this was designed in the past to dilute diesel emissions – which now become less of a consideration. From an environmental perspective, approvals are required to install solar and wind farms – or other renewable power sources – in Australia. These need to align with local and state planning policies, which differ from one jurisdiction to another. Clearing of a large area may be required – for a solar array, for example. Where land clearing is required, community and stakeholder consultation is essential for social licence and duty of care, and is required under the Aboriginal Heritage Act 2006. Accreditation as a large-scale renewable energy generator is also required by the Clean Energy Regulator in line with the requirements set out in the Renewable Energy (Electricity) Act 2000. In addition, there is an accreditation required for a solar farm to generate and trade large-scale generation certificates under the federal Large-scale Renewable Energy Target. There is also a long-term consideration of ownership and liability of renewable energy infrastructure. Solar panels, for example, have a life span of 20 to 25 years, after which a reliable transition plan for decommissioning, removal, disposal and land rehabilitation is needed. There may be significant opportunity for communities in remote regions of Australia to gain access to low-cost energy generation for landuse management, such as irrigation, improved rangeland management, transport, or long-term water management of pit lakes for aquaculture; however, this would require regional oversight and cohesive planning via well-equipped public institutions, as well as the appropriate technical expertise, financial resources, and training for ongoing maintenance. Without broader support, mining companies may not have the visibility, time or resources to undertake such projects. The technical achievements by Australia’s mining sector bodes well for its counterparts in South Africa. While the delays in the latter’s energy regulations are a frustration, the ‘late start’ inadvertently gives South African mines the ability to leverage even more efficient, tried-and-tested technologies. That said, it is also vital for the country’s mines to begin their practical application of renewable generation as soon as possible to test innovations, and so that they can overcome the myriad technical and regulatory challenges that will present themselves.

AUSTRALIAN RESOURCES & INVESTMENT

F E AT U R E D

FYI Resources closing in on high purity alumina production BY BAR RY FITZGER ALD

FYI Resources is closing in on becoming a world-class producer of high purity alumina from its integrated Cadoux–Kwinana project in Western Australia.

igh purity alumina (HPA) is a versatile product with broad commercial applications. FYI’s objective is to displace current supply of HPA, which is sourced from bauxite/ aluminium metal at a fraction of the capital and operating cost, and with a lower carbon footprint. FYI’s integrated business model means it can guarantee the provenance of the HPA. This is a key attribute from a customer perspective as it ensures the quality and purity of the delivered HPA to meet critical specifications. A definitive feasibility study (DFS) released in March confirmed robust economics for the US$189-million project, which involves producing high-grade aluminous clay feedstock from the Cadoux kaolin deposit for transportation to Kwinana for refining into 8000 tonnes of HPA annually. The DFS covered an initial 25-year project (mine life at Cadoux is good for more than 50 years), which, at a conservative and flat HPA price assumption of US$24,000 per tonne, delivered total net operating cash flows of US$2.4 billion. Life-of-mine cash costs (freight on board Kwinana) was estimated at US$6217 per tonne. Annual average EBITDA was estimated at US$133 million, the net present value (10 per cent) post-tax was US$543 million, and the internal rate of return was 46 per cent. FYI Resources Managing Director Roland Hill says that the DFS presented a ‘persuasive economic case supported by extensive and technically detailed studies’. ‘The extent of diligence in this body of work provides us with assurance in our innovative HPA refining process to be able to deliver a high-quality, high-purity product in a consistent and reliable manner. ‘The DFS demonstrates that the company’s innovative HPA strategy has the merit to be developed as one of the sector’s lowest capital and operating cost projects,’ Hill says. FYI has successfully completed a second trial production run at its Welshpool pilot plant ahead of samples being

–X–

sent to potential customers for detailed qualification assessment. It has also secured an A$80-million equity facility that can be accessed at the company’s election. Along with the robust DFS findings, the pilot work and equity facility are seen as major de-risking events as FYI works towards potential full-scale production of the high-growth material with its myriad high-tech applications (industry consultant CRU forecasts 17 per cent compound annual growth for the HPA market).

The supercharged growth in demand reflects growth expectations in HPA’s ‘traditional’ use in LED lighting, plasma screens, artificial sapphire glass screens (TVs, tablets, smartphone screens, electronics and aeronautics), along with the wave of growth coming from its use in batteries for electric vehicles and renewable energy storage revolutions. Announcing the completion of the second pilot plant production run, Hill says its success is strategically important.

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F E AT U R E D

Unmanned aircraft and photogrammetry in the mining space BY ADA M KER R, PROJECT ENGINEER ING GEOLOGIST, CARTLEDGE MINING AND GEOTECHNICS

With new technology emerging in the mining sector almost every day, it can be difficult to keep up.

or large companies, this can be made worse by the daily workload and onsite events, bureaucracy ,and conservative thinking. ‘We’ve always done it this way’ is a phrase we are all too familiar with. But each of us can challenge the status quo. If you told someone 20 years ago that we would eventually be able to use flying machines to autonomously take photos of a pit wall and develop 3D models in the space of a few hours, you would have been laughed out of the room. These days, it is considered best practice. During the dawning years of unmanned aerial vehicle (UAV) data capture on mine sites, their use was restricted primarily to surveyors for their spatial pick-ups. Today, we see people from a range of professions using UAVs – from environmental scientists and operation supervisors, to drill and blast engineers. Geotechnical engineers also use UAVs in ways that might not immediately be apparent. In order for us to make geotechnical assessments, a lot of work goes into developing a reliable dataset and realistic parameters.

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Part of this is the structural make-up of the wall – the fault lines and various joint sets that can cause failures and instability. The synthesis of this information makes up what is called the Structural Model. Collecting this data is not as easy as drawing lines on a photo, although that does have a time and place. In reality, it involves being able to make accurate, three-dimensional measurements where structures are present, and being able to manipulate this data in space and visualise what is happening behind the face. Historically, this would involve a team of people, including surveyors, geotechnicians, geologists and field hands, setting up various ground-based pieces of equipment to make measurements of these features. This is quite an arduous task. Today, we employ the use of photogrammetry – a way of ‘stitching’ together a number of photographs of an object or an environment, and forming a model to scale and in real space. Traditionally, this was done with ground-based cameras; however, with the rise of remote-controlled aerial vehicles, we can take this a step further. It significantly reduces the time it

AUSTRALIAN RESOURCES & INVESTMENT

takes to complete a job, and can capture crucial data from areas potentially considered unsafe for people on the ground. As an example, say there is a complex wall failure on site causing the shutdown of a truck circuit. The shift supervisor has made the call that a geotechnical assessment is required before mining can resume. The geotechnician can now drive out to the area, undertake a risk assessment, prepare their UAV, set a flight plan (or manually fly the UAV), capture the data they need, and bring it back to the office for data processing before they can make a call on whether it is safe for mining to continue. With this technology, a job that in the past would have been time-intensive and involved liaising with several parties can now be done in quick turnaround by a single person. Though a large number of operations are adopting UAV technology, some have not yet harnessed its full potential. Site geotechnical engineers may, as previously mentioned, be stuck in their existing workflow and need that extra push to work outside of their normal realms.

Though originally a high-priced endeavour, the cost of these UAV systems is decreasing as the technology becomes more common across the industry. Software packages now form the most expensive portion, with some making up 90 per cent of the total cost; however, the benefits that these tools provide pay dividends with their ease of use, multiple functionalities and quick turnaround from data capture to data interpretation and reporting. Considering the ever-growing focus on production numbers, this technology allows us to efficiently capture this data. More importantly, it allows us to capture it remotely, which is safer as the operator is isolated from harmful areas in the mine site. Cartledge Mining and Geotechnics is a Brisbane-based company providing specialist geotechnical advice to the mining industry, from exploration, to closure and mine-to-port solutions. Its skilled team has worked on and project-managed geotechnically and commercially complex large civil projects in residential and mining environments in Australia and around the world.

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F E AT U R E D

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AUSTRALIAN RESOURCES & INVESTMENT

Taking the lead in the future of workforce and digitisation BY HENDR IK LOUR ENS AND GARY WONG

During the Age of Technology that began in the late 19th century, investors focused on companies building new factories and assembly plants. Huge returns were achieved by applying the principles of Scientific Management.

hat followed was Systems Thinking coupled with breakthrough advances in computer hardware and software. Metal and mining investors during the Age of Information saw how process improvements embedded in enterprise resource planning (ERP) systems, such as SAP and Oracle, resulted in efficiency gains; however, over time these investments have created unintended negative consequences. The current COVID19 pandemic has exposed how brittle global supply chains have become by following a ‘faster, better, cheaper’ directive. More importantly, the crisis has shown how vulnerable the mining industry is when people are not cared for. Many companies proudly state ‘people are our greatest asset’. Is this the truth or mere platitudes? Let’s examine the facts. In September 2019, E&Y published its yearly survey on issues that occupy the minds of mining executives. Future of the workforce and digitisation made the top three. These themes were present also at the 2019 Future of Mining Conference in Sydney. Mining is facing increased pressure to deliver on attracting talent to an unfashionable industry and competing for high-tech skills, improving safety and

increasing workforce diversity, while coping with falling grades and a demand for improving productivity. In 2019, only 24 university students were studying mining engineering in all of Australia. Turnover of skilled resources are substantial, and anecdotal evidence suggests that prospective engineers would instead work for high-tech and software companies rather than an industry considered to be unexciting, overly hierarchical, and providing limited opportunity to make a difference. Corporate Australian (and rest of the world) mining culture displays an aversion to taking risks that can impact cash flow. Many Tier 1 consultants have identified culture as a major stumbling block in technological innovation. The bigger question is, why does the accounting world classify people as expenses and not assets? Why are people being treated as liabilities? As witnessed in the current crisis, companies just get rid of people to increase cash flow. The evidence is overwhelming, and compared to technology, people have been given second-tier status in terms of investment and become top priority when expending.

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F E AT U R E D

Hendrik Lourens

Gary Wong

T H E AG E O F E C O L O GY – INVESTING IN PEOPLE The pandemic has clearly demonstrated its direct impact on the bottom line. Without naming names, there are senior mining leaders who believe it’s best to comply with COVID-19 protocols and wait it out until the ‘old normal’ returns. Think about the venerable fable of the frog sitting in the pot of water. As the heat is turned up, the frog reacts by adjusting to the temperature rise. It’s a slow yet comfortable death. As the talent pool shrinks with no replenishment, mining operations will suffer. Not investing in people won’t lead to a sudden crash; it will also be a slow but comfortable death. We are now entering the Age of Ecology, which carries forward the positive learnings of the Technology and Information Ages, but leaves behind the troubling paradigms that treated people merely as cogs of a machine. When looking at your next investment, we offer three questions to ask senior leaders (especially if you think they might be frogs): What is your ‘people’ philosophy? What is your long-term strategy to build and retain human capacity and capability? How are you leveraging the collective wisdom of your existing workforce? 1 . H U M A N S E N A B L E D B Y T E C H N O L O GY, N O T T H E O T H E R WAY A R O U N D In the 20th century, mining relied on technology and linear processes to deliver results. Accident-prone people were a necessary hazard to keep the machines running. Bernard Marr in Forbes magazine reported that 25 per cent of technology projects fail outright; 20–25 per cent don’t show any return on investment, and 50 per cent need massive reworking by the time they’re finished. Idealistic ‘work as imagined’

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promises fail the smell test. It took the ingenuity of people to realise what technology success there was to salvage. In today’s complex reality, the failure rate conceivably will be higher due to rising unpredictability and uncertainty. In the past, the leader’s job was to command and control a top-down change program. Today calls for cultivating a change platform – one that enables anyone to initiate an idea, recruit confederates, explore solutions and launch experiments – all monitored by experiences captured 24/7 as stories. Digitisation should be an initiative in the change platform, not running the show. 2 . M I N I N G A S A N AT T R AC T I V E P L AC E T O T H R I V E There is a serendipitous opportunity to rewrite the script that mining is a boring, uninspiring profession. The technical challenges posed by automation and digitisation means being on the leading edge and even pioneering innovative ideas to prove their worth. During the pandemic, is the company encouraging professionals and tradespeople to keep externally collaborating and thus be industry ambassadors? Or are they told to hunker down to reduce cash flow? With a little bit of investment in people’s careers, how might the company stories being told on the informal networks be more favourable, such as, ‘We love working here. It’s where the action is’. 3. PEOPLE AS HUMAN SENSORS Mining operations dashboards are replete with mechanical and electrical sensing devices. Gauges alert when a machine is overloaded, or if a pump is not working properly. Managing normal variability is key to maintain stability. Good but not good enough. What’s missing? Human sensors.

AUSTRALIAN RESOURCES & INVESTMENT

Neuroscience research tells us that our brains were built not to logically store and retrieve information like a computer. They are designed to be pattern recognisers. We have the unique ability to quickly detect early patterns of pending danger often told as ‘I’ve got a bad feeling about this’ stories. We can also make sense of novel patterns and recognise solutions as ‘I think there’s a better way to do this’. The real power is harnessing the collective wisdom of the total workforce. This is what we do with our Productivity Platform approach. In more than 95 interventions, our methodology has achieved output increases by an average of 20 per cent, and has reduced operating costs by 10–30 per cent, typically within 3–5 months. Only humans can discover the patterns leading to these productivity breakthroughs. The Productivity Platform engages their untapped sense-making prowess. It creates protective capacity, which buffers operations against the inevitable setbacks involved in innovation efforts. It enables employeeled continuous improvement by highlighting the areas where digitisation and automation projects will deliver significant results in the shortest time, thereby maintaining momentum. In this manner, it unshackles employees and managers so that they are able to contribute their best ideas and energy, making mining careers exciting. CONCLUSION To readers who are prospective investors, the smart choice is funding companies who know how to deal with complexity and uncertainty. It’s not difficult to pick them out. They have, or are developing, a change platform to stabilise operations and strengthen robustness. Digitisation and other agility initiatives to

build resilience can then be properly sequenced in the change portfolio to shape the ‘new normal’. To readers who are senior leaders interacting with investors and shareholders, what strategies do you have in place in respect of the three questions posed, and, if so, are they effective? About the authors Hendrik Lourens is a Sydney-based management consultant who has worked with Aurizon, Qantas, John Holland, CPB, Downer and Anglo American. He has qualifications in Physics and Polymer Science, as well as an MBA. Hendrik has worked at Director level in manufacturing businesses and for a number of Tier 1 companies. On completing ‘Managing the Theory of Constraints Way’ in 2010, Hendrik became the first practitioner to pass all exams involved in the theory of constraints (TOC) Body of Knowledge within one year. His focus is on applying Complexity Science and Theory of Constraints to deliver breakthrough results. He has turned around manufacturers, and improved the safety and productivity of mining and construction companies, and has been published in various journals on efficiency and innovation. Gary Wong is a Canadian engineer residing in Vancouver, Canada. He worked for Ernst & Young Consulting as a Senior Manager in Strategy & Transformation. Gary has operated on his own over the past decade, focusing on complexity thinking and safety. He is a Training Associate with Cognitive Edge Inc., and co-authors and delivers complexity courses and workshops. Gary is a regular contributor on the safetydifferently.com website and has been a Stratflow Associate since 2019.

References: Lourens H and Wong G, 2020, ‘Social Licence and Digitisation require new thinking’, AusIMM [online]. Available at https://www. ausimmbulletin.com/feature/sociallicence-and-digitisation-requirenew-thinking/ H Lourens and G Wong, 2019. ‘Radical Innovation in mining management’, Austmine [online]. Available from www.austmine. com.au/News/category/articleseditorials/radical-innovation-inmining-management-article-3-theecology-age-stability-agility Lourens H and Blakemore J, 2017. ‘Turning Mining performance around: Moving from efficiency to effectiveness’ [online], Australian Mining. Available from: www. australianmining.com.au/features/ turning-mining-performancearound-moving-effciencyeffectiveness/ (https://www. australianmining.com.au/features/ turning-mining-performancearound-moving-effciencyeffectiveness/)

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MINE DE VELOPMENT

ALL THAT GLITTERS IS NOT BLOCKCHAIN BY DR ANDR ZEJ GWIZDALSKI, LECTUR ER, THE UNIVER SIT Y OF WESTER N AUSTR ALIA

Blockchain has now become a buzzword defining the narrative of digital modernisation.

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AUSTRALIAN RESOURCES & INVESTMENT

usiness leaders, major global corporations across all industries, including mining, and even governments and central banks have all embraced blockchain. Declared as the heart of Industry 4.0, this new shiny tech streamlines old business processes, turning them into saved time and money – pure profit. Like a Swiss Army knife, blockchain promises to solve many business problems. The mining industry has experimented with blockchain in several key areas. These include real-time cargo tracking and provenance of precious commodities, increasing efficiency by digitising and automating paperwork processes, and secure quick-trade financing and settlement. Is all the buzz justified, or are we looking at the emperor’s new clothes? This really depends on whom we ask. Renowned tech companies selling blockchain solutions, as well as the marketing departments of businesses that recently acquired the tech, are likely to be positive. This positivity is sometimes reminiscent of the dotcom bubble euphoria. A more sober approach may be of value. Blockchain is a particular type of database distributed across a network of computers. Unlike in traditional relational databases, new data is recorded in a special structure known as a block and added to the longest chain of blocks (hence blockchain). All new data is cryptographically secured and added as append only. This means that it is unfeasible to change any previously recorded data without making it noticeable, a quality known as blockchain’s immutability. A novel property of this database is that its exact copy is continuously updated on multiple computers that are part of the blockchain’s network without the intervention of any central authority, a quality known as blockchain’s decentralisation. Data written in such blockchain is highly secure. While this sounds relatively simple, the achievement of a truly decentralised, secure and immutable system has been a major challenge in computer and data sciences. The closest solution to this challenge was the TCP/IP protocol, the base architecture of the internet that allows for electronic decentralised data transfer (e.g., text, images, videos); however, where the internet fails is a digital peer-to-peer (P2P) value (money) transfer that does not require any third-party institution, like banks. Of considerable issue is the lack of a purely P2P internet currency in times of global digital economies and the failing traditional financial institutions with their forms of inflating national currencies (such as the global financial crisis in 2008). Many have tried to solve this puzzle for decades, but it was the pseudonymous Satoshi Nakamoto who first published the solution in their 2008 paper and implemented it in 2009 as the first open public decentralised blockchain and P2P digital money – Bitcoin. The Bitcoin blockchain has been recognised as a revolutionary foundational technology, similar to the TCP/IP innovation; however, much of the speculative public attention has, unsurprisingly, focused on bitcoin money (in the plural, and written with small ‘b’ to differentiate it from the Bitcoin blockchain). Bitcoins are an important incentive mechanism in the Bitcoin blockchain, and only when put

together with a number of cryptographic solutions and an open P2P network, some of the most unique properties of immutability, security and decentralisation are achieved. We are only beginning to fully appreciate the impact of this revolutionary technology, which goes beyond mere temporary disruption. The open public and decentralised blockchains challenge the way we do business, organise our economies, our societies and relate to each other. Although the functioning of blockchains, like Bitcoin, is still not without issue (i.e., scalability and speed) the technology both challenged and inspired many. In the last few years, many established corporations, startups and even governmental institutions have fully embraced ‘blockchain, as the technology beyond Bitcoin’. Their response involved various ‘better, faster and more scalable’ versions of blockchains, which are proprietary and permissioned, hence more business-friendly. The difference between open public decentralised blockchains and private permissioned alternatives is like coffee versus decaf. Yes, decaf is a form of coffee but there is little to no coffee in it. Similarly private, permissioned blockchains may partially share the ‘blockchain’ name, but the key ingredients that make the tech truly innovative – namely decentralisation, immutability and high security – are hardly there. Some authors simply call them blockchains without the blockchain. More recently, the name ‘distributed ledger technologies’ became more recognised for the permissioned alternatives. This does not mean that decaf is useless and has no market; however, it requires a more honest and critical evaluation of what it can and cannot do. If, by their very nature, privately controlled and permissioned ledgers cannot achieve the key features of public open and decentralised blockchains, what can they do? They can certainly do fast digital transactions and distributed data queries that support digitisation and automation of business processes. Further on, when supported by tracking technologies, they can improve the transparency and traceability of supply chains, and give trusted parties permission to verify data on their geographically distributed devices. Isn’t this in itself amazing? The best part is that we already have this technology. It’s called distributed SQL and is provided by Oracle. A modified Google Drive spreadsheet would also do the work in many cases; however, these traditional centralised (in terms of governance) but geographically distributed databases do not glitter. They do not convince investors, clients and business partners that the emperor has new high-tech clothes. Blockchain does. There is, of course, more nuance to the new and evolving technology than explored in this article. To be on top of things, executives in the mining sector could further deepen their knowledge of blockchain and distributed ledger technologies, including critical perspectives. More honest communication with stakeholders would also be of long-term value. Executives could certainly explore international trade settlement on the Bitcoin blockchain and attract top-skilled employees by offering them salaries paid in sound money, like bitcoins.

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The mining power specialists Saving capital and maximising profits with efficient power strategy.

ccess and allocation of capital is often cited as one of the biggest issues facing the mining industry. Mining companies are under great financial pressure as a result of fluctuating demand and uncertainty around commodity prices, so the need to improve efficiency across all operational aspects of a mine site is critical. Reducing costs and maximising production are key issues directly impacted by a firm’s energy choices. A mining power strategy is influenced by many moving parts. Decision-makers need to consider how their energy needs will change over time, how to only use what is needed, what the risks are, and how power consumption affects profit margins. One common issue we encounter concerns energy infrastructure and while many mines can and do benefit from a grid connection, more

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flexible solutions to powering a mine are available. As an energy-intensive industry, one way mining companies can fast-track their mining project and save on capital is through modular power, which can be established off the balance sheet. A modular power plant can be installed within weeks and offers the flexibility to ramp-up or scale down the power requirements, giving operators control over the varying demands of power throughout the life cycle of a mine. Temporary power also lends itself well to particularly remote and extreme environments, including where a grid connection isn’t viable. Scalability of power capacity is directly linked to maximising production, and operators would want to achieve this quickly. A benefit of our modular power equipment is that additional units can be added into

the mix within days rather than months, and the extra capacity is very specific, down to the megawatt, avoiding surplus energy and unnecessary costs. A benefit of this flexibility is also mirrored in avoiding uneconomical redundancy – if one generator is down for maintenance, only a small amount of power is lost and fewer engines are needed as backup. Whether it’s a mix of grid, temporary or renewable power, a mine’s power strategy needs to address capacity needs and how these are likely to change. As energy moves towards a more decentralised future, microgrids can provide mining companies with the agility needed to respond to the quickly evolving energy landscape. Speak to one of Aggreko’s mining power specialists today about how they can help you maximise profits for your mine site.

Scalable hybrid power plants for mining Even when your mining operations become deeper, more remote and more intense you want the same level of reliability for your energy. With our hybrid power plants we offer you not only that, but also innovative ways to cut costs, reduce carbon footprint and improve productivity. Benefit from the combined power of renewable and thermal, seamlessly integrated with battery storage and managed by state-of-the-art software. Our hybrid package is now available for deployment, with no costly up-front investment giving you the flexibility required to react to market conditions and adjust to the timelines required for your mining operation.

Call us to learn more 1300 929 031

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A post-mining future looks golden with a little help from science BY MIKE MCR AE, CSIRO

Australian mining has a lot of responsibilities to manage.

new Cooperative Research Centre (CRC) aims to transform the industry to enable regions and communities to transition to a more prosperous and sustainable post-mine future. The bones of old mines and their potential legacy impacts on Australia’s environment and regional communities are images that today’s mining industry is working hard to avoid. To do so, companies are reshaping the way they engage and plan for transition to closure that incorporates post-mine environmental and community values and expectations. To help mining communities develop ways to better support our ever-evolving mining industry in sustainable mining, the Australian Government has funded a CRC for Transformations in Mining Economies (CRC TiME). From July, the CRC will provide a collaborative platform involving industry, government, research organisations (including Australia’s national science agency, CSIRO) and diverse members of the community. It will deliver knowledge, technologies and solutions for a vision of sustainable mine closures and regional economic opportunities. ‘The CRC will drive transformational change in the mining industry through a clear shared vison of post-mining options, benefits and outcomes,’ says Dr Jason Kirby, who leads CSIRO’s involvement in the new CRC. ‘It will look at harmonised concepts of risk, and intervention technologies and solutions to enable regions and communities to transition to a prosperous and sustainable post-mine future.’

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It’s an ambitious goal by any measure. Like any commodity, resources pulled from the ground are sold at the whims of an unpredictable global market. Every nugget of ore must turn a profit for its recovery to be worth the effort. Meanwhile, society’s expectations about how our nation’s natural resources are managed are evolving. To maintain the environment for future generations, mining needs to be sustainable. To satisfy diverse cultural needs, values must be respected and mining must demonstrate a social licence to operate. When a mine reaches its end of life, the community depending on it needs support in transitioning to a post-mine future. ‘The broader community’s expectations of the mining sector are high,’ says Kirby. ‘Acknowledging and addressing these will ensure the mining sector continues to contribute strongly to the national economy and Australian society into the future.’ TIME FOR CHANGE In 2018, a national Senate inquiry into the rehabilitation of mining and Commonwealth resource projects made it clear that any question mark over the fate of a mine site puts its very finances at risk. In a world where social and environmental responsibilities increasingly matter to shareholders, mines with no clear shared vision for transitioning to closure – including final landforms, and regional economic value and benefits – aren’t attractive investments. Good science and robust technology are key to ensuring that environments are well protected into the future. A collaboration

AUSTRALIAN RESOURCES & INVESTMENT

Mt Rawdon employee, Elynee Tyson, applying components of Virtual Curtain® to an interception dam

between CSIRO, Australian Wetlands Consulting and Evolution Mining’s Mt Rawdon operation has been trialling an integrated wastewater management process involving a synthetic clay using Virtual Curtain technology, along with a series of constructed wetlands using biological-driven processes to remove pollutants. New methods for ore extraction could also extend the life of mines previously abandoned or closed for environmental or economic reasons. Emerging technology called in situ recovery (ISR) may provide an economically viable and low-environmental-footprint process to target minerals, such as gold or copper, in the ground by circulating fluid(s) through an area’s geology. Under some circumstances, ISR could be used for mineral extraction without disrupting the countryside at abandoned or legacy mine sites. South Australia’s first profitable copper mine, from the mid 19th century, is a historical test site for ISR, with more than 100,000 tonnes of copper potentially recoverable through the process. CSIRO is evaluating the extraction, environmental impacts and community expectations of this ISR process through a $2.8-million project at the Kapunda mine. CRC TiME’s partnership presents a unique opportunity to establish a National Demonstration Mine Site Network to provide a pathway to develop, test and demonstrate innovative and emerging technologies and solutions in mine environments. ‘This network of demonstration sites will enable faster acceptance and adoption of technologies and solutions at mines for improved environmental and community outcomes, and benefits transitioning to closure and relinquishment,’ says Kirby.

The clarified water after treatment with Virtual Curtain® is clean enough to support vegetation

ECOSYSTEM TRA JECTORIES How do we return a mine site to a healthy and biodiverse ecosystem? How long does it take, what will it cost, and when will we know we’re on track to achieving this goal? Providing more certainty around costs and time lines for ecosystem rehabilitation enables mining companies to effectively plan for these from the start, increasing the likelihood of mine relinquishment and improving environmental outcomes for the whole community.

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A collaborative project between CSIRO; the federal Department of Agriculture, Water and the Environment; and Energy Resources Australia is using ecosystem models, known as state and transition models. This project aims to capture the best understanding of ecosystem recovery pathways after mining, including both desirable and undesirable trajectories. Recognising when ecosystems are deviating down an undesirable pathway, such as invasive weed problems, early on can reduce the costs and time required to manage threats and return ecosystems to a desirable development pathway. State and transition models are used to quantify and better manage the risks of problems arising. The models also identify when ecosystem development is on a desired trajectory, which helps mining companies to meet regulatory requirements around closure sooner, leading to a greater likelihood of successful mine closure. TRANSITIONING COMMUNITIES Every phase of a mine’s life brings new opportunities and challenges to different sectors of society. The swings and roundabouts of a mining operation through the booms and busts can have diverse impacts on different sectors of the surrounding populations, says Dr Tom Measham, a CSIRO Principal Research Scientist focused on industry, and how regional communities and economies are affected by them.

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‘During mine exploration and operations, there can be positive benefits and impacts to regional communities, such as increased employment, income and skills,’ says Measham. The ripple effects of higher house prices, new infrastructure and investment in new services are great for those in a job, with a house, or in business. But negative impacts can occur for those struggling to pay rent or working in a competitive field, or those who can’t get or keep a job. When mines close, adapting and transitioning is no less complicated. What’s more, no two communities face the same road map of ups and downs. ‘Some regions have diversified economies and have multiple options,’ says Measham. ‘Others are more dependent on mining and have fewer options.’ To assist regional communities once reliant on mining to forge new paths or adjust to new technologies, it’s vital for authorities to remain transparent and work closely with the regional community as early as possible. ‘A key factor is planning ahead – those regions that take steps to plan and prepare during the life of [a] mine will find it easier to navigate to a post-mining future,’ says Measham. CRC TiME will support both communities and companies to map options based on the values, strengths and circumstances of each region, solving the challenges that mining will continue to face in a rapidly changing world.

AUSTRALIAN RESOURCES & INVESTMENT

UNEARTHING NEW AREAS OF MINERAL EXPLORATION Australian Resources & Investment speaks to Nathan Reid, CSIRO, about groundwater analysis research that will help mining companies discover valuable ore deposits.

ew research, conducted by Dr Nathan Reid and a team of scientists in the Capricorn region of Western Australia, has opened up potential opportunities and further study in mineral exploration. By sampling the water, the researchers’ instruments can detect the geology they interact with. The team has discovered broad ‘haloes’ of altered water chemistry around known deposits of gold and other minerals that interact with the ore systems, leaving distinctive traces in the water. These ‘haloes’ could be useful for identifying areas where ore deposits may be hidden by layers of sediment and weathering, assisting companies in more accurate and focused mineral exploration. Reid says, ‘The objective is target reduction, to focus on an area of interest for further exploration techniques. We are also researching new methods to increase the sensitivity of analysis for gold and precious metals, as well as trialling non-traditional isotopic methods to improve our understanding of covered mineral deposits. Over the last few years, we have compiled all available hydrogeochemical data into a national hydrogeochemical database, which has over 200,000 data points across Australia, and through collaboration with the Bureau of Meteorology, is now housed on its Groundwater Explorer portal’. This is part of CSIRO’s ongoing partnership with state geological surveys, and mining and exploration companies to conduct hydrogeochemical studies, which consists of sampling existing bores and wells to test different bodies of water for their chemical make-up. Reid says that this information is then used to determine changes in underlying geology, major aquifer changes and large footprints around known mineral systems.

H Y D R O G E O C H E M I S T R Y: N O T N E W, B U T I N N OVAT I V E This research builds upon existing techniques already used in Australia, and has been developed to find ways to explore different types of terrains. Reid says that it’s not a new technology, and has been used across Australia for the last 40–50 years. Australia already has many holes drilled into the ground for exploration, agriculture and drinking, allowing researchers to take advantage of these holes to take samples. ‘These holes allow us to take a sample of groundwater that has been in contact with the subsurface for many years and integrate the chemical signature of these rocks,’ says Reid. ‘This chemical signature can travel towards the surface through transported materials and can travel laterally, carrying a signature for up to several kilometres in some cases. ‘What has spurred this research has been the decrease in new deposits found over the last few years as exploration has had to step off from areas of outcrop into areas of transported cover. This has meant new understandings of element transport need to be developed, and new tools for exploration in these covered terrains need to be trialled. ‘This research was built on the methods developed by Dr David Gray (deceased, formerly of CSIRO) from the northern Yilgarn Craton, Western Australia. These methods are designed to be relatively easy to follow and adopt, and allow us to cover the most ground rapidly while still being robust. The method involves sampling from existing bores and wells in the region when they are pumping, filling up a two-litre jug and then doing our work from there. If they are not flowing, then we need to bail water from about five metres below

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the water table. The water samples are collected and sent for seven different analytical techniques, as well as collecting field parameters, such as electrical conductivity, pH, redox potential and temperature.’ KE Y FINDINGS SIGNIFICANT FOR M I N E R A L E X P L O R AT I O N The key findings of this research are that researchers can essentially map geological changes, detecting areas that were undercover and figuring out new areas of interest that have previously been overlooked. ‘We could identify the geochemical signatures of the known deposits in the region, and which elements and how far they were laterally dispersed,’ Reid says. ‘By using this information and the data from the northern Yilgarn region (which was chemically similar), we were then able to identify new areas of interest for mineral exploration in the region where there were no known deposits, but the water chemistry provided several parameters that we have found linked to mineralisation previously in those concentration ranges. ‘Hydrogeochemistry is just one aspect of the work carried out by CSIRO, Geoscience Australia and Australian universities when looking at how to more effectively explore in covered terrains. There is a plethora of research being carried out on the regolith (or critical zone) to understand how [it] developed, how metals and elements may migrate through the regolith to the surface, and what tools you can employ to explore more effectively in this environment.’ With this research, drilling through covered terrains can be more focused, which is helpful as it is an extensive and costly venture. This research is also a valuable addition to the already existing data that has been integrated into a national whole, meaning that new areas of interest can be identified where the waters are similar to other known systems. I N D U S T R Y I M PAC T S A N D F U T U R E A P P L I C AT I O N S This research will help to provide new data in areas where there may be none, or to develop new understandings of different deposit types. It could lead to being part of how future mineral exploration is conducted and how the industry approaches finding ore deposits. Also, as Reid says, ‘Hydrogeochemistry is an environmentally friendly technique and can provide valuable information to the other land users, such as pastoralists’. Due to it being a non-traditional exploration technique, the research has received a mixed response; but according to Reid, there are already companies that are testing the areas of interest identified.

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Hydrogeochemistry is just one aspect of the work carried out by CSIRO, Geoscience Australia and Australian universities when looking at how to more effectively explore in covered terrains ‘Our hope is that this technique will become part of the normal exploration set of tools used across Australia (and globally),’ Reid says. ‘We hope that explorers can feel confident in the technique so that they are willing to pick ground for tenements based on this information and other spatial data layers, and are then willing to infill samples on their tenements where possible. ‘Hydrogeochemistry is another tool for mineral explorers to be able to tap into. It isn’t designed to be the magic bullet, but it will work hand in hand with existing techniques to narrow down the search space for drilling… this regional work will really open up new areas for exploration that may not have been considered before, and will provide some new targets.’ With this research, there are many ways it can evolve and be built upon. The team is looking at new analytical techniques and isotope systems that may improve vectoring towards mineralisation. There will also be more sampling in new areas, as well as investigations into new deposit types, and how workflow and data can be integrated with geophysical and other geochemical techniques. It has created new opportunities to aid mining companies, finding potential areas for exploration that may not have been considered before, and providing additional tools to identify the next generation of ore deposits.

AUSTRALIAN RESOURCES & INVESTMENT

THE IMPORTANCE OF THE SOCIAL LICENCE IN MINING BY SHER IF ANDR AWES, GLOBAL HEAD OF NATUR AL R ESOURCES, BDO

Social licence to operate, or just simply a social licence, is the acceptance of a mine or mining company by its employees, by its community stakeholders, and by the general public.

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he extended stakeholder network that adjudicates on social licence also includes ethical investment funds, international human rights activists, international financial institutions, and local and national governments. These key stakeholders are demanding stronger engagement and transparency – so much so that social licence will soon be akin to a mining licence, without which mining companies will find it impossible to operate. There is no question that investment in mining will continue to be needed. Mineral consumption strongly correlates with the economic growth and urbanisation that brings jobs and prosperity to developing countries. To combat climate change, mining is needed for the manufacturing of electric vehicles, wind turbines and solar panels. To meet the aspirations of newly affluent middle-class consumers, mining is essential in the making of communications devices, consumer electronics and food production. Social licence is the key to unlocking these positive mining outcomes. The global shift from fossil fuels to a low-carbon future is possible only through the development of green economy minerals. Far from being the villain, the mining industry is part of the solution, and it should reposition itself as such. The demand for minerals will continue to grow as the global economy expands. This is good news for the many emerging countries that rely on the mining industry to drive economic growth and industrial transformation. Alongside growing demand for minerals, the mining industry can expect to be more closely scrutinised by governments, funding agencies and networked civil society for mining’s contribution to the living conditions of local communities. Almost certainly, these mining communities will reap a larger share of the economic benefits. C O N T I N U E D I M P O R TA N C E O F M I N I N G FOR EMERGING ECONOMIES Mining impact assessments tend to focus on macro-economics, the consideration of the benefits or detriments to the overall economy. There is no doubt that mining is an important source of tax revenue and foreign exchange – providing that there are adequate legal and budgetary systems in place. Well-managed mineral assets can also be a powerful engine of growth, as has been the case for Chile, Peru, Botswana, Ghana, Mali and Papua New Guinea, among others. Mining generates employment (directly and through a multiplier effect), pays wages and salaries, and develops skill sets. The World Gold Council (WGC) evaluated 47 countries that account for 90 per cent of global gold production. In its assessment, the WGC found that the gold industry contributed to moving 11 countries out of low-income status, while helping 12 countries to attain upper-middle or high-income status. Social licence requires an assessment of the economic and social benefits of mining at the local community level. Studies by the World Bank’s mining department clearly demonstrate substantial social and economic benefits to local communities. Very much in keeping with the principles of social licence, the World Bank believes that the strongest and most sustainable benefits flow from support given

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to small businesses in the immediate vicinity, including those that supply the mine. Mining’s role in many emerging economies has not diminished. Developing countries dominate the production and export of many important commodities, such as copper (54 per cent) and bauxite (69 per cent).1 Iron ore, precious metals, lead and many other minerals are produced mainly by emerging economies. The importance of the mining industry for many developed and developing economies has grown over the past decade. RISE OF THE GREEN ECONOMY The green economy is a response to multiple converging crises, including global warming, food insecurity and economic stagnation. The new green economy paradigm promises stronger economic growth, while at the same time mitigating the strain of rising consumer demand. The global population is projected to increase by two billion people within the next 30 years.2 The vast majority of these people will live in the developing countries within Africa, Asia and South America where, coincidentally, most of the world’s minerals are mined. The metals needed to make the rechargeable batteries used in devices and vehicles, as well as the green infrastructure needed to generate and store the electricity needed to run them, include graphite, manganese, vanadium, nickel, cobalt, copper, rare earths and lithium. Global demand for these strategic minerals is expected to skyrocket, as will demand for copper, iron and many others, according to the World Bank. The World Bank’s publication, ‘Building Resilience – A Green Growth Framework for Mobilizing Mining Investment’, concludes, ‘The mining industry, which provides input to almost every product and service in the world, is highly relevant to the goal of achieving sustainable development in mineral-rich countries and in the global economy. Besides, environmental sustainability is a critical concern for mining companies, whose growth is increasingly affected by climate change’. COMMERCIAL COSTS AND BENEFITS OF SOCIAL LICENCE The absence of social licence comes with a variety of risks and costs – both direct and indirect. The risks of project derailment are well understood, as is the importance of reputation from a funding perspective. Less obvious is the future risk associated with an ageing industry workforce and mining’s lack of appeal to millennials. FINANCIAL RISK Mining is a high-risk endeavour. It can take decades to recoup the initial investment from a geographically fixed asset, one that cannot be relocated should the business environment turn sour. The nature of the risks associated with such long-term investments makes social licence imperative. Mining companies need early and sustained 1 World Mineral production 2013–17, British Geological Society (2017 data) 2 UN Population Division, https://yaleglobal.yale.edu/content/ world-population-2020-overview

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Social licence is an essential risk-management tool. The failure to obtain and maintain social licence invariably results in conflict, project delay and unplanned cost stakeholder engagement strategies to ensure long-term commercial viability, shielding mines from the risk of shutdown or disruption due to stakeholder actions. Community stakeholders typically have the power to halt a project or allow it to proceed. They can influence policymakers and lobby regulators to change compliance requirements. In this context, social licence is an essential risk-management tool. The failure to obtain and maintain social licence invariably results in conflict, project delay and unplanned cost. From a risk-avoidance perspective, early forethought and strategic social licence planning can help to manage stakeholder expectations, and avoid disagreement and delay. Litigation against mining companies is on the rise, including retroactive action for past damages. The importance of mitigating financial risk will almost certainly increase over time. R E P U TAT I O N A N D C O M M U N I C AT I O N S The internet has had an enormous impact on branding and communication in the mining sector. Negative experiences are instantly reported and circulated, while positive outcomes are less newsworthy. The communications revolution has also produced a convergence of global values around a sense of shared environmental concern. A well-communicated social licence can substantively enhance company branding to shareholders, investors and potential buyers, too. As competition for natural resources increases, investors and regulators increasingly consider environmental, social and corporate governance credentials when granting exploration concessions. A solid reputation in this regard can also assist mining companies to successfully compete for the next venture and raise capital. This new level of scrutiny extends to community engagement and social licence. The Responsible Mining Foundation’s Responsible Mining Index rates leading mining companies’ interactions with mining-affected communities and community stakeholder

groups. Factors include systematic approaches to developing local entrepreneurship and innovative efforts to support local suppliers, as well as meaningful engagement with local stakeholder groups, including women, Indigenous people and artisanal miners. Local cultural practices notwithstanding, investors will want to know that a gender-responsive approach is in place – one that provides equal job opportunities for men and women, and equal access to health care, education, and infrastructure (e.g., clean water). The rights of Indigenous people is a global social issue involving delicate trade-offs between preserving Indigenous ways of life and cultural/ spiritual sites, and the desire by the same communities for prosperity through economic autonomy. This issue has been particularly intractable in Canada, Australia, parts of Africa, and among the artisanal miners of Peru. INVESTMENT IN PEOPLE , PA R T N E R S H I P S A N D P L AT F O R M S Building a strong social licence and a sense of shared values among stakeholders requires time, commitment and money. Time and commitment are always at a premium. Mid-sized mining companies have far fewer staff and considerably less in the way of resources than the mining heavyweights. Key personnel, such as the exploration geologist, can be overburdened with multiple roles, such as team leader, camp manager, liaison officer and local HR/recruitment manager. Counterintuitively in developing countries, not having a big complement of expatriate staff may work to mid-sized mining companies’ advantage. Smaller companies tend to employ more local staff and people who generally have a better understanding of the business landscape, including culture, language, customs and regulations. Social licence requires dedication to cultural change and the acceptance of a period of lower profitability as companies and projects transition to sustainable practices and processes. Civil society and local communities are not going to wait for the transition to be cost-effective, and the necessary disruption may mean a different profit horizon for transitioning companies.

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F EI N ATEUDREEVDE L O P M E N T M

VEGA sensor products have the measure of critical infrastructure Global leader in instrumentation technology, helping organisations prepare for IoT.

EGA Australia Managing Director John Leadbetter has a timely view on the benefits of sourcing highquality infrastructure equipment. ‘The cost of owning equipment over many years is always more important than the initial purchase price,’ he says. ‘Invest in quality and you get precision that lasts a long time.’ Quality and precision are hallmarks of VEGA Grieshaber KG, a world leader in level, switching and pressure instrumentation. The German company operates in more than 80 countries, and its sensors are used extensively across Australian industry. Councils, for example, use VEGA technology in their water plants to measure drinking supplies and in wastewater treatment plants to monitor sewage flows. Its sensors also measure the quality of cement and other raw materials used in infrastructure.

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VEGA also helps clients leverage the benefits of the Internet of Things (IoT) through state-of-the-art sensors. ‘VEGA is a pioneer of connected sensor technology,’ says Leadbetter. ‘Our equipment has been compatible with bluetooth apps since 2002 and continues to evolve.’ Although sensors have a critical role in infrastructure construction and maintenance, operators sometimes choose cheaper, inferior products, says Leadbetter. ‘They mistakenly think sensors are a commodity, so they choose the cheapest option. An $80 pressure transmitter might measure airflow okay, but it won’t work in a mining slurry with abrasive materials.’ Poor product support too often accompanies cheap sensors. ‘The customer realises that there is limited capability to tailor a sensor to an infrastructure project, or not enough support if something goes wrong,’ says

Leadbetter. ‘Or they realise that their supplier is not keeping up with latest sensor technologies because they underinvest in R&D.’ Organisations that cut corners with sensor technology can pay a heavy price. ‘Sensors are integral to infrastructure performance,’ says Leadbetter. ‘The data they capture tells a council how an asset is performing, whether there is enough bitumen being laid in a new road, or if the council is meeting its environmental obligations with wastewater outflows. Infrastructure assets last for decades, so it pays to invest in the best sensor technology.’ F O C U S O N I N N OVAT I O N

VEGA’s mission to develop innovative, trendsetting sensor technology has underpinned its approach over more than 60 years. Its longstanding goal is developing sensors that are easy to install

AUSTRALIAN RESOURCES & INVESTMENT

and operate, and offer maximum reliability and safety. VEGA employs 1480 staff worldwide, half of which work at its headquarters in Schiltach, in Germany. ‘Australian customers get the best of both worlds,’ says Leadbetter. ‘VEGA’s global network and extensive R&D capability puts it at the forefront of sensor technology. But we also have a very localised Australian approach.’ VEGA Australia has operated since 1987, selling most of its products directly to customers. The company works with local and state governments, water authorities, infrastructure developers and operators, and a wide range of infrastructure service providers. This approach has four main advantages. First, a deep understanding of Australian infrastructure requirements helps VEGA tailor its sensor technology. ‘We spend time understanding what our clients are trying to achieve and then create the best product solution for them,’ says Leadbetter. ‘Through VEGA’s R&D capability in Germany, we have enormous capacity for innovation and an ability to create bespoke solutions for clients.’ Second, VEGA Australia carries local inventory. ‘We have sensors ready to go and can bring in products from Germany if needed. That minimises the risk of an operation being held up because a supplier relies on imported sensors and cannot get them quickly.’ Local staff are the third advantage. ‘VEGA has an excellent team that knows our clients, and provides ongoing technical support and training,’ says Leadbetter. ‘Everything we do is about building longterm relationships and long-term solutions. There are no quick fixes.’ The fourth advantage is the breadth and depth of VEGA’s work in Australia. ‘Our sensors have been used for decades by government and across industries, and are found in many of Australia’s largest infrastructure assets,’ says Leadbetter. ‘This experience provides valuable insights on how to maximise benefits from sensor technology.’ INTER NET OF THINGS

Leadbetter is proud of VEGA Australia’s history and excited about its future. He believes that the IoT is transforming infrastructure maintenance and elevating the importance of high-quality sensors that capture data to inform software algorithms. ‘More than ever, infrastructure operators want to address problems before they occur,’ he says. ‘They want

connected devices online that provide information to inform decisions, help operators take a more proactive approach and minimise costs.’ Council workers, for example, can monitor pressure at a water plant using an app that connects to a VEGA sensor. ‘They can investigate a potential pressure issue through an app on their smartphone or tablet and upload that data to the cloud,’ says Leadbetter. ‘They don’t have to carry expensive specialist equipment or waste time trying to access sensor information.’ Leadbetter says that connected devices are a key focus of VEGA’s R&D operations. ‘We’re doing continuous work on how sensor technologies can harness the power of the IoT and help clients make timelier, better decisions with their infrastructure.’

Sensor technology is about more than operational efficiencies, says Leadbetter. ‘VEGA products help communities. Our sensors measure everything from a river’s tidal flows, to sea levels, to a dam’s water levels and drinking water quality. Our technology is used in tsunami warnings, and helps reduce the risks of major sewage spills and other environmental disasters. ‘I doubt the community realises how integral VEGA sensors are to our everyday way of life, and how important it is that governments and infrastructure companies invest in quality sensor technology from leading providers. Information is power, and sensors provide it.’ To learn more about VEGA Australia, visit www.vega.com.

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MINE DE VELOPMENT

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AUSTRALIAN RESOURCES & INVESTMENT

Combining big data and experience for safer tailings dams Technology for continuously gathering data from tailings dams, together with the power to model and analyse that data, holds great potential for improving safety in tailings dam management.

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MINE DE VELOPMENT

ccording to Lyzandra Boshoff, Principal Engineering Geologist at SRK Consulting, mines ideally need more realtime data about the changing conditions in their tailings dams over time. ‘This is demanding that we harness technology in the way we collect, process and interpret data,’ says Boshoff. ‘For instance, SRK has used automated vibrating wire piezometers (VWPs) to gather and communicate real-time data on tailings facilities. Just as important is that we are developing visualisation capability, as well as interpretive tools, to make this data meaningful to engineering decisions.’ The mining industry’s focus on tailings dam safety has been spurred by a series of accidents in the past few years. The most recent was the dramatic failure of the tailings dam at Vale’s Córrego do Feijão iron ore mine in Minas Gerais, Brazil, in early 2019, in which more than 250 people lost their lives. A key challenge in the field of tailings dams is the engineering complexity of this infrastructure, due mainly to its dynamic nature and growth over time. Dam content changes continuously as the ore body and mineral processing parameters alter its chemical and structural composition. ‘Our use of VWPs has been valuable in providing the data on which we can base real-time visualisation of changes in phreatic levels within a given monitoring area,’ Boshoff says. ‘This is important, as the seepage and associated pore pressure regime within a tailings facility is a vital aspect of the integrity and stability of the structure.’ This has conventionally been tracked by manual standpipe piezometers whose performance, while accurate, depends on the quality of installation and aftercare – and manual data collection is subject to human error. This equipment, however, currently remains useful as a backup source of information as the reliability of VWP technology is gradually improved. ‘The real advantage of using VWPs is that we can generate much more data with less effort, and this can be digitally communicated to us in real time,’ she says. ‘A limitation of the traditional system was that the data may not reflect the prevailing conditions in the tailings dam by the time the information reaches the engineer for analysis.’ An important advance in VWP technology has been improved wireless capability from many telemetry hardware developers. Cloud technology now allows data to be quickly uploaded and stored for immediate access by engineers and management. These VWP networks are also useful when needing to confirm whether the mitigation measures in place are having the desired effect. Applying these technologies, SRK has been able to review the impact of construction processes, and other site activities and incidents on pore pressure responses, and analyse the impact of depositional patterns on the seepage flow regime within a facility. ‘For the first time, we can see and correlate in real time what we have always predicted using models and assumptions,’ she says. ‘Harnessing the power of big data, we can now test our assumptions and substantially raise the confidence of our observations. With the exponential growth in the application

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A key challenge in the field of tailings dams is the engineering complexity of this infrastructure, due mainly to its dynamic nature and growth over time of technology in this field, more data is being generated and is available to be harnessed and interpreted.’ The work underway at SRK – with the specialised input of its data services department – is changing the landscape of data flow and interpretation. Significantly larger datasets can now be generated for analysis and decision-making. ‘Our pioneering work in rolling out automated VWP networks therefore allows us to visualise cloud-based databases, and analyse the information for better engineering decisions,’ she says. ‘This has required a number of technological innovations, including built-in, automated validation and interpretive tools to automate some of the routine engineering interpretive work.’ Boshoff emphasises, however, that any useful technological advance must still give the engineer the ability to apply judgement, and to consider all the factors relevant to each site’s unique geotechnical model. ‘Each tailings dam needs its own piezometer network to be properly customised, and the evaluation approach must be based on the specific geotechnical model to ensure that all the right elements are interpreted, tracked and controlled in the correct way,’ she says. It is important to avoid the danger of becoming ‘lost in the data’ without adequate validation or assessment, which can only be achieved with high levels of engineering understanding of the context of the design, materials and other site conditions. Such discernment from an experienced professional can ensure that anomalies are not misunderstood and/or obscured within massive datasets. ‘The data can only be understood in terms of the geotechnical framework in each case,’ she says. ‘We won’t get the right answers from the data if we don’t ask the right questions, or if the data is not correctly analysed and applied.’ Here, she notes, SRK is well positioned to be innovators in this field; it has the experience of leading engineering experts

AUSTRALIAN RESOURCES & INVESTMENT

in tailings dam management, which can be combined with the company’s depth of digital expertise in developing analytical tools and apps. ‘To effectively harness the power of technology, we need to marry two worlds: data analytics and engineering,’ says Boshoff. ‘Data analysts have the information technology skills but not necessarily sufficient engineering insight. These two capabilities need to be adequately meshed if we are to realise the full benefits of big data in tailings management – and indeed other fields, too.’ As the capability to process and interpret data from VWPs improves, the tracking of tailings dams promises to become a more exact science. The behaviour of the infrastructure can be observed continuously and in more detail – reducing the need to interpolate between the regular but relatively static snapshots of information. ‘This will contribute significantly to mines being able to manage tailings facilities more proactively and safely,’ she says. ‘It should be noted, though, that other monitoring methods based on the observational approach employed by experts will continue to be vital in tailings dam management. Observational data is complemented by additional data from sensors to assist in understanding what cannot be readily observed from the surface.’ Graphs 2a and 2b show the changing pore pressure (green/blue) within the tailings body in response to overburdened loads being placed during the construction of a buttress (yellow trend line indicating successive lifts over the measured period). A sudden spike in pore pressures can lead to the pore pressure within the soils becoming greater than other forces acting between particles, keeping the soil skeleton intact (e.g., gravity and frictional forces) and strong. If and when pore pressures are permitted to become large enough and are not given an opportunity to dissipate, it can effectively push the neighbouring soil particles apart. In extreme cases, almost all strength is lost within the soil skeleton, and is usually referred to as ‘liquefaction’ in the field of critical-state soil mechanics.

Graph 2a

Graph 2b

About SRK SRK is an independent, global network of consulting practices in more than 45 countries on six continents. Its experienced engineers and scientists work with clients in multidisciplinary teams to deliver integrated, sustainable solutions across a range of sectors, such as mining, water, environment, infrastructure and energy. For further information, visit www.srk.co.za.

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GOLD

Potential in the Pilbara BY BAR RY FITZGER ALD

The exciting December 2019 Hemi gold discovery by De Grey Mining has put the company on a pathway to becoming a major gold producer.

he discovery has not only transformed De Grey from junior explorer to developer status, but it has also transformed the gold potential of the broader Pilbara region, currently better known as the world’s biggest supplier of iron ore. De Grey Managing Director Glenn Jardine explains that Hemi is a large-scale, near-surface, intrusion-hosted gold deposit, which is a deposit style not previously identified in the Pilbara. ‘We are very excited about the potential to increase the size of Hemi and to find more of the same,’ Jardine says. ‘The company has a 150-kilometrelong tenement package in the region, and the fact that this intrusion style of mineralisation has not previously been explored provides a unique and exciting opportunity for the company. ‘We see further value accretion for shareholders through the expansion and delineation of Hemi, the delineation of known intrusives around Hemi, and exploration for Hemi-like repeats,’ Jardine says.

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‘Our overall 12-month objective is to demonstrate the potential for De Grey to become a Tier 1–plus gold producer.’ De Grey has set a strategic target for Hemi and its surroundings to become a five-million-ounce resource. The target is in addition to De Grey’s existing 2.2-millionounce shear-hosted gold resource spread across a number of deposits. ‘Due to the continued and rapid expansion of mineralisation at Hemi, we expect an initial resource (estimate) in the coming 12 months when a meaningful portion of the Hemi resource is likely to be classified in the JORC indicated category,’ Jardine says. Hemi is located 60 kilometres south of Port Hedland, in the Mallina Basin. Unlike many of the big gold discoveries that have become mines elsewhere in Western Australia in recent years, the project is blessed with easy access to world-class infrastructure. There are two major sealed highways, two gas pipelines and a high-voltage

powerline all within a short distance of Hemi. ‘We have six rigs in the Hemi region, and we are continuing to extend the mineralisation there,’ Jardine says. He says that in the area immediately surrounding Hemi, five additional intrusions have been identified, four of which are known to be mineralised. ‘We are currently conducting air core drilling over the known mineralised intrusives to delineate mineralised footprints for follow-up reverse circulation drilling. ‘Air core drilling over the remaining intrusive (there are more regionally) will be conducted over the next six months,’ Jardine says. De Grey will also be testing targets along the 200 kilometres of prospective shear zones on its tenements to add to the existing 2.2-million-ounce resource, with Jardine saying the resource would ‘make a valuable contribution’ to a future largescale processing facility.

Reshaping the Pilbara Growing one of Australia’s most exciting new gold discoveries at Hemi within the Mallina Gold Project New style of large scale, high value, near surface intrusion hosted gold mineralisation at Hemi The Hemi discovery spans 2km x 2.5km and up to 400m depth – remains open with drilling continuing Aspirational goal to become a plus Tier 1 gold producer* from Hemi

Established Mineral Resource of 2.2Moz @ 1.8 g/t (excluding Hemi) within the +200km of shear zones

*Tier 1 gold producer: 300,000 ounces per annum for +10 years in a Tier 1 jurisdiction

ASX: DEG

degreymining.com.au

GOLD

GOLD RUSH BY ANTHONY FENSOM

Gold bugs are out in force again. As the price of the precious metal hits record highs above US$2000 per ounce, Australian miners are riding the wave of investor excitement.

he yellow metal’s bull run saw it reach US$2039 (A$2832) per ounce on 5 August, its highest level ever, driving up valuations for listed gold miners and spurring an exploration mini boom. Safe-haven demand, falling bond yields, rising inflationary expectations and a weak US dollar have all contributed to the price rise, up around 35 per cent this year amid surging investor demand. With analysts suggesting the price could soon top US$3000, a new gold rush may have begun. ‘Gold has always held a special place in the heart of Australian investors and miners,’ says Corey Nolan, Managing Director of Platina Resources. ‘With prices now hitting record highs, we would anticipate a surge in exploration activity, particularly in Western Australia, which is at the centre of Australia’s gold industry.’ Platina has shown its confidence in the outlook by acquiring the Challa gold project, located in between the prolific Mount Magnet and Sandstone gold mines. The company is seeking to further grow its Western Australian footprint by applying for an exploration licence at Mount Narryer South, which, like Challa, is in the Yilgarn Craton. Platina is among a number of Australian miners staking new ground in prospective gold areas, capitalising on the heightened investor interest. Gold-focused miners raised $484 million in the June quarter, nearly half the total of $1.1 billion in capital secured by exploration companies, according to Rob Murdoch, Principal Consultant and Executive Director of Austex Resource Opportunities. With gold miners accounting for more than a third of ASXlisted resource companies, the extra capital should spur increased exploration activity for the year ahead, together with more stock market listings. Among recent initial public offerings (IPOs), New South Wales– focused Manuka Resources listed on 14 July in an oversubscribed $7-million IPO, with plans to advance its Mt Boppy gold project and Wonawinta silver project near Cobar. Another New South Wales gold explorer, Kaiser Reef, listed in February after securing $4.5 million in its IPO, targeting its Stuart Town gold project near Newcrest’s Cadia mine.

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Other gold IPOs in the pipeline include North Stawell Minerals, which aims to raise $20 million to pursue gold exploration in Victoria’s ‘Golden Triangle’, near Stawell. WORLD’S BIGGEST PRODUCER The heightened activity could see Australia become the world’s biggest gold producer next year, with output expected to reach a new peak of 381 tonnes for fiscal 2022, according to the Australian Government’s official forecaster. The value of the nation’s gold exports could hit a record high of $32 billion in fiscal 2021, driven by higher prices and export volumes, according to the June 2020 ‘Resources and Energy Quarterly’, released by the Office of the Chief Economist. Australia’s increased production will be propelled by both the expansion of existing operations and new mines. These include St Barbara’s Gwalia extension project in Western Australia and the Mt Freda gold mine in Queensland, while next year should see first production from Regis Resources’ McPhillamys mine in New South Wales and Capricorn Metals’ Karlawinda mine in the Pilbara region of Western Australia. Exploration expenditure has also surged, rising by nearly 39 per cent year on year to $273 million in the March quarter 2020. Western Australia remained the focus, accounting for more than two-thirds of total gold exploration spending, and recent discoveries in the state could further increase its share. De Grey Mining’s Hemi high-grade gold discovery, which was found in December 2019 under a shallow ‘blanket’ of cover, set off a wave of activity in the Pilbara, including Coziron Resources’ Croydon project. Others targeting the area include Golden State Mining and Sayona Mining, the latter as part of an earn-in agreement with Altura Mining. US$3400 PER OUNCE With the gold rally picking up speed, just how high could prices go? Fund manager VanEck predicts that the price could hit US$3400 per ounce, based on central banks’ money printing and rising inflationary expectations.

AUSTRALIAN RESOURCES & INVESTMENT

Demand for gold-backed exchange-traded funds has surged, with holdings rising by 30 per cent to more than 100 million ounces in 2020 Other analysts also see prices rising further, albeit more modestly. Goldman Sachs analysts have projected a 12-month price target of US$2300, due to rising US–China tensions, uncertainty over the US presidential poll and a weak US economic outlook that could see the world’s reserve currency further weaken. Similarly, ANZ Research recently raised its six-month price target to US$2300 per ounce, although it sees further gains being dependent on investor demand. Demand for gold-backed exchange-traded funds has surged, with holdings rising by 30 per cent to more than 100 million ounces in 2020. In the first half of 2020, global net inflows reached nearly US$40 billion, setting new records. The Australian bank, however, notes that physical demand for gold remains weak, with declining demand in the two largest consumer markets of China and India. Consumer demand in India plunged by 55 per cent in the first half to an 11-year low, while Chinese gold demand dropped by 48 per cent, pushing the physical market into surplus. ‘There is no doubt that the backdrop remains highly constructive, with negative real yields for the foreseeable future,’ ANZ Research said in its 31 July report. ‘Even so, we are mindful that if economic sentiment improves in coming quarters, the hurdle for continued growth in investor demand may make the path to this level [US$2300] an arduous one.’ Austex’s Murdoch points to the impact of the global coronavirus pandemic. ‘The gold outlook is dependent on international stability – certainly COVID-19, and how damaged the international economies are. A lot of people are turning to gold and away from cash, as they do in troubled times. But if suddenly the situation turns rosy, the gold price will come down,’ he says. In the meantime, Australia’s gold miners are making hay while the sun shines. ‘Gold is hitting the headlines again, and that’s great news for the entire Australian gold industry. There’s never been a better time to invest and explore for the precious metal,’ Platina’s Nolan says.

Platina Resources’ Challa gold project in Western Australia

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GOLD

Chalice’s Julimar continues to shine BY BAR RY FITZGER ALD

Chalice Gold Mines has notched up one of the best base and precious metals discoveries of recent times at its Julimar project on the doorstop of Perth.

he first hole drilled by Chalice came up trumps, with a 19-metre intersection assaying 8.4 grams per tonne palladium, 2.6 per cent nickel and one per cent copper. Chalice Managing Director Alex Dorsch believes that Julimar, 70 kilometres northeast of Perth, has the potential to become a world-class mineral province. ‘Since the discovery hole in March 2020, we have uncovered what looks to be a remarkable and quite rare nickel–palladium discovery in a completely new mineral province,’ Dorsch says. ‘Our first hole targeted a strong electromagnetic (EM) anomaly and it returned what was a very high-grade nickel–copper PGE (platinum group elements) intersection. Prior to Chalice, the Julimar region had never [had such a discovery], so we have unearthed something extra special. ‘The most enticing thing is that there is a further 24 kilometres of the complex that we haven’t yet explored.’ The share market embraced news of the discovery and sent Chalice shares sharply

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higher, carrying the explorer’s market value to a peak of $380 million. Interest in the discovery meant that Chalice was able to comfortably raise $30 million from a share placement in May, even though it was already one of the best-funded explorers on the ASX, with $25 million in cash and liquids at the time. ‘We wanted to be in a position of financial strength to take the project forward in a rapid manner,’ Dorsch says. Drilling has continued to return highgrade PGE, nickel and copper hits from the newly named Gonneville discovery at Julimar. Chalice reported in mid June that drilling results had continued to demonstrate that the Gonneville intrusion hosts both high-grade nickel–copper PGE zones in massive/ matrix sulphides, and widespread PGE mineralisation associated with disseminated sulphides. Prior to the Julimar discovery, Chalice was best known for its Victorian gold hunt at its Pyramid Hill project and its early-

stage nickel–sulphide exploration at its King Leopold project in Western Australia’s Kimberley region. ‘We are continuing work on the two projects, which arguably could stand on their own feet in any company,’ Dorsch says. ‘Shallow aircore drilling over the past two years has narrowed down the focus at Pyramid Hill to two outstanding prospects – Karri and Ironbark.’ A long gold trend – which is more than four kilometres – has been identified at Karri, and a widely spaced geological drill program was recently completed at the prospect. ‘The combination of tightly folded Castlemaine Group sediments, quartz veining and a large-scale gold footprint with primary high-grade gold make it a compelling opportunity,’ Dorsch says. ‘Results indicate that the Karri prospect has the potential for a Tier 1– scale gold system.’ Time will tell if Karri shapes up as another win for the Chalice team, when the first of the lode-targeted holes are drilled later this year.

Unearthing an exceptional PGE-nickel-copper-cobalt discovery in WA and an emerging gold province in Victoria Rapidly advancing a greenfield Ni-Cu-PGE discovery at the Julimar Project in WA 19m @ 8.4g/t Pd, 2.6% Ni, 1.0% Cu, 0.1% Co from 48m in first drill hole An unrivalled, district-scale >5,000km 2 position in the world-class Bendigo goldfields of Victoria Fully funded to rapidly progress projects with ~A$54 million in cash and investments (30-Jun-20 2 0 )

WWW.CHALICEGOLD.COM

ASX:CHN | OTCQB:CGMLF

CONNECT WITH CHALICE

GOLD

Mako making its way BY BAR RY FITZGER ALD

Mako Gold is well on its way to establishing a maiden gold resource at its flagship Napié project in northern Côte d’Ivoire.

he resource estimate from the Tchaga prospect within the broader Napié project area is expected to be the start of a bigger story unfolding in Côte d’Ivoire for Mako. Mako listed on the ASX in April 2018, and was founded by husband and wife – and geologists – Peter and Ann Ledwidge, now Managing Director and General Manager-Exploration respectively. They formed the geology team behind ASX-listed Orbis Gold, which found 2.6 million ounces of high-grade gold across two discoveries in Burkina Faso before being taken over by Canadian miner SEMAFO for $178 million in 2015. They are out for a repeat performance by Mako. ‘We feel pretty confident that we can outline 2–3 million ounces or more at Napié. Our speciality is greenfield discovery,’ Peter Ledwidge says. ‘We really like Côte d’Ivoire. It is the nation of choice to operate in now in Africa. It hosts 35 per cent of West Africa’s prospective greenstone belts, and the infrastructure is really good. ‘We have a bitumen road that crosses Napié, as well as a hydro-electric powerline, and there is a river to the east. So, if things go the right way, you have everything you need to put a mine into production,’ Ledwidge says. During the June 2020 quarter, Mako kicked off a 10,000-metre drilling program at Napié, which is expected to be completed by the end of the year.

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Côte d’Ivoire with Mako permits

About half of the drilling program is focused on the Tchaga prospect in the central part of Mako’s permit area. The prospect sits within a onekilometre stretch of a 23-kilometre-long soil/auger anomaly, which is coincident with a more than 30-kilometre-long shear zone, thought to be the major control for the gold mineralisation.

‘What we are trying to do is outline a maiden resource at Tchaga, then grow it,’ Ledwidge says. He says drilling would also occur at three other prospects – Tchaga North, Tchaga East and Gogbala – with the aim of adding to the maiden resource. The 10,000-metre drilling program got off to a flying start, with best results from the first five holes including 14 metres at 5.46 grams of gold per tonne, with five metres at 11.2 grams per tonne from the surface, and nine metres at 4.08 grams per tonne from 80 metres. In a previous drilling campaign, drilling at Tchaga returned best results of 36 metres at 3.09 grams per tonne from 43 metres, and 23 metres at 2.46 grams per tonne from 15 metres. ‘Our confidence has been improving with every drill program. We are now on to our sixth drill program and we have had pretty spectacular results in all of them. And that’s not stopping,’ Ledwidge says. ‘What we are targeting here is open pit mineralisation that starts from the surface, and our targeting methodology seems to be working.’

HUNTING HIGH-GRADE GOLD DEPOSITS IN COTE D’IVOIRE ADVANCING TOWARDS A MAIDEN JORC MINERAL RESOURCE AT NAPIÉ

GOLD

Gold during a pandemic CONTENT SUPPLIED BY IBISWOR LD

The price of gold has surged during 2020, creating a beneficial operating environment for Australian gold miners. Gold prices are likely to continue to grow while there is ongoing uncertainty in financial markets and economic disruption stemming from COVID-19.

o far, 2020 has been a turbulent year for investors. As COVID-19 spread around the world, stock markets had some of their fastest drawdowns in history. After closing at a record high on 20 February, the All Ordinaries index fell by 37.1 per cent over the following 22 trading days. Deteriorating economic conditions and financial market uncertainty have prompted investors to shift to safe-haven assets. The COVID-19 pandemic has provided strong support for precious metals prices in 2020. Gold prices reached record highs and broke through US$2000 per ounce, which currently puts it at approximately A$2800 per ounce. In US dollar terms, gold prices have risen by 31.3 per cent over the year ending July, significantly outperforming most asset classes. Over the same period, the All Ordinaries index fell by 10.9 per cent. Demand for safe-haven assets has proven robust, with investors choosing gold to ride out the developing turmoil in stock markets caused by COVID-19. Australian producers and investors had the additional support of a weakening Australian dollar earlier in the year, which bottomed out at US$0.55 in mid March. This trend,

Demand for safe-haven assets has proven robust, with investors choosing gold to ride out the developing turmoil in stock markets caused by COVID-19 – 52 –

however, reversed in the June quarter, as economic activity picked up in China, boosting demand for Australian iron ore exports and supporting an appreciation of the Australian dollar. From the midMarch low to the end of July, the Australian dollar appreciated by 30 per cent against the US dollar, and is currently holding above US$0.70. This has constrained gold’s run in Australian dollar terms. Despite reluctance among many investors to hold gold as it does not generate yield compared with stocks or bonds, record-low interest rates and quantitative easing by global central banks have supported demand for the asset. The unprecedented economic disruption caused by the COVID-19 pandemic has prompted the Reserve Bank of Australia (RBA) to lower the cash rate to a historic low of 0.25 per cent, reaching the effective lower bound specified by the RBA. Likewise, the US Federal Funds Rate has fallen to 0.25 per cent. Central banks have embarked on quantitative easing efforts, injecting money into the economy through purchasing government bonds. Investor concern has been rising over mounting government deficits and increasing global money supply spurring inflation, depreciating fiat currencies and reducing investor purchasing power. The low-interest-rate environment continues to provide support for gold as an attractive asset due to reduced bond yields and low returns on cash, lowering the opportunity cost normally associated with investing in physical gold. US–CHINA TENSIONS Ongoing tensions between the United States and China have also aided gold prices over the year. The US consulate in Chengdu and the Chinese consulate in Houston closed in July. While tit-for-tat retaliations through tariffs have been ongoing since 2018, the handling of COVID-19 has created increased tensions between the two countries. Any escalation in hostilities or a further deterioration of trade negotiations would create increased uncertainty in financial markets and support higher gold prices. IBISWorld expects that concern over unfolding economic conditions and inflationary pressures will be the key driving forces supporting gold prices in the short term.

AUSTRALIAN RESOURCES & INVESTMENT

GOLD PRODUCTION COVID-19 has had a mixed effect on the operations of Australian gold miners. Lower oil prices have reduced operating costs for firms by lowering energy costs associated with ore extraction and processing. Some gold mining firms have been disrupted by bans on fly-in flyout mining employees due to COVID-19 containment regulations. Output has also been hindered by planned maintenance and lower-than-expected gold ore content at some major mines. Despite the disruption of COVID-19, according to the Office of the Chief Economist, Australian gold mine output increased by 4.3 per cent in 2019–20. Australia remains the world’s second-largest gold producing country, and higher prices are anticipated to entice producers to ramp up output over the year. Furthermore, a number of projects are scheduled to enter production from 2020–21, including St Barbara’s Gwalia extension in Western Australia and Regis Resources’ McPhillamys mine in New South Wales. IBISWorld expects Australian gold production to rise over two years through 2021–22. In response to positive operating conditions for precious metals miners, there has also been a flurry of capital-raising activity on the ASX, with almost 40 gold and silver mining companies raising more than $1.2 billion in the June quarter. The S&P/ASX All Ordinaries Gold index is up 37.8 per cent for the year, and the outlook for Australian gold miners is still promising. OUTLOOK Despite some anticipated profit taking by investors, with prices hitting US$2000 per ounce, IBISWorld projects that gold prices will remain elevated over the remainder of 2020. Economic conditions remain a concern, and there is political uncertainty around the US presidential election scheduled for November. For the June quarter, the United States reported a 9.5 per cent contraction in gross domestic product (GDP), while the Treasury has forecast Australian GDP to decline by seven per cent. With COVID-19 case numbers continuing to rise globally, the economic disruption is likely to continue to negatively affect company earnings and stock market performance. Central banks are likely to continue quantitative easing efforts, amplifying inflationary pressures and providing ongoing support for gold prices over the year. High prices should support earnings for gold miners, and encourage increased exploration and production. Australian exploration expenditure dropped off in response to lockdowns earlier in the year. As restrictions are relaxed, IBISWorld projects that exploration activity will recover. On the back of rising production and high prices, Australian gold exports are expected to rise by 15.1 per cent in 2020–21 to reach $32 billion. Growth in global gold production will likely slow over the next few years due to the depletion of ageing mines in Russia, South Africa, Mexico and Australia. As a result, recovering demand for physical gold and slowing supply are anticipated to continue to support higher gold prices. Overall, 2020–21 should be a promising year for gold investors, with few immediate hurdles in sight.

– 53 –

GOLD

Logging diamond drilling

Royal gains in Ecuador BY BAR RY FITZGER ALD

Titan Minerals has hit the ground running in southern Ecuador after securing $14.5 million in funding to advance at its flagship Dynasty gold project.

ynasty was acquired earlier this year through the acquisition of Canada’s Core Gold and came with a 2.1-million-ounce foreign resource estimate averaging 4.5 grams of gold per tonne. Titan will finish updating the resource – one of the biggest held by any ASX explorer – to Australian standards by the end of the year. It’s kicked off a drilling program to extend the scale of the resource, which remains open in multiple directions. Early success in recent drilling programs was reported in mid July and includes a 14.5-metre hit on the Breccia Vein structure, which assayed 6.43 grams of gold per tonne from 119 metres, including 6.65 metres at 12.5 grams per tonne of downdip from an originally modelled intercept of 2.75 metres at 2.7 grams per tonne of gold. Other structures tested have also been returning higher grade and wider intersections than those used in the foreign resource estimate. Titan Managing Director Laurie Marsland says the initial batch of assay results have proved to be ‘very encouraging’.

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‘Where altered (halo) material surrounding the veins is included, we are seeing up to three to five times wider intercepts than previously reported.’ Previous resource modelling was limited to vein material. ‘These results add weight to the view of developing open pits over these extensive high-grade mineralised vein swarms that typify the Dynasty project,’ Marsland says. Marsland is on the record as saying that he could not see any reason Dynasty could not get as big as five million ounces, or maybe bigger. Titan is also aiming to grow the overall resource by drilling targets yet to be tested at the original 2007 discovery. Marsland says the recent fundraising activities have been strongly supported by Australian and global institutions. Titan is in good company in Ecuador, where the country’s mineral riches have also attracted some notable Australian miners like BHP, Newcrest and Fortescue. The acquisition has also proved to be well timed with gold prices moving to record levels.

Like the trio of BHP, Newcrest and Fortescue, Titan’s push into Ecuador includes the hunt for large porphyry copper ore bodies (along with epithermal gold). The Core Gold acquisition delivered Titan the Copper Duke exploration project, 18 kilometres east of the flagship project Dynasty. Copper Duke covers 130 square kilometres close to the Pan-American Highway, near the city of Catacocha. It was the subject of reconnaissance exploration by the United Nations between 1968 and 1978, which yielded promising gold–copper mineralisation. Titan is currently commencing highresolution air mag studies for ranking targets using remote and surface sampling techniques, with a view to start drilling at Copper Duke early in 2021. ‘We continue to believe that we have two very exciting projects in Ecuador, and are confident that the funds will enable further exploration that will result in these projects quickly emerging as substantial assets,’ Marsland says.

Two Gold and Copper projects in Ecuador with a historic resource and exploraaon potenaal

Dynasty Gold Project Ecuador – 100%

Copper Duke Project Ecuador – 100%

139km across ﬁve concessions, with three > concessions fully permiied for exploraaon and 2

small-scale mining

long by 1km wide mineralised structural > 9km corridor with outcropping vein swarm hosang high-grade gold anomalism

pending for over 3,000m of diamond Ass > Assays drilling completed in late 2019 of mineralised drill intercepts within 100m > 95% of surface and a 5km drill gap on the mineralised corridor remains untested

> 6 Month Exploraaon Program Planned

tenement posiaon in highly > 130km prospecave Southern Ecuador 1978 UN drill Programme – 440m in two > diamond drill holes paraally assayed 2

returned: 33.1m @ 2.5g/t gold from 9m drill depth; 45.4m @ 1.9g/t gold from surface

Mulaple porphyry intrusions with extensive > copper-gold anomalism outcropping gold systems – Epithermal style > Overprinang mineralisaaon with over 1.8km extent at surface

High resoluaon magneac and geochemical > surveys at Copper Duke planned to

6,000m of diamond drilling; Trench and surface geochemistry;

commence in Q3 of 2020

High-resoluaon magneac surveys

> Mineral resource conversion to JORC in Q4 2020 2.1M oz Au Resource at 4.5g/t 1

World Class Porphyry Potenaal

ASX: TTM atanminerals.com 1

NOTES TO MINERAL RESOURCES & COMPETENT PERSON STATEMENT. The Company confirms that the technical informaaon in this release and informaaon provided in this document relaang to the Mineral Resource Esamate for the Dynasty Gold Project is based on informaaon contained in the ASX announcement atled “Quarterly Acaviaes Report” dated 30 April 2020. Pursuant to Lisang Rule 5.13, Titan confirms that it is not in possession of any new informaaon or data in respect to the Dynasty Gold Project and the supporang informaaon provided in the Announcement conanues to apply and has not materially changed. Pursuant to the requirements of Lisang Rule 5.12.9, the Company provides the following cauaonary statement: The Mineral Resource Esamates for the Dynasty Gold Project is in not reported in accordance with the JORC Code 2012. A competent person has not done sufficient work to classify the foreign esamate as mineral resources in accordance with the JORC Code 2012. It is uncertain that following evaluaaon and/or further exploraaon work that the foreign esamates will be able to be reported as mineral resources or are reserves in accordance with the JORC Code 2012.

GOLD

Apollo Hill soars to new heights BY BAR RY FITZGER ALD

Saturn Metals’ Apollo Hill gold project has continued to grow in stature thanks to the fast-paced discovery of more and higher-grade resource ounces.

aturn only listed on the stock exchange in March 2018, with Apollo Hill, 60 kilometres southeast of Leonora in Western Australia, as its major asset. It started out with a 500,000-ounce resource grading 0.9 grams of gold per tonne identified from the work by as many as eight previous owners, dating back to the first exploration hole drilled in 1986. Saturn has since grown the resource to 781,000 ounces at a higher grade of one gram per tonne, and it plans to further update the resource in October/November. ‘We have always delivered a resource upgrade in October/November because it gives us a measure of our progress,’ Saturn Minerals Managing Director Ian Bamborough told Australian Resources & Investment. He adds that he remains confident, with some caveats, that the next step up in the resource/grade will continue Apollo Hill’s pathway to an eventual two million ounces.

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‘I think that the potential for a two-million-ounce deposit in the first 250 metres from the surface, and in the one single spot, is very real,’ Bamborough says. ‘Obviously, we have a lot of drilling and studies to do over the next couple of years to achieve that.’ Bamborough notes that the company had previously published its incentive targets, which had set a goal of the resource growing to one million ounces by November 2020, with a ‘stretch’ target of 1.5 million ounces the following year. ‘We’ve put those targets out in front of us and we are going after them,’ Bamborough says. The task of meeting the company’s ambition has been aided by last year’s discovery of a new trend of higher-grade mineralisation in the hanging-wall position of the Apollo Hill gold system. The hanging-wall had been the subject of a few historic holes but became a new focus for Saturn early last year, in a drilling

program that returned an early hit of 13 metres grading five grams per tonne of gold from 74 metres. In the most recent June quarter, Saturn completed 6884 metres of extensional and resource drilling in an ongoing drilling program to grow the size of the resource. Saturn says intersections in the hanging-wall in the north of the deposit have outlined a 600-metre-wide corridor, while intersections to date in the south and central parts have demonstrated a 400-metre-wide corridor. It says the drilling again shows the potential for mineral resource improvement and expansion. Best drill results include six metres at 6.23 grams per tonne of gold from 246 metres in the hanging-wall, and five metres at 32.6 grams per tonne of gold from 301 metres in the main lode – among the best ever hits at Apollo Hill. Saturn says that, importantly, the intersections sat outside of the current 781,000-ounce gold resource estimate.

ASX:STN

Saturn Metals Limited’s Apollo Hill Project The Next Tier in West Australian Gold www.saturnmetals.com.au

GOLD

GOLD IN THE TIME OF COVID-19 BY ANDR EW NAYLOR, EXECUTIVE DIR ECTOR, HEAD OF PUBLIC POLICY, WOR LD GOLD COUNCIL

As the global health crisis morphed into a financial crisis, gold’s status as a safe haven was challenged; however, recent data demonstrates that gold is still the ultimate safe-haven asset and fulfils a unique role in investment portfolios, and the outlook for gold remains strong.

old hasn’t been immune to the economic fallout of the COVID-19 crisis – most asset classes have been affected by turbulent market conditions. Despite some initial volatility, gold has been one of the best performing asset classes so far this year. As the crisis was ramping up in April, gold was up 11 per cent in 2020. Gold has outperformed most major asset classes and indices – the S&P 500, Nasdaq, DAX and Nikkei are all down this year to date. In the early days of the financial crunch, pressure on the gold price led many investors to question the precious metal’s status as a safe-haven asset. Gold is, after all, supposed to be inversely correlated to risk. As the scale of the economic fallout from COVID-19 became apparent – unprecedented economic shutdowns, the potential for mass unemployment, and uncertainty about the full extent and duration of the pandemic – global financial markets were placed under extraordinary pressure. As the crisis hit, the gold price dropped. Gold was not alone – even longer-term US treasuries prices fell as assets across the board were liquidated to raise cash. Gold’s initial sell-off was concentrated on derivatives in the exchange and over-the-counter (OTC) markets as investors were forced to meet margin requirements. The sell-off was not surprising given it was, as of early March, one of the few assets with positive returns this year. In fact, just before the crisis hit, gold was up 10 per cent – more than all other major asset classes. This is nothing new – there is historical precedent for these types of pullbacks. During the 2008–09 financial crisis, gold initially came under pressure; however, in these instances, gold was behaving as it should – as a source of liquidity and much-needed funding during extreme stress periods. During crunches, investors take advantage of the wealth preservation and highly liquid nature of the gold market, and close their positions; however, as the initial shock subsides and immediate funding requirements are met, the need for a long-term

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safe haven increases, which is why gold recovered quickly. When stocks sold off sharply in 2008, gold experienced a few pullbacks, falling more than 30 per cent from peak to trough, but rallied back to close four per cent higher on the year. Looking ahead, the deceleration in economic growth will undoubtedly impact gold consumer demand and gold’s volatility may remain high; but high risk levels, combined with widespread negative real rates and quantitative easing, will be supportive of gold investment as an allocation to an effective safe haven. INVESTMENT DEMAND FOR GOLD This is borne out in the latest exchange-traded fund (ETF) market data. Global gold ETF holdings are at an all-time high, and gold ETF inflows remain robust so far this year. Global gold-backed ETFs and similar products added 298 tonnes, or net inflows of US$23 billion, across all regions in the first quarter of 2020 – the highest quarterly amount ever in absolute US dollar terms, and the largest tonnage additions since 2016. Sharp volatility across many assets and global equities entering bear market territory encouraged inflows into safe havens. So, why do investors view gold as such an important asset class? Despite the unusual financial climate, the fundamental reasons for holding gold in a portfolio remain the same. Historically, it has been an important source of returns – over the last 20 years, gold has outperformed most major asset classes, including the US bond aggregate, and US and emerging market stocks. Effective portfolio risk management requires a diversification. Gold is a unique diversifier and shows little correlation to other asset classes. The reason for this is the dual nature of demand for gold – it is both a procyclical and countercyclical asset class, with demand coming from different sectors of the economy and different regions of the world.

AUSTRALIAN RESOURCES & INVESTMENT

It performs differently, which is what you want especially in a time of crisis. It is also a highly liquid asset. Taken together, these different characteristics of gold mean that an allocation can typically improve the risk-adjusted return of a portfolio. AU S T R A L I A N P E N S I O N F U N D S Like countries across the world, Australian funds are under pressure. The announcement that super account holders can draw down a proportion of their portfolio early increases the need for funds to have a sufficient allocation to liquid assets to meet these drawdowns. Gold is a highly liquid asset and in March 2020 traded more than $260 billion every day. As such, an increased allocation to gold could be useful for Australian funds looking to rebalance in favour of more liquid assets. 2020 OUTLOOK So, what will the rest of 2020 bring? No-one really knows what the full economic impact of the COVID-19 crisis will be, nor when the pandemic will subside. In an era of such uncertainty, gold will likely perform well overall, although volatility is to be expected. Central banks around the world are cutting interest rates and embarking on unprecedented economic stimuli. Trillions of US dollars are being pledged to prop up economies, support businesses and protect the short-term finances of citizens. Since the Australian Government’s initial Economic Response was announced on 12 March, an additional A$130 billion has been pledged, bringing the total amount of support to A$320 billion or 16.4 per cent of gross domestic product. Other countries in the region have embarked on a similar course. Japan has unveiled a massive $992 billion stimulus package, while a day after the G20 pledged to do ‘whatever it takes’, China announced it would raise its fiscal deficit ratio, and will pump trillions into its economy.

In an era of such uncertainty, gold will likely perform well overall, although volatility is to be expected As budget deficits around the world increase, currencies are debased and real interest rates persist in negative territory, asset managers and investors will be presented with unique structural challenges. It will be a while before financial markets stabilise. Amid high volatility, the gold price may experience additional swings, but the long-term implications of an environment combining high risk and lower opportunity cost should support gold investment demand. Although softer consumer demand will flow from a recession, investment demand has historically offset weakness in the consumer markets.

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GOLD

Underground development at Wiluna

A golden opportunity BY BAR RY FITZGER ALD

Wiluna Mining Corporation’s plan to re-establish its historic namesake gold project, in Western Australia’s Northern Goldfields, to Tier 1 status is fast taking shape.

he company (formerly Blackham Resources) is about halfway through transitioning Wiluna to a large-scale underground mining operation by capitalising on the project’s big and growing sulphide–gold resource base. Confidence in the transition away from the smaller-scale oxide/free-milling operation has been boosted by recent exploration success in Wiluna’s ‘under the headframe’ resource upgrade and growth strategy, and the repair of its balance sheet. Under the sulphide transition plan, Wiluna plans to ramp up production from the current annual rate of about 62,000 ounces to 100,000–120,000 ounces from September 2021, increasing in a Stage 2 expansion to more than 200,000 ounces. Wiluna Executive Chair Milan Jerkovic says that it is important to emphasise that the current free-milling operation through to next September ‘exists purely to provide operating cash flow to assist in funding the staged development of the sulphide operation’.

– 60 X ––

‘Wiluna is first and foremost a development and growth company focused on the staged development of the company’s large underground sulphide system, which we plan to bring online in Stage 1 by September next year,’ he says. Despite a production history that stretches back more than 100 years, Wiluna’s ownership of the goldfield gives it one of the biggest gold resource bases of companies listed on the ASX at a time of record Australian gold prices. The underground resource that underpins the transition to a sulphide operation currently stands at 2.9 million ounces (18.5 million tonnes grading 4.82 grams of gold per tonne). Jerkovic says the past six months of drilling by the company has been a ‘great success’. The program has the dual purpose of upgrading more of the inferred resource to indicated resource status, as well as discovering additional high-grade ore shoots to add to the mine life of the sulphide operation.

‘It has assisted in both our growth and discovery strategies, and will add meaningful ounces to our mineral resource and our reserves, which we will be updating in September and December this year. ‘From a discovery point of view, we have also found new shoots and mineralisation that we didn’t know previously existed under the headframe, with all of the existing infrastructure available to exploit these new discoveries very quickly and economically,’ Jerkovic says. ‘We’re targeting high-grade shoot discoveries because every one gram per tonne of increase in the grade of the sulphides could result in an additional 25,000 ounces per annum of production in Stage 1, and 50,000 ounces per annum under our Stage 2 scenario. ‘So, grade is obviously extremely important to project economics.’ While the current underground sulphide resource estimate averages 4.82 grams per tonne of gold, the historic mined average grade is seven to eight grams per tonne.

Awakening the Sleeping Giant

Wiluna Mining Corporation Limited (ASX code: WMX; “Wiluna Mining”) is a developing gold mining company listed on the ASX. Wiluna Mining controls 100% of the massive and historic Wiluna Gold Mining Complex located at the northern end of the Yilgarn Craton in Western Australia. With four gold systems over a 1,600 square kilometre tenement package; a gold endowment of 11 million ounces, a 6.4 million ounce Mineral Resources and a 1.4 million ounce Reserve, Wiluna is one of the largest underdeveloped gold systems in Western Australia, surrounded by existing 100% owned infrastructure. Currently producing a modest 60,000 ounces per annum, the Company is transitioning to a two stage, planned expansion over the next three years. Moving initially to 120,000 ounces per annum production by September 2021 and then 250,000 ounces per annum all at the one site. This would place Wiluna in the top 20 largest, single site, Tier 1 gold mines in a Tier 1 jurisdiction*. Exploring for further discoveries “under the headframe”, the potential for Wiluna to grow even bigger is significant. *(Australia, USA and Canada)

GOLD

Calidus Resources’ golden ticket BY BAR RY FITZGER ALD

Calidus Resources is poised to capitalise on booming gold prices through a planned $116-million development of its Warrawoona gold project near Marble Bar in Western Australia’s East Pilbara region.

anaging Director David Reeves says an updated pre-feasibility study (PFS) has highlighted Warrawoona’s ‘superb’ cash-generating potential from a forecasted annual production averaging 85,000 ounces in the first six years of an initial eight-year mine life. The update is being followed by a definitive feasibility study (DFS), the completion of which will move the project into the financing stage. ‘We are knee-deep in the DFS, which we aim to get out in the September (2020) quarter. ‘That should lead to a final investment decision later this year, which will be followed by a start to construction next year. All things being equal, we could see gold bars being poured late next year,’ Reeves says. Calidus began to consolidate the fragmented ownership of the historic goldfield in 2017, starting out with a 411,000-ounce gold resource. The resource has since grown to 1.5 million ounces. The DFS work is based on a proven ore reserve of 519,000 ounces, including 502,000 ounces at the main Klondike area. The initial development will involve a single big open pit, with a push underground delayed to future years in a deliberate decision to keep things simple. ‘With that simplicity comes the success of development and minimisation of risk,’ Reeves says. ‘The ore outcrops at surface and when you look at the strip ratio of 3.6 to 1; it’s why we can generate a lot of cash.’ The updated PFS pointed to an all-in sustaining cost of production of $1251 per ounce. At a $2500-per-ounce gold price, project cash flow (pre-tax) was estimated at $648 million, while the internal rate of return was put at 77 per cent (post-tax). Capital payback was 13 months. The current resource is based on drilling to a depth of 250 metres. In August/September, some holes will be drilled to depths of 550 metres. ‘We are pretty excited about what the drilling turns up,’ Reeves says.

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Diamond drilling

‘This deposit is open, and it will be around for a long time once we develop the mine.’ While fast-tracking the development of Warrawoona, Calidus has expanded its exploration effort in the East Pilbara region. It recently struck a deal under which it can earn up to a 70 per cent interest in the Otways gold–copper project, about

50 kilometres from Warrawoona and to the north-east of Nullagine. Drilling by others in the 1960s identified near-surface copper mineralisation that remains to be tested at depth. The historic drilling never assayed for gold, even though nearby costean samples returned values of up to 13 grams of gold per tonne.

GOLD

Nelson consolidates position on the ground BY BAR RY FITZGER ALD

Nelson Resources is zeroing in on the big-time gold potential of its Woodline project in Western Australia.

erth-based Nelson Resources recently completed assembling a consolidated tenement package at Woodline, which includes 45-kilometre coverage on the Cundeelee Shear Zone on the boundary between the Albany–Fraser Orogen and the Yilgarn Craton. Executive Director Adam Schofield says that the same boundary hosts the 480,000-ounce-per-year Tropicana gold mine, owned by AngloGold Ashanti (70 per cent) and IGO Ltd (30 per cent), to the north-east. ‘Both Tropicana and ourselves are in exactly the same structural geological setting – the hanging wall of the Albany– Fraser Oregon. ‘That is important because previous explorers at Woodline did not have any structural information giving them any correlation to Tropicana. We have that now,’ Schofield says. Nelson’s consolidated ground position at Woodline comes with the data collected from $14 million in exploration work spread over

– 64 X ––

10 years by previous explorers, including that by a joint venture between ASX-listed Sipa Resources and US gold giant Newmont. ‘A lot of hard work has been done by previous explorers, and we are literally walking straight onto something we can drill,’ Schofield says. ‘It is interesting tenure with lots of opportunities. I would say there is no other junior explorer with a package of this quality and scale in Western Australia.’ Schofield says that while there were walk-up targets that could be drilled immediately, an initial drilling program would follow work refining targets with geophysical programs. He says previous explorers had used fairly low-resolution magnetics. Other than that, there has been no real geophysics across a 20-kilometre gold geochemical and bedrock anomaly identified in previous exploration work. ‘Our plan is to fly a 25-metre linespaced magnetics program, which will very much guide the drill bit. We have

targets we could drill today, but we think it is smarter to see and really understand all of the structural controls before we start putting holes in,’ Schofield says. ‘We are also going to do a seismic program to map all of the cover across the entire fault. It is probably one of the largest of its kind ever done in Western Australia. That will help us to distinguish faults from palaeochannels, again guiding the drilling. ‘We are trying to understand the bigger picture ahead of drilling,’ he says. Only limited drilling was completed by previous explorers to test for bedrock gold. Reported results from the previous drilling included a 10-metre intersection grading 1.29 grams per tonne from 64 metres, including one metre at 7.8 grams per tonne from 71 metres. ‘That does not necessarily get people excited, but when you piece together the fact that it is all within a 20-kilometre anomaly, it shows that there is metal in the system and there is likely to be decent grades,’ Schofield says.

Resources L

Woodline Project Nelson Resources is embarking on a hunt for a major gold discovery at its 828km2 Woodline Project, which lies along trend from the 7.5m oz Tropicana Gold Mine in the Albany-Fraser Oregon. Newmont / Sipa spent $14 million on early exploration prior to 2012. Nelson has had excellent gold results at Woodline (Socrates prospect) since listing in 2017. Targeted drilling starts late September 2020.

Key Points:

Contact: Adam Schofield, CEO Email: info@nelsonresources.com.au

•

$14 million spent on Woodline Project by Newmont / Sipa

•

Multiple geochem anomalies of Tropicana scale

•

Targeted drilling program to commence late September

•

828km2 tenement package is across the AlbanyFraser Oregon boundary – highly suitable geology for a large gold/nickel discovery

www.nelsonresources.com.au

GOLD

Why countries went on a goldbuying spree before coronavirus – here’s why BY DR EW WOODHOUSE, LECTUR ER IN ECONOMICS, SHEFFIELD HALLA M UNIVER SIT Y

The global economy was flashing danger signs long before the pandemic.

or one thing, many countries were clamouring to get hold of as much gold as possible. For the past decade, they have been buying new reserves and bringing them home from overseas storage to an extent never seen in modern times. Then just before the pandemic, there was a pause. What does all this mean? Central banks added 650 tons to their reserves in 2019, the secondhighest shift in 50 years, after the 656 tons added in 2018. Before the 2007–09 global financial crisis, central banks were net sellers of gold worldwide for decades. Leading the recent spree has been China, Russia, Turkey, Kazakhstan and Uzbekistan. We have also seen a large effort by central banks to repatriate their gold from other countries, mostly from storage in New York and London. Venezuela started repatriating its gold in 2011, shipping 160 tonnes from New York. A third of its holdings remain in London, but only because the Bank of England won’t repatriate them – declaring it doesn’t recognise the government in Caracas. Venezuela has now made this the subject of a legal claim. Between 2012 and 2017, Germany repatriated most of its massive reserve from Paris and New York to Frankfurt. The Netherlands did likewise in 2014, followed by Austria. Then came Eastern Europe. In 2018, Hungary announced it would repatriate nearly three tons of gold from London, while greatly boosting its reserves. Poland repatriated 100 tons from London a year later, about half of its national reserve. Next was Romania, while Slovakia and Serbia have been considering moving gold home from England, too. WHY IS IT HAPPENING? This dash to gold is about geopolitics and economics. Gold serves as a patch mark of nationalist identity. To quote Adam Glapiński, Governor of the National Bank of Poland, ‘gold symbolises the strength of [a] country’. Stocking up has made sense to many countries in the populist climate. It is also a sign of countries diversifying from dollars. The likes of Russia, China and even countries in Western Europe want to break the US dominance of the financial system, having seen it used as leverage in everything from economic sanctions to trade threats.

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Following the last financial crisis, many also feared there was more to come. When former Slovak Prime Minister Robert Fico last year urged his parliament to compel the central bank to repatriate gold from London, he argued that overseas reserves could be at risk in a new global economic crisis. Citing the 1938 Munich pact between France, Britain, Italy and Germany that allowed the German invasion of Czechoslovakia, he said that ‘sometimes your international partners can betray you’. Countries also seem unnerved by the row over Venezuela’s gold, plus the fact that Germany’s repatriated bars from the United States appeared different to what it thought was in store. This suggested the Federal Reserve was trading them. F I AT V E R S U S G O L D In an era where everything is digital, fast and smart, it might sound strange that a static piece of metal could still have a major monetary role. Central banks abandoned the gold standard in the 1970s, led by US President Richard Nixon, which meant that paper currencies were no longer exchangeable for gold. This was necessary because there were too many dollars in the international system and too many countries exercising their right to exchange them for US gold reserves. After Nixon’s decision, currencies became fiat, meaning that countries could freely decide how much to have in circulation. Currencies now had value not because they were backed by gold, but because the state standing behind them said they had value. Central banks effectively declared gold to be a relic. Fiat money was seen as superior, thanks to central bankers’ supposedly scientific oversight of monetary policy. The new dash for gold makes economists pause and wonder what is happening. It seems to show many countries looking for a safe haven in these years in which interest rates have been very low, and central banks have been printing large amounts of money to stimulate the global economy. Gold continues to have intrinsic value, so it reassures countries – especially if they fear inflation and downturns.

AUSTRALIAN RESOURCES & INVESTMENT

FURTHER READING

If you liked this article, find more expertise in The Conversation’s gold series: Why gold prices go up and down – five charts

Since the demise of the gold standard in the early 1970s, the precious metal has gone through four distinct phases. And yet, just as economic uncertainty was about to move to a whole new level with the pandemic, this trend lost momentum. Additions to the gold holdings of central banks and other international institutions in the three months to January 2020 – the most recent figure available – were just 67 metric tons, the least since August 2018. In truth, this was not entirely surprising. Purchasing bullion at close to a seven-year high, and after a month of prices fluctuating plus or minus about 13 per cent, is no particularly prudent way to consolidate economic and geopolitical power. It will be a few months before we see how the pandemic has affected central banks’ attitude to gold. It could yet convince them that gold will still move higher. So, don’t be surprised if this dash to gold has resumed in recent weeks in a leading indicator of troubling times ahead. This article is republished from The Conversation (https://thecoversation.com) under a Creative Commons licence. Read the original article at https://theconversation.com/ countries-went-on-a-gold-buying-spree-before-coronavirus-tookhold-heres-why-138173

I’m a bit of a modern-day alchemist, recovering gold from old mobile phones

There’s 33 times more gold in the average handset than in the equivalent amount of ore. Yet the vast majority is never recovered. Meet the struggling gold miners who are missing out on the boom in precious metals

You would think that anyone in the gold industry would be getting rich right now, but informal miners in many countries are missing out. How the US government seized all citizens’ gold in 1930s

It seized all gold bullion and coins, forcing citizens to sell at well below market rates. Then, immediately after the ‘confiscation’, it set a new official rate for gold that was much higher. Subscribe to the newsletter. Get more news and information you can trust, direct from the experts, by signing up to https://theconversation.com/newsletter.

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GOLD

Rumble in the jungle BY BAR RY FITZGER ALD

Rumble Resources’ strategy of developing a pipeline of projects has matured to the point where the company has secured exposure to five potential high-impact gold and base metals discovery opportunities.

rilling by Rumble or by its joint venture partners at the Western Australian properties is either underway or is planned for later in 2020, ensuring a strong news flow from the company, led by Managing Director Shane Sikora. The flurry of activity is the result of Rumble’s decision to adopt a ‘pipeline of projects’ strategy three years ago, with veteran geologist and two-time Prospector of the Year award-winner Brett Keillor joining as technical director to guide the strategy. Sikora explained that the strategy involves Rumble being highly critical in turning projects over and only filling the pipeline with those considered capable of resulting in discoveries. ‘The strategy gives us multiple avenues to discovery,’ Sikora says. Importantly, the strategy involves seeking out low-cost optionality upfront through staged payments and a balloon payment once a discovery has been made, as well as seeking out joint venture partners with deep pockets to fund exploration where the cost will be high.

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Western Queen gold project

‘What is exciting for us is that early on it was all about developing targets. Now we are at the point where each drill program could be a discovery,’ Sikora says. The five projects that have emerged from Rumble’s culling process that are going to be tested with the drill bit before the end of the year are Western Queen (gold), Fraser Range (nickel–copper gold), Lamil in the Paterson Province (copper– gold), Munarra Gully (gold, copper, silver, zinc) and Earaheedy (zinc–lead–silver). Western Queen is a high-grade gold opportunity and is currently the subject of a 12,000-metre drilling program by Rumble, the biggest in its history. It is looking to extend the known high-grade gold resource, as well as identify new highgrade shoots along trend. ‘There is already a resource there, and we are drilling to get that in to the indicated classification. Given the record Australian gold price, and with four treatment plants owned by others in the area, we can be innovative about monetising the gold,’ Sikora says. In the Fraser Range, Rumble’s joint venture partner, IGO, plans to start a

Brett Keillor

Shane Sikora

drilling program in the September quarter in the hunt for another Tier 1 discovery like IGO’s Nova nickel operation, and/ or the AngloGold Ashanti/IGO Tropicana gold operation. The September quarter is also when Rumble’s joint venture partner in the Paterson Province, AIC Mines, plans to begin a drilling campaign at the Lamil copper–gold project. It is a shallow target that shares geological similarities to Newcrest’s Telfer gold–copper mine, located 30 kilometres to the east. Rumble also plans to drill test its Munarra Gully project in the September quarter. It will be testing the large-scale Amaryllis Prospect. Drill testing of its Earaheedy zinc–lead–silver project is planned for the month of October.

Rumble Resources

Signi�icant High-Grade Gold System and Multiple Tier 1 Projects

Rumble Resources Limited is an Australian-based mineral exploration company with a clear strategy of organic growth via the generation of a pipeline of quality high-grade base and precious metal projects, critical review against stringent criteria, and complete systematic exploration targeting high-grade world class discoveries on multiple projects. Contact: Shane Sikora Phone: +61 (8) 6555 3980 info@rumbleresources.com.au

ASX: RTR

www.rumbleresources.com.au

GOLD

Rising to the challenge BY BAR RY FITZGER ALD

Excitement is building for Challenger Exploration at its flagship Hualilan gold project in north-west Argentina following the scale-boosting discovery of a bulktonnage porphyry system.

he July discovery boosts Hualilan’s big-time potential, as the porphyry system is, in addition to the high-grade skarn mineralisation, what the project area is known for, with an intermittent production dating back to the 1500s. The high-grade skarn mineralisation remains a priority target for Challenger, which expects to have an ASX-compliant

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resource estimate ready for release late this year. The resource estimate will represent an update of a 2003 historical estimate by a previous owner, along with confirming and extensional drilling work under Challenger’s ownership. About 600,000 ounces at a handy grade of 10 grams of gold per tonne equivalent is expected, making it a nearterm development opportunity in itself.

But it is the potential of the porphyry discovery – along with what could come from other porphyry targets in the area – that will carry Hualilan to multimillion ounce gold resource status that has Challenger buzzing. ‘All of a sudden, we’ve got this gold system in Argentina that we think is going to be quite big,’ Challenger Managing Director Kris Knauer told Australian Resources & Investment. ‘We are onto something that could be a multimillion ounce ore body.’ The porphyry target is one kilometre long and 100 metres wide, and openended at depth. It is located between the high-grade skarn mineralisation at Cerro Norte and Cerro Sur, and is now defined by intersections of 116 metres at 1.2 grams per tonne gold equivalent and 88 metres at one gram per tonne gold equivalent at either end. Announcing the discovery in July, Knauer said the new large-tonnage target is expected to substantially increase the scale of Hualilan. ‘We have just done some highresolution magnetics and there looks to be half a dozen other porphyry targets within a 25-square-kilometre area that we will be having a look at.’ Importantly, exploration drilling at Hualilan effectively targets both the highgrade and lower-grade/bulk-tonnage porphyry mineralisation at the same time. Because the high-grade wraps around the porphyry gold system, Challenger has to basically drill through one to get to the other. Challenger is fully funded for its highimpact drilling programs for the next two years at Hualilan, and at its El Guayabo/ Colorado V gold–copper exploration project in Ecuador’s El Oro Province, after a $20-million capital raising in July. As many as five rigs will be employed in a 45,000-metre drilling program at Hualilan. Along with a 5000-metre program at the Colorado V prospect, the news flow from the company in terms of exploration results will be particularly strong. ‘We’ve got our heads down and we are going hard. And now we’ve got the funds to do it,’ Knauer says.

Challenger Exploration Limited (ASX:CEL) 45,000 metre five rig drilling program underway at Challenger's Flagship Hualilan project The drill program aims to: • Extend the existing high-grade resource of 627,000 ounces at over 10 g/t gold¹ which remains open in all directions, with potential evidenced by recent results such as; drill hole GNDD-035, that extended the high-grade mineralisation 100 metres along strike with an intersection of 5.8 metres at 9.5 g/t gold, 29 g/t silver, 3.5 % zinc and; drill hole GDDD-020 which returned 8.3 metres at 17.7 g/t gold, 257 g/t silver, 0.3% zinc successfully extending mineralisation 45 metres down dip. • Follow up on the recent discovery of an underlying intrusion-hosted gold system where the first two holes returned 116m @ 1.2 g/t AuEq and 88m @ 1.0 g/t AuEq (hole ending in 1 g/t material).

HUALILAN GOLD PROJECT Argentina Earning 75%

• Locked up in a dispute for 15 years prior to Challenger • First drilling by Challenger includes: • 6.1m @ 34.6 g/t Au, 21.9 g/t Ag, 2.9% Zn • 10.3m @ 10.4 g/t Au, 28g/t Ag, 4.6% Zn • 5.8m @ 9.5 g/t Au, 29 g/t Ag, 5.6% Zn • 45,000m program designed to extend the existing mineralisation and support multiple resource upgrades • Mineralisation open in all directions with a recent discovery

Historical resource 627,000 oz Au at 13.7 g/t

ASX:CEL www.challengerex.com #1 - To ensure compliance with LR 5.12 please refer to the Company's ASX Release dated 25 February 2019. These estimates are foreign estimates and not reported in accordance with the JORC Code. A competent person has not done sufficient work to clarify the foreign estimates as a mineral resource in accordance with the JORC Code. It is uncertain that following evaluation and/or further exploration work that the foreign estimate will be able to be reported as a mineral resource. The company is not in possession of any new information or data relating to the foreign estimates that materially impact on the reliability of the estimates that materially impacts on the reliability of the estimates or CEL's ability to verify the foreign estimates estimate as minimal resources in accordance with Appendix 5A (JORC Code(. The company confirms that the supporting information provided in the initial market announcement on February 22 2019 continues to apply and is not materially changed. Source La Mancha Resources TSX Release 14 May 2003 ( Independent Report on Gold Resource Estimate.

COPPER

COPPER’S ROLLERCOASTER RIDE With the world economy facing prolonged uncertainty, copper has been under pressure. But this may be short lived, says Steve Freeth.

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AUSTRALIAN RESOURCES & INVESTMENT

ustralian copper miner Oz Minerals recently lifted its full-year copper production targets on the back of a solid half-year performance, helping to push its share price higher in the process. The robust announcement came at a time when copper prices hit a six-month high, having risen steadily on world markets as the full impact of the pandemic on copper supply and demand increasingly gains some, if not perfect, clarity. The Oz Minerals move is, however, a potent sign that copper may be about to see better times. When the pandemic hit at the start of the year, sending the world economy into a tailspin, copper suffered more than most as markets fretted over long-term demand. Six months later, copper’s prospects are picking up as COVID-19impacted supply – especially from Chile and Peru – and demand has picked up, most significantly in the world’s biggest copper market, China. A DISRUPTED WORLD The world is still in the worst downturn since the Great Depression according to the International Monetary Fund (IMF), with most countries facing steep falls in gross domestic product, failing businesses, lacklustre exports and huge unemployment. ‘Global output is projected to decline by 4.9 per cent in 2020, followed by a partial recovery, with growth at 5.4 per cent in 2021,’ the IMF said in a recent blog. The way forward also remains shrouded in uncertainty with the threat of second or even third and fourth virus waves, and that’s likely to keep copper markets volatile, says Fitch Solutions. The analyst firm recently cut back its projected global copper mine production by 2.5 per cent this year, but added mine production will ‘increase by an average annual rate of three per cent over 2020–29, with total output rising from 20.1 million tonnes to 27.7 million tonnes over the same period’. World consumption will also fall this year, the firm says, albeit only slightly by 0.3 per cent year on year as Fitch sees China’s recovery helping to bolster demand. But this sentiment was hedged by many unknowns. ‘On the flip side, an increase in COVID-19 cases leading to the closing down of economies could weigh down consumption growth further.’ All that uncertainty is clear from the varied predictions on demand. GlobalData says copper demand will grow at 2.7 per cent this year versus an earlier figure of 4.1 per cent ‘assuming that the outbreak is contained’, while Wood Mackenzie is upbeat on demand, but also on supply, predicting a ‘surplus market for the next couple of years’. Global growth is likely to be uneven, as well. The United States just suffered its worst economic quarter in nearly 75 years, but its recovery looks to have stalled due to the rampant spread of the first wave of COVID-19. Europe, on the other hand, has had some success at halting the pandemic, with Germany recently reporting drops in the number of unemployed and an expansion in factory production helping to lead a strengthening of investment and the euro. But all eyes are on China, especially when it comes to copper. The first country to fall victim to COVID-19, it’s been the first to rebound, with the country saying it grew by 3.2 per cent in the second quarter and is on track to post a full-year annual growth of 2.5 per cent.

Governments everywhere are spending to keep the economic pain at bay, of course, and China is no exception. Alongside launching special treasury bonds, lower lending rates and tax exemptions, it’s investing heavily in infrastructure like new roads, railways and subway lines – and the equipment to make them happen – to keep millions employed and spending. All that government stimulus is likely to have an outsized impact on copper demand, says the Eurasia Group, as it doubles down on investments that will drive up demand for the red metal, calling it ‘the age of copper’. The company sees demand for copper falling by as much as five per cent this year, but predicts that stimulus measures could push demand back to pre-pandemic levels next year. ‘Huge green and digital stimulus programs, especially in Asia and Europe, will create the conditions for a boom in copper demand – electric vehicles, 5G networks, and renewable power generation all require large amounts of the red metal,’ Eurasia Group’s Henning Gloystein said in a recent research note. WA L K T H E WA L K A smarter, cleaner world also has to start with mining, and the major companies now face pressure to lower emissions – a process that has started but remains uneven. McKinsey & Company says mining is responsible for 4–7 per cent of global greenhouse gas emissions when direct emissions from operations and indirect emissions from power generation are factored in. Australia could have the answer. A world-first study – Zero Emission Copper Mine of the Future – launched at the South Australian Copper To The World Conference in June and sets out how Australian copper mining can become emission-free over the next 30 years through the use of emerging technologies. Written by the University of Sydney’s Warren Centre for Advanced Engineering, and commissioned the International Copper Association Australia (ICAA), the study identifies five key target areas for technological innovation to reduce and ultimately eliminate mining emissions: exploration, movement of materials, ventilation, processing and water use. The report points out that achieving cutting-edge innovation and high-tech disruption will also depend on collaboration across five strategic levers: policy and programs, industry networks, capital enablers, future knowledge, and an open mindset. ‘The resources sector – and copper mining, in particular – faces big challenges: falling ore quality, fewer new deposits and much tougher licence-to-operate rules,’ John Fennell, ICAA CEO, says. ‘Mining hasn’t changed that radically in decades, but we need to start doing things differently.’ Ashley Brinson, Director of The Warren Centre for Advanced Engineer and one of the report’s authors, says that a zero-emissions copper mine will require fundamental changes in how energy is consumed, sourced and abated. ‘Moonshot-type thinking is needed to shape the aspirations and imagination of the industry towards adopting a zero-emissions approach,’ Brinson adds. Fennell says this is the first of three blueprints or horizon reports over three years designed to clarify the vision, establish viable technologies, create an innovation culture, and bring the industry together.

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COPPER

Standalone plant in the works for Peel Mining BY BAR RY FITZGER ALD

Peel Mining has started planning its transition to producer status after moving to full ownership of the Mallee Bull (copper) and May Day (gold–base metals) deposits in New South Wales’s southern Cobar Basin.

he move to full ownership of the deposits, after they were held in a 50:50 joint venture with CBH, cost $17 million, and was funded by a $10.5-million share placement and a $6.6-million (before costs) entitlement issue to shareholders. Peel Managing Director Rob Tyson says that the deal has been overwhelmingly supported by shareholders as it delivers the critical mass in terms of tonnage needed for the company to begin planning the development of a standalone treatment plant. ‘The sale agreement will be signed off in the next couple of weeks, and then our aim is to very much move towards production,’ Tyson says. ‘There is a fair bit of drilling that needs to be done, but I think that we are within 12–15 months of defining the critical mass needed for our own mill.’ The planning for a standalone plant brings together the full copper-rich Mallee Bull resource (6.8 million tonnes at

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2.6 per cent copper equivalent) with Peel’s wholly owned, zinc-rich Wagga Tank– Southern Nights resource (4.95 million tonnes at five per cent zinc, along with lead, silver, copper and gold credits). May Day is a less-advanced golddominant opportunity that has come into its own because of record Australian gold prices. It sits about midway between Mallee Bull and Wagga Tank–Southern Nights, with Peel planning a low-cost drilling program there to define an openpittable resource by December 2020. Tyson says that an initial eight-year combined mining operation could feed a central 1.2-million-tonnes-per-annum polymetallic treatment plant. ‘Wagga Tank–Southern Nights and Mallee Bull could each supply 40 per cent of the mill feed, with the opportunity for May Day to provide the remaining 20 per cent.’ Tyson says the move to 100 per cent of Mallee Bull/May Day after it spent eight years in the joint venture is best summed

up by it achieving three key Cs – control of the development timetable, critical mass for a standalone plant, and the increased copper exposure. ‘It transitions us from a zinc-dominant company to copper. And that resonates with investors and the broader market because of the shortage in the metal that is looming because of the uptake of electric vehicles.’ While development planning gets underway, Peel is also out to emulate the exploration success it has enjoyed in the Cobar region in recent years – most notably, the 2017 Southern Nights discovery near the mid-1970s Wagga Tank discovery. ‘We are out again with a drilling rig, and we are testing a greenfields prospect called Siegals, with cooperative drilling funding from the New South Wales Government,’ Tyson says. ‘Then we head down to Southern Nights, where, at the end of last year, we had our highest gold-rich intercepts.’

GROWING A SUBSTANTIAL BASE METALS BUSINESS IN THE WORLD-CLASS COBAR BASIN ASX: PEX www.peelmining.com.au

NICKEL

Elon Musk drives nickel higher BY ANTHONY FENSOM

‘Please mine more nickel,’ urges Tesla boss and billionaire Elon Musk.

he comment reignited interest in nickel, spurring an immediate 4.5 per cent rise in the price of the silvery-white metal. With Australia accounting for around a quarter of global nickel resources, miners will be hoping for a lithium-style boom to drive demand even higher. Musk reportedly made the comment in a Tesla earnings call in late July, when he responded to analyst queries about constraints on battery metals output. ‘I’d like to re-emphasise, any mining companies out there, please mine more nickel,’ Musk was quoted as saying. ‘Tesla will give you a giant contract for a long period of time if you mine nickel efficiently and in an environmentally sensitive way.’ Evidencing Musk’s influence, the nickel price on the London Metals Exchange on 7 August was trading at US$14,335 (A$20,027)

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per tonne, up nearly 30 per cent from its 2020 low of US$11,055 marked on 23 March at the height of the COVID-19 pandemic. Tesla has ramped up production in 2020, building a new battery and car factory in Texas, among other investments, while also becoming the world’s most valuable automaker. With two of the most common batteries, nickel cobalt aluminium and nickel manganese cobalt, using 80 per cent and 33 per cent of nickel respectively, the electric vehicle (EV) industry is a growing source of demand. ‘By 2030, we forecast nickel demand from the batteries sector to account for a little over 25 per cent of the total nickel market,’ Roskill nickel analyst Jack Anderson told Investing News Network. Roskill expects that primary nickel consumption will rise by 4.4 per cent per year over the next decade, as the EV revolution accelerates.

AUSTRALIAN RESOURCES & INVESTMENT

decline from the 6.7 per cent average expansion of the prior decade. By 2029, the consultancy sees global nickel production reaching 2.8 million tonnes, up from 2.1 million tonnes in 2020.

Some 8.5 million passenger EVs could be on the road by 2025, rising to 26 million by 2030 and 54 million by 2040, according to Bloomberg New Energy Finance. The World Bank also sees nickel demand rising to support clean energy targets. In its report entitled ‘Minerals for Climate Action: The Mineral Intensity of the Clean Energy Transition’, the bank sees nickel demand doubling by 2050. Energy storage is expected to account for 74 per cent, geothermal power for 16.5 per cent, and wind for 5.8 per cent, among other low-carbon technologies. ‘Nickel is a crucial metal for the move to a green energy future as it is needed in energy storage [and] for use in [lithium-ion] batteries, and is also used in a wide range of generation technologies, often being used as a component of the steel required,’ the report says. Other factors driving nickel demand include Indonesia’s export ban, which came into effect on 1 January – two years ahead of its original planned date. Jakarta banned exports while it attempts to build a complete nickel supply chain, from extraction and processing, to manufacturing EVs. The ban is expected to see global nickel ore production drop by 15.4 per cent year on year in 2020, despite rising output in the Philippines and steady production in other major producers, including Australia, Canada and Russia, according to Fitch Solutions. Another key factor is Chinese demand for stainless steel, the primary market for nickel, which could improve as the world’s second-largest economy boosts construction following the coronavirus pandemic. Longer term, Fitch Solutions sees global nickel production rising at an average annual rate of 1.7 per cent through to 2029, a sharp

E XPORT GROW TH New projects and expansions are expected to increase Australia’s nickel exports from an estimated 282,000 tonnes in fiscal 2020 to around 374,000 tonnes in fiscal 2022, according to the Office of the Chief Economist. Nickel export earnings are also seen rising on the back of increased export volumes and higher prices, reaching $6.8 billion in fiscal 2022, up from $4.3 billion in fiscal 2020, the government forecaster said in its June 2020 report ‘Resources and Energy Quarterly’. While nickel prices are seen averaging US$12,600 per tonne this year as the market moves into surplus, the price could reach US$15,100 per tonne by 2022 as consumption outpaces production. ‘Given its exposure to China’s stainless steel and EV production, there is wide consensus that nickel is one of the best-placed base metals to rebound as the world, and particularly China, starts to recover economically from the COVID-19 pandemic,’ the forecaster said. Australia’s rising mine production is expected to be supported by a number of new projects and restarts. In Western Australia, production at BHP’s Nickel West project is expanding in 2020, with the ramping up of First Quantum’s Ravensthorpe mine also lifting output. Other expanding projects include IGO’s Nova operation, Poseidon Nickel’s Black Swan project and Mincor’s nickel projects, including Cassini. Construction of a nickel sulphate plant also commenced at BHP’s Nickel West Kwinana Nickel Refinery, with the stage one operation expected to produce up to 100,000 tonnes per year of nickel sulphate. New discoveries have buoyed explorers, including Chalice Gold Mines’ discovery of high-grade nickel and copper at its Julimar project in Western Australia, which was followed by promising results at Cassini Resources’ nearby Yarawindah Brook project and a ‘significant and exciting discovery’ at Legend Mining’s Mawson prospect. Renewed investor interest has spurred increased merger and acquisition activity. This has included OZ Minerals acquiring Cassini Resources, its joint venture partner in the West Musgrave nickel–copper project, while BHP grew its Western Australian nickel holdings by buying tenements from Russia’s Norilsk Nickel. Australia’s nickel industry could get a further boost, with a government-backed report touting Western Australia’s potential to become a lithium-ion battery cathode manufacturer. The report proposed a precursor plant be built at CSIRO’s Waterford facilities, including using BHP Nickel West’s nickel sulphate pilot plant. ‘Nickel deficits [are] now a reality!’ Western Areas proclaimed in its August corporate presentation. And with billionaire Musk sparking interest in the sector, the positive momentum appears to be here to stay.

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NICKEL

Chasing big targets at depth BY BAR RY FITZGER ALD

A cashed-up St George Mining has set out to test for big deposits at depth in a new drilling program at its high-grade Mt Alexander nickel-copper sulphide project in Western Australia.

uided by results from magnetotelluric (MT) and audiomagnetotelluric (AMT) surveys, the drilling is testing conductive features identified at depth, with drilling starting at the Investigators discovery on the project’s Cathedrals Belt. John Prineas, St George Mining Executive Chairman, says that the drilling made for an exciting time for the company. ‘We have already discovered high-grade nickel-copper sulphides at shallow depths across more than 5.5 kilometres of the Cathedrals Belt. ‘But intrusive mineral systems will typically have significant mineralisation at depth,’ Prineas says. He says that the company’s challenge had been how to best target drilling to discover the potential deeper and bigger deposits. The MT and AMT survey work has provided the answer. ‘MT has given us the targets to focus on, rather than us drilling randomly,’ Prineas says. ‘So, we are going to drill those MT targets now, and the market is excited. If we hit mineralisation as we expect in one of the those targets, we will hopefully see the kind of re-rating that Chalice Gold Mines and Legend Mining have had in response to their Western Australian nickel discoveries,’ Prineas says. St George is comfortably funded for the drilling campaign after raising $3.6 million in a private placement in May 2020, and another $3.6 million from a shareholder purchase plan in June, taking its cash position to $9 million. The funding also enables St George to pursue a two-pronged strategy at Mt Alexander that involves chasing the prospect’s big-time potential at depth, while also pinning down a near-term development opportunity from the known shallow mineralisation. ‘We know we have a lot of high-grade nickel sulphide mineralisation in shallow discoveries. While they are not of huge scale, it is very good mineralisation, so we’re going to do a resource estimate for some of the shallow deposits,’ Prineas says. He says the maiden resource estimate could underpin an initial low-cost startup

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John Prineas at Mt Alexander with massive nickel-copper sulphide drill core from MAD152

mine, which could have strong profitability thanks to it being high-grade and the mix of metals. ‘It is something that we think we can do with very low capital expenditure,’ Prineas says. Despite being smallish, a startup mine could throw off a lot of cash. ‘Not only is the high-grade nickel mineralisation shallow, it comes with copper, cobalt and other metals,

including palladium and rhodium – both of which are trading at very high levels at the moment. So, we know we can get a lot of value for the mineralisation,’ Prineas says. About 4000 metres of the company’s current 13,000-metre drilling program is for shallow resource definition drilling, with the remainder chasing the big targets at depth.

ST GEORGE MINING

is making WA’s next big nickel discoveries

Mt Alexander Project: High Grade Nickel Copper Sulphide Discovery High grade nickel-copper-cobalt-PGE sulphide mineralisation commences 30m from surface

High impact drilling campaign underway Quality exploration team with track record of success in discovery of gold and massive nickel sulphide deposits Strong investor backing supports St George’s exploration model ST GEORGE MINING LIMITED | ACN 139 308 973

stgm.com.au

LITHIUM

Battery of the future BY M AHDOKHT SHAIBANI, NEW HOR IZONS R ESEARCH CENTR E, MONASH UNIVER SIT Y

Australia’s lithium could become the key to the future battery industry.

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AUSTRALIAN RESOURCES & INVESTMENT

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LITHIUM

S Mahdokht Shaibani (credit Reza Mortezaee)

ince 1991, the year of commercialisation of the lithium-ion (Li-ion) battery, scientists have continued trying to improve the performance of these widely used batteries or seeking alternative battery technologies. In the beginning, the urge was the unforeseen usage of Li-ion in personal electronics, such as mobile phones and music players, and then suddenly, the reconsidered thoughts of electrified transportation and smart grids made it substantial. Marked improvements in the performance metrics, cost-cutting and packaging of Li-ion gradually happened, but at some point the progress couldn’t keep up with the advancement in the transistor technology and the demand for green products, a call for a better battery. We are going to need a cheaper, greener battery that can store more energy and deliver it faster. The definition of a better battery in Australia arguably should lean more towards a greener and cheaper one. New clean energy sources and storage technologies that are efficient, cost-effective and reliable is an urgent priority to fight climate change in Australia, where sustained climate change could have drastic effects on not only the ecosystems, but also people’s lives. While Li-ion batteries seem like the obvious choice to store the energy of sunlight and wind, they are actually quite expensive for the

Theoretical specific energy of different battery technologies. Pb-acid, NiMH, and Li-ion are mass produced. Li-S and Li-air systems utilize lithium metal anode (credit Mahdokht Shaibani)

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energy they store, and there are ethical concerns around the sourcing of the materials required, such as cobalt. The use of low-emission technologies in transport is a major priority in Australia. Today’s batteries make up a significant portion of the total electric vehicle (EV) cost (33–57 per cent depending on the car). Moreover, if EV production reaches the levels required to meet global targets, in 2030 EV cobalt requirements could reach as high as 81 per cent of 2017 production, whereas industry insiders expect a severe shortage of cobalt starting in 2022. When it comes to the domestic uptake of renewable energy systems – while the addition of batteries actually reduces the payback period of a solar photovoltaic (PV) system – the average payback period of around 10 years in major Australian cities doesn’t make sense for most residents purely from an investment standpoint. Therefore, the switch to an alternative battery or the introduction of other commercially viable batteries is inevitable, and in the rich space beyond Li-ion battery, lithium-sulphur (Li-S) chemistry is foreseen to be the one to shine! L I T H I U M - S U L P H U R B AT T E R I E S : THE MOST PROMISING CHOICE FOR F U T U R E E N E R GY S T O R AG E S Y S T E M S The path towards cheaper, greener and more ethical batteries lies at the heart of designing electrodes that have comparable or superior performances to today’s electrodes but are inherently greener and have global material abundance. The Li-S battery, which uses extremely cheap and readily available sulphur as the positive electrode material and the ultra-high capacity lithium metal as the negative electrode, provides such a solution. While the ‘improved performance’ and ‘environment friendly’ boxes are addressed, the instability of sulphur cathode and lithium metal anode, which results in short-cycle life of the battery, has long intrigued researchers. Extensive research and considerable progress over the past 10 years have solved the instability issue of the sulphur cathode to a large extent. In 2010, the University of Waterloo carried out pioneering research in the area of composite sulphur cathodes and addressed the low-electrical conductivity challenge of the sulphur cathode. Later on, The University of Texas at Austin pioneered an area of research in introducing functional separators and interlayers to the configuration of Li-S cells, and addressed the issue of ‘polysulphide

AUSTRALIAN RESOURCES & INVESTMENT

shuttle’ to a large extent. Quite recently, our Monash University team addressed the stability challenge by introducing the expansion-tolerant architecture. The story, however, goes on (and will go on for a while!). With the introduction of practical design of highly stable sulphur cathodes, the focus is now on the more difficult electrode, lithium metal, as addressing it is predicted to ensure a rapid transition to commerciallevel life spans. After all, the highest energy density can be achieved by battery chemistries that utilise lithium metal as the anode, provided that a solution to the instability problem can be formulated. T H E R E T U R N O F L I T H I U M M E TA L? I T W O U L D B E R E VO L U T I O N A R Y Having the highest theoretical capacity (3860 mAh g–1) and lowest electrochemical potential make lithium metal the ultimate choice for the anode in a lithium battery. The lithium-metal battery is the immediate predecessor to today’s Li-ion battery. The concept was developed by M. Stanley Whittingham, the Exxon chemist of the 1970s and 2019’s Nobel Prize winner; however, it was soon found to be too unstable to attract a market. Lithium is highly reactive, tends to deposit in dendritic form, and its relative volume change is virtually infinite owing to its hostless nature. This leads to formidable challenges, such as safety and cyclability. In the late 1980s and after years of research, Moli Energy commercialised lithium metal batteries using a molybdenum disulphide (MoS2) cathode paired with excess lithium. This device could be cycled hundreds of times, and millions of cylindrical-type cells were sold to the market; however, recurrent accidents brought safety concerns to public attention, ultimately leading to the recall of all the cells. A very limited number of other companies continued the production of lithium-metal rechargeable batteries until Whittingham and other researchers removed the metallic lithium from the configuration of the battery, and used materials in the lithiated form as the cathode and graphite (372 mAh g−1) as the anode, allowing the lithium to intercalate and reduce its reactivity. That’s how the reliable, commercially viable Li-ion was born, and the commercialisation of high-energy-density lithium-metal batteries was halted. The story of lithium-metal anode deserves a better ending, though. Lithium metal is indispensable for the promising Li-S system (as well as lithium-air system), and a relentless drive for improved longevity is powering research on lithium-metal protection and novel designs of lithium-based anodes. In fact, it is well accepted that the introduction of Li-S battery to the marketplace without significant development on stabilising the lithium anode is unlikely. Several strategies are being investigated to improve the performance of lithium anodes; the highlights are the use of solid electrolyte, using stable hosts for lithium, interface engineering and electrolyte engineering. Among these, the use of lithiated silicon as a stable host for lithium may be the one to facilitate the revolutionary return, thanks to the large capacity of silicon to store lithium. The research on silicon-based anode, while

at its infancy for Li-S battery, has brought reasonable improvement in the performance of Li-ion battery. In 2016, Elon Musk of Tesla announced that adding silicon in Model S batteries increased the car’s driving range by six per cent. AC H I E V I N G T H E P R AC T I C A L U S E O F L I T H I U M M E TA L I N B AT T E R I E S W O U L D R E VO L U T I O N I S E AU S T R A L I A’ S L I T H I U M I N D U S T R Y It is estimated that the future Li-S system will cost four times less than the Li-ion battery, around $150 per kilowatt hour. Therefore, if commercialised, the projected low cost will make the Li-S battery the energy storage of choice for several applications – a call for more lithium. Australia’s resource sector is a significant contributor to the economy. By adding value where we have competitive advantage, we will optimise long-term economic, social and environmental benefits to the community. A 2018 resources and energy quarterly update from the Department of Industry, Innovation and Science Chief Economist Mark Cully confirmed that Australia has the potential to capture more wealth and jobs from its lithium sector by moving down the battery supply chain. The report showed Australian exports of spodumene ore, the precursor material to lithium, were expected to grow from $780 million in 2017 to $1.1 billion at $980 per tonne by 2020. Taken into account that Li-S battery uses at least twice more lithium than the current Li-ion batteries, if commercialised, the future battery will need to be connected to a supply chain from reliable and accessible sources, creating a market-pull for Australian Lithium. The main reason is that compared to Chile and Argentina, the advantageous location of Australia provides easy access for Asian electronics companies, which are the top global lithium consumers. A somewhat disheartening report published in late 2018 by the Commonwealth of Australia, represented by the Australian Trade and Investment Commission (Austrade), reveals that Australia currently earns only 0.53 per cent of the ultimate value of its exported ore (A$1.13 billion) while 99.5 per cent (of an estimated A$213 billion) of the value of Australian lithium ore is added in overseas. Dr Amir Razmjou of the University of New South Wales believes that Australia needs to take action on this narrow window of opportunity and move towards advanced direct lithium extraction technologies such as Li-ion–selective nanostructured membranes. In early 2020, a team of researchers from Monash University (Associate Professor Matthew Hill and Professor Huanting Wang), CSIRO, the University of Melbourne and the University of Texas at Austin developed a new filtering technology to extract lithium ions from brine, which is reported to be revolutionary. Arguably, the successful fabrication and implementation of lithium metal–based batteries including the promising Li-S system in large-scale applications should help to grow our economy and create Australian jobs. It will also help to provide Australians with a cleaner and more reliable energy market.

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LITHIUM

Galan Lithium is earning its stripes BY BAR RY FITZGER ALD

High-grade and low-impurity resource base a major advance for Galan Lithium.

alan Lithium Ltd has moved its highgrade Hombre Muerto West (HMW) project into the development stage after solidifying the exceptional credentials of its lithium brine resource. The HMW project is located within one of the world’s greatest lithium project clusters, Salar del Hombre Muerto in Argentina. ‘Not only do we have good grade, we have the size, and we are changing gears now,’ Galan Managing Director Juan Pablo Vargas de la Vega says. ‘We are no longer explorers; we are now a developer, and, don’t forget, we have more exploration upside as we have not drilled all our tenements at HMW.’ HMW covers the western margin of the Hombre Muerto salt flat, high in the Andes and 1300 kilometres north-west of Buenos Aires. It has the long-established operations of US lithium major Livent Corporation as its neighbour to the east. HMW began to earn its stripes as a major lithium development candidate in March 2020, when Galan delivered a maiden Inferred Resource of 1.1 million tonnes of lithium carbon equivalent at 946 milligrams per litre of lithium, which was upgraded to an Indicated Resource of 1.37 million tonnes at 946 milligrams per litre of lithium in June 2020. Vargas de la Vega says the increase in the high-grade and low-impurity resource (which does not include Galan’s Candelas lithium resource at Hombre Muerto) was a ‘major advance for the project’s economic and technical potential’. ‘We are doing what we said we would be doing – delivering our milestones, and [doing so] on time,’ he says. Another milestone will be achieved in the last quarter of 2020 with the expected completion of a preliminary economic assessment (PEA) into the potential development of HMW. In late July, Galan announced that the work would be undertaken by an engineering group, who are experts in the field. Vargas de la Vega says, ‘Having proved up a combined 2.1 million tonnes of high-grade/low-impurity resource base across HMW and Candelas, our next step is to mature the project by economically assessing the strength of HMW’s push towards the production of lithium carbonate’.

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The move into the PEA phase comes less than 18 months after Galan drilled its first exploration hole in Argentina. Vargas de la Vega says that the current tough lithium market conditions have created opportunities for Galan, including being able to secure the services of a renowned engineering group. ‘At the completion of the PEA, we aim to have a high-level blueprint to production produced by a company with one of the most experienced lithium brine project teams in the world. The current

data is indicating the potential for a competitive project with low opex and capex. We are now preparing samples of our brine to be sent to a lab once transport permits are available’. He expects the current lithium market oversupply to start showing signs of depletion in less than 12 months, saying that Galan is maturing HMW for when the market turns around. ‘The lithium boom is coming, and the COVID-19 pandemic is proving to be something of an inflection point for the push into electric vehicles.’

HOMBRE MUERTO PROJECT Placed among the best in Argentina Galan Lithium Investment Foundations 

WORLD CLASS LOCATION:

quality neighbouring projects with proven high grade, low impurity settings

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LOW CARBON FOOTPRINT:

lowest energy intensity process identified to produce EV Lithium Carbonate

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RIGHT PERSONNEL:

experienced Board and in-country team

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ACCESS TO WATER:

low grade suitable for reverse osmosis

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GRADE IS KING:

Hombre Muerto West (HMW) with 1.37Mt LCE at 946mg/l Li

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BASE FOR PRODUCTION:

total inventory of 2.06Mt LCE at 826mg/l Li

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POSCO TRANSACTION:

US$280m for 2.54Mt LCE at 732mg/l Li, from Galaxy Resources, Hombre Muerto

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SHARE REGISTER:

includes Luxembourg green energy fund, Thematica. GLN management hold 27%

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SCOPING AND PFS:

PEA undertaken by engineering group experts in the field – Est. Q4 2020

Below: Pata Pila drilling at the Hombre Muerto West project

ASX: GLN

www.galanlithium.com.au admin@galanlithium.com.au

@galanlithium

LITHIUM

ENERGISING A GREENER FUTURE BY ANTHONY FENSOM

Australia’s battery metals have become a strategic asset as major economies seek a cleaner energy future post-COVID-19.

T Brett Lynch

Steve Promnitz

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his is a message that has started resonating with miners, too, as the global electric vehicle (EV) revolution accelerates, highlighted by Tesla becoming the world’s most valuable automaker. The changing sentiment has been highlighted by an uptick in listed lithium miners’ market valuations, despite the coronavirus pandemic. ‘Sentiment has turned a corner, with analysts pointing to a growing supply deficit emerging on the back of automakers’ EV plans, and the enormous “green” investments announced by governments in Europe and Asia,’ says Sayona Mining’s Managing Director, Brett Lynch. ‘New lithium projects will be essential to support this increasing demand, and Australian miners have shown their ability to deliver wherever they operate.’ In July, US EV maker Tesla overtook Japan’s Toyota Motor to become the world’s most valuable automaker, with its market value exceeding US$200 billion. This was despite Toyota selling around 30 times more cars last year and with revenues 10 times greater. Roskill analyst Jose Lazuen comments, ‘Would investors put their money into companies that invest into a clean and electrified future, or in maintaining a status quo that will eventually be swept away by regulators?’ Roskill expects manufacturing capacity to reach nearly three million plug-in vehicles by 2022, including not only Tesla vehicles, but those from General Motors, Toyota, Volkswagen and others.

While passenger EV sales are expected to decline in 2020 to 1.7 million compared to last year’s 2.1 million, Bloomberg New Energy Finance sees sales reaching 8.5 million by 2025, 26 million by 2030, and 54 million by 2040. EUROPE AN INVESTMENTS Europe has been leading the charge, eclipsing China in its EV investments and unveiling a €750-billion (A$1.2 trillion) economic recovery plan focused on clean energy. The continent has seen rapid growth in its planned lithium-ion battery production capacity, with its global share expected to reach nearly 15 per cent by 2024, overtaking the United States and Asia (excluding China). The European Union’s internal market commissioner, Thierry Breton, says the grouping would need ‘60 times more lithium by 2050’ to meet its climate goals. France, Germany, Italy and the United Kingdom have all recently announced plans to incentivise EV production, including increased vehicle subsidies and charging stations. Battery ‘gigafactories’ are also being rolled out across Europe to support the industry’s growth. Analysts Benchmark Mineral Intelligence (BMI) have estimated that 158 EV battery gigafactories are in the pipeline through to 2030, more than double the 67 currently in operation, with July showing the largest increase to date.

AUSTRALIAN RESOURCES & INVESTMENT

BMI expects the industry will need two million tonnes of lithium carbonate equivalent (LCE) by 2028, a significant rise from the estimated 300,000 tonnes produced in 2019. Both the International Energy Agency and World Bank have urged increased production of battery minerals, including lithium, cobalt and rare earths, to support clean energy targets. According to the World Bank, production of graphite, lithium and cobalt may need to expand by more than 450 per cent by 2050 (compared to 2018 levels) to meet demand from energy storage technologies. While the demand forecasts continue to rise, shelved expansion plans have crimped output. A lack of battery-grade lithium supply is a particularly urgent issue for EV makers. ‘If every EV company took their 2023 plans and went to the lithium market today, they’d probably only get about 15 per cent of their needed supply of lithium,’ Paul Graves, Chief Executive of lithium producer Livent Corp, told Reuters. AU S T R A L I A’ S O P P O R T U N I T Y Critical minerals, such as lithium, cobalt, manganese and rare earths, offer Australia a number of opportunities, including supporting the post-pandemic recovery, diversifying commodity exports and contributing to global renewable energy, according to a 28 July report by ANZ Research. ‘The renewable energy transition relies on critical minerals as components in wind turbines, solar panels, energy storage, electric vehicles and charging infrastructure. As countries work towards their emissions reduction targets, demand for these minerals is set to rise exponentially over the longer term,’ the report said. The report noted that Australia is the largest producer of lithium and rutile, and is one of the top three producers of manganese, ilmenite and rare earths, with significant global reserves of these minerals, as well as tantalum, cobalt and vanadium.

In 2019, Australia produced 55 per cent of the world’s lithium (mostly as spodumene concentrate), becoming the biggest exporter with production of 208,000 tonnes of LCE, according to the Office of the Chief Economist. G L O B A L I M PAC T Australian miners are also making an impact on the global stage. In Argentina, Lake Resources plans to transform the lithium brine industry with a sustainable, direct extraction technology developed by its US technology partner, Lilac Solutions. Lilac’s pilot plant module in California has successfully produced a 99.9 per cent purity lithium carbonate using its ion exchange process. ‘The Lilac process offers a sustainable solution since it avoids any mining, with virtually all the water (brine) reinjected into the aquifer. This is a far better outcome for local communities and the environment,’ says Lake’s Managing Director, Steve Promnitz. ‘Tier 1 EV and battery makers are increasingly seeking responsibly sourced materials in their supply chain, and this, together with the product quality, is driving demand for our high-purity lithium.’ Meanwhile in Canada, Sayona’s Lynch envisages developing a lithium hub in Quebec centred on its flagship Authier project, seeking to supply the North American battery market, including Tesla. In addition, the Australian company is bidding for North American Lithium, which has an established mine and concentrator. It aims to become a world-scale producer by combining North American Lithium with its nearby Authier and emerging Tansim projects. ‘The opportunity is enormous for Quebec, which is the most economical, strategic and green supplier of lithium to the United States,’ Lynch says. ‘We look forward to bringing Australian know-how to help cement Quebec’s position as a leader in this industry of the 21st century.’ With such ambitious plans, Australia’s place in the global clean energy revolution appears assured.

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P O TA S H

Reaping the rewards BY BAR RY FITZGER ALD

Reward Minerals is cranking up development planning for its Lake Disappointment sulphate of potash project in Western Australia’s Little Sandy Desert after concluding the environmental approvals process.

breakthrough in the lengthy process came in the June quarter when Western Australia state approval was achieved, with the Commonwealth’s environmental clearance of the large-scale fertiliser project expected to follow. Reward’s CEO Greg Cochran told Australian Resources & Investment that now that the ‘environmental process is pretty much done and dusted, it’s time to turn the taps back on by delivering a really solid definitive feasibility study (DFS)’. ‘The building blocks that contribute to a DFS, I would argue, are pretty much already in place. We have a resource at Lake Disappointment that is truly intergenerational. It is a project that could be going for decades and decades to come,’ Cochran says. Earlier studies outlined a project based on what is Australia’s biggest high-grade sulphate of potash brine deposit, capable of producing at least 400,000 tonnes per

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annum of sulphate of potash for more than 25 years at an all-in sustaining cost of A$376 per tonne (free on board Port Hedland) compared with a US$500 per tonne sales price assumption. Despite the robust economics, Reward took the decision to slow down development planning pending the receipt of environmental approvals. ‘It has taken us a long time to get to this point, but shortly we will have both Commonwealth and state environmental approval, and then it is genuinely game on,’ Cochran says. Before pushing the button on a DFS, Reward first plans to complete a resource update, conduct final metallurgical trials, and pin down civil engineering plans. ‘The resource update will generate data on volumes and grade over the life of the operation, which will allow us to accurately model the production rate and the cost,’ Cochran says. He also hinted that the DFS could contain some positive surprises.

‘The run towards the end of 2020 is going to be quite exciting. While we slowed down our project efforts ahead of the environmental approvals, we didn’t stop thinking about various smart ways to do things differently, which we hope will feed into the DFS.’ The new momentum for the project means that Reward will also step up its engagement with potential partners for the project. Cochran says that there were three types of potential partners – a private equity–type of investor, existing players in the industry, and diversified companies interested in moving into the industry. He says talks with potential partners have been limited ahead of the environmental approvals and previous uncertainty around the timing of the DFS. ‘We are still engaging with a number of companies, and now that we are approaching the finish line, we are escalating our efforts to engage more formally with those companies.’

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