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Morning News Bites – October 19

Changes at the Top for Resolute Management.

The Board of Directors of Resolute Mining (RSG) have advised that, after five years with the Company as Managing Director and CEO, Mr John Welborn has stepped down from the role.

Resolute Chief Financial Officer, Mr Stuart Gale, has been appointed as Interim Chief Executive Officer while an executive search process is undertaken. Mr Gale will be well supported by Resolute’s executive team and the Board.

Resolute Chairman Martin Botha said: “John has worked hard to reposition and transform the business over the past five years, and the time is right to introduce a new CEO to take Resolute forward, to deliver improvement in operational outcomes and resilience, and to deliver the next phase of sustainable value for the company.

“Under his leadership, Resolute has been active corporately to build its mining profile and dual-list on the London Stock Exchange. On behalf of the Board I would like to thank him for his valuable contribution and wish him well in his future endeavours.”

Interim CEO Stuart Gale joined Resolute as Chief Financial Officer in January 2020, having previously held senior executive positions at Fortescue Metals Group Limited and Wesfarmers.

The Board is commencing a comprehensive process to recruit a new CEO with the skills and industry experience to lead the executive team and deliver on Resolute’s strategy.

Legends Releases Quarterly Report

In its quarterly report Legend (LEG) says it has completed its busiest ever quarter of field activities at the Rockford project with diamond, RC and aircore drilling ongoing and geophysics and assay reporting playing catch up. There has been further success, with massive nickel copper intercepts in diamond holes 23 and 27 along with broader zones of nickel copper sulphide mineralisation.

The quality and scale of Rockford has been highlighted by the development of the Mawson 3D gravity model (with mag inversion, geochemistry and structural inputs) along with the regional MLTEM success at Hurley.

Legend’s Rockford Project is located in the highly prospective Fraser Range district of Western Australia and considered prospective for mineralisation styles including magmatic nickel-copper, VMS zinc-copper-silver and structurally controlled gold.

The Rockford Project comprises 14 contiguous granted exploration licences covering a total area of 3,088 square kilometres.

Exploration activities completed during the September 2020 Quarter at Rockford focussed on the Mawson prospect and included: diamond drilling, RC drilling, downhole electromagnetic (DHTEM) surveying, structural and lithogeochemical studies, and geophysical inversion modelling. Moving loop electromagnetic (MLTEM) surveying and modelling was also undertaken at the Hurley, Crean, and Worsley prospects at Rockford South.

Galena Mining Report High Grades at Abra Project.

Galena Mining (G1A) today announced the first assay results from the substantial ongoing drilling program at Abra Base Metals Project.

Managing Director, Alex Molyneux commented, “We’re astounded at the success of hole AB147 in targeting a potential ‘metal rich’ combination of grade and thickness on the northern part of the eastern limb of Abra’s Indicated Resource area, which is shallow and close to the current plan for early decline infrastructure.  We have added a number of follow-up holes around AB147 to the drilling program with the intention to bring this area into the early years of the mine plan as an optimisation.”

25 diamond core drill-holes (AB144 to AB168) for 10,646 cumulative linear metres of the 2020 Abra Drilling Program have been completed so far.  Albeit, this release only includes assays from the first five holes due to the slow progress in receiving assays.

The program was initially planned to consist of approximately 15,000 metres to 18,000 metres of drilling, with three objectives: lead-silver orebody infill; drilling into selected prospective ‘metal rich’ zones for potential life of mine plan optimisation; and gold-copper exploration.  The holes completed to date have been targeting the first two objectives, with the plan to address the third objective later in the program.

There are now three drill-rigs operating at Abra with the capacity to drill a cumulative 1,400-1,800 metres per week. Assays have taken some time because drilling initially commenced with one drill-rig only and it took some weeks to ramp-up to three rigs due to drill-rig availability.  Assays have also been slower to be received than for past programs due to capacity issues with sample logistics operators and lab backlogs.

Assays for five drill-holes (AB144 to AB148) are being reported in this announcement and assays for 20 completed holes remain pending.

Gascoyne Resources Pleased with Latest Drill Results.

Gascoyne Resources Limited (GCY) has released what it says are excellent results from the recently completed resource definition RC drilling at the Sly Fox, Gilbeys and Plymouth deposits at the Dalgaranga Gold Project near Mt Magnet, WA.

A 9-hole RC drill program targeting the down dip potential of the Gilbeys, Sly Fox, and Plymouth deposits was completed in September. Assay results have now been received for 8 of the 9 holes.

Gascoyne Resources CEO, Mr Richard Hay, commented “The success of this short drill program highlights that with further infill and extensional drilling, the strong potential for material additions to Mineral Resources and Ore Reserves, and with further drilling success, could lead to significant increases to mine life at Gascoyne’s flagship Dalgaranga operation.”

Four RC holes were completed targeting the Gilbey’s Main Zone below the southern end of the Gilbey’s 2020 Life of Mine pit design. These holes were designed to intersect below the previous drill hole program completed in April 2020.

Assay results from Gilbeys have now been returned from 3 drill holes (with the results of the fourth hole pending) which include the standout intersection of 11m @ 4.2 g/t Au from 227m including 6m @ 7.3 g/t Au.

At Sly Fox, four RC holes were completed targeting potential high grade zones between the base of the open pit and the historical intersection of 40m @ 2.0g/t Au. Drilling returned excellent broad high-grade intersections in 3 holes, of 26m @ 1.8 g/t Au from 184m including 13m @ 3.0 g/t Au, 21m @ 1.2 g/t Au from 198m and 19m @ 1.4 g/t Au from 175m. These drill results indicate a SW orientated plunging high grade shoot that remains open at depth and along strike.

A single RC hole was completed at the Plymouth deposit. Drilling targeted down dip extensions returning a strong gold intersection of 20m @ 2.6 g/t Au from 150m including 13m @ 3.8 g/t Au. The location of the intersection is 50m below the nearest drill hole. Plymouth remains open in all directions with grades increasing at depth. Due to Plymouth’s close proximity to the Sly Fox open pit.

Kalamazoo Resources Release Exploration Update.

Kalamazoo Resources Limited (KZR) released an update to the market on significant exploration progress made at its Victorian Goldfield Projects, as a result of a concerted campaign of regional and infill surface geochemistry programs, detailed field mapping, 3D structural modelling and drill program design and planning.

The outcome of these recent work programs is the commencement on 1st October 2020 of a minimum 2,700m (up to 4,000m) diamond drilling program at the Lightning Prospect within the Castlemaine Gold Project. A further ~7,000m RC drilling program is planned for the South Muckleford Gold Project which is currently awaiting final approval.

Kalamazoo’s Chairman and CEO Luke Reinehr said, “We are extremely pleased to have commenced our next Victorian drilling campaign at the Castlemaine Gold Project, with drilling to then move to our South Muckleford Gold Project soon after. We are fortunate that our project areas are located within incredibly rich historical goldfields which contain a combined past production of almost 8Moz of gold. Our strategy from the outset has been to utilise technologies and innovations previously not used on these projects to better assist us in our search for the next world class discovery in the Bendigo Zone and whilst these programs are extensive, we are confident they will assist us in identifying exploration targets with the potential to contain high grade gold resources.”

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Today’s Top Story – When Will The WA Bubble Burst?

Who would have thought six months ago that the words “travel bubble” would have been used so prolifically, yet alone anyone even thinking of it?  Yet here we are talking about it, hoping that these bubbles will open up between states and glory be internationally.

Western Australia has lived within its own bubble since almost the beginning of the Covid19 living regime.  Early on in this timeline the state was split into regions with travel restricted to within each region only, unless an exemption was given.  And exemptions weren’t given out easily as the government was determined to contain the virus.  Eventually those travel restrictions were lifted except for some remote communities and people were free to move around the state.

But restrictions still apply for people trying to enter the state and an exemption must be granted.  If, however you have been in Victoria you must have a more valid reason than just wanting to visit.

The travel restrictions in WA have had a significant affect on FIFO operations and workers.  Companies have started to employ people only living in WA and some have encouraged their interstate FIFO workforce to consider relocating to WA to avoid quarantining when returning home.  Decisions like this cannot be taken lightly and peoples’ livelihoods are being affected the longer it goes on.  Some people will be suffering economic losses for years to come – let alone the mental anguish that comes with it.

Conversely, those workers who travel from WA to other states for FIFO work are spending most of their time back home in self isolation, which for most of them means having no social interaction until the restrictions are lifted.  Some people have likened it to house arrest, and it is likely to stay in place until mid-next year if the premier sticks to his guns.

Not mining related, but WA people are now exploring more of their own state rather than taking cheap international holidays or flitting over east for a Gold Coast fix or to watch their favourite football team.

It is this writer’s opinion that some borders should be opened up without the onerous restrictions that are still in place even when coming from the Northern Territory or South Australia.  Their Covid19 transmission rate is the same as WAs, which makes them ideal jurisdictions to have free travel with.  All their recent cases have been from returning overseas travelers, the same reason for all the cases currently in WA.

Speaking of overseas, there is now talk from the federal government to looking at travel bubbles between some international locations.  New Zealand is an obvious location to allow this to happen and obviously places the likes of Brazil, USA and England would not be contemplated at the moment.  Other places that are up for consideration are Singapore, South Korea and Japan who all seem to have their Covid19 response well in hand.

But what the federal government wants and what the state and territory leaders allow could be two different things.  A staged process of opening up Australia to other nations needs to be considered now, otherwise restrictions good last for years if a vaccine is not found.

More businesses will flounder the longer restrictions are kept in place, whether that be interstate or international travel.  NSW, ACT and NT are opening their borders to New Zealand as of today, which is a positive step for those jurisdictions.

Australia is the lucky country, there is no mistaking that, but let’s not turn it into a basket case – let’s look for innovative ways we can open the borders.

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Morning News Bites – October 16

Carnaby Starts Drilling in Mallina, Pilbara.

Following our mention of De Grey Mining’s Hemi project in the Mallina Basin we follow up with this announcement by Carnaby Resources (CNB) of a 400-hole, 8,500 m aircore drilling program at its 100% owned Strelley project in the Mallina Basin, Pilbara of Western Australia.

The initial aircore drilling program will be completed on a nominal 320 x 80 m spacing across several priority targets including the Palisade target where a 300-500m wide bottom of hole gold anomaly is open in all directions.

Results from the aircore drilling will be prioritised and will be immediately followed up by a second drill rig which will initiate a 3,500 m RC program, for deeper drill testing of the high priority targets starting in mid-November 2020.

Carnaby has also locked in a 3rd RC / Diamond drill rig to commence diamond drilling targeting the highly prospective Tick Hill North offset target in Qld coupled with an RC program targeting the direct extension of the Tick Hill main lode into the northern wall of the historical open pit. The Tick Hill drilling is expected to commence in mid-November 2020.

The Company’s Managing Director, Rob Watkins commented:   “We look forward with high anticipation to completing the maiden Carnaby drilling programs at Strelley in the Mallina Basin of the Pilbara and homing in on the extension of high-grade Tick Hill gold deposit in Queensland, both of which have the potential to produce company transforming results”

Blackstone Minerals Releases Scoping Study.

A scoping study was released by Blackstone Minerals (BSX) for their Ta Khoa nickel project in Vietnam.  The Australian based company is bullish the project will deliver great outcomes for the company.  The key points to come from the study are:

Maiden Ban Phuc DSS indicated resource of 44.3Mt @ 0.52% Ni for 229kt Ni and Inferred Mineral Resource of 14.3Mt @ 0.35% Ni for 50kt Ni;

Annual production of 12.7ktpa Ni over 8.5-year project life; Gross Revenue of US$3.27 billion;

Net pre-tax cashflow of US$1.2 billion; Pre-tax cashflow of US$176mpa;

Pre‐tax NPV8% of US$665m and 45% IRR; www.blackstoneminerals.com.au

Capital Payback Period of 2.5 years;

Economically robust nickel sulphide project able to produce downstream nickel: cobalt: manganese (NCM) Precursor products for the Lithium-ion battery industry;

Downstream processing utilises existing well-tested technology;

Blackstone’s downstream NCM Precursor product significantly improves the pay ability of nickel, from ~70-80% to ~125-135% of LME metal prices;

Upside opportunities include staged capex, by-product credits (including copper, gold, platinum, palladium and rhodium), King Cobra Discovery Zone (KCZ), Ban Chang, Ta Cuong and 25 untested massive sulphide vein (MSV) targets.

SO4, Lake Way Project continues on schedule

SO4 (SO4) released an update to the market about its Lake Way project and the key points to date.  The site construction of the plant is running to schedule.  The process plant site concrete foundations poured by Flanco are 97% complete, installation of structural steel supplied by Metro Steel has commenced and first carbon steel tanks have been installed by Proweld.

The long lead procurement items have commenced arriving on site including the Veolia crystallisers with associated components and tanks, and transformers from Wilson.

The permanent village, construction village, warehouse, workshop, administration, reagents, laboratory, ablutions and crib rooms have all been completed and 4G communications has been installed across site.

The development of On-Lake infrastructure continues to progress. Work commenced on the fourth pond train and 62km of trenches have now been completed. The Paleochannel drilling programme continues with the seventh bore completed. All bores have intercepted basal sands in line with the model prediction.

With finance in place the project is expected to continue on schedule with production of the first sulphate of Potash in the 2021 March quarter.

Rio Tinto Release 3rd Quarter Production Results.

Some key points to come from Rio Tinto’s (RIO) 3rd quarter production results are:

All Injury Frequency Rate (AIFR) of 0.35 has improved through 2020 versus 2019 (0.42). They have successfully adapted their assets and offices to the new operating conditions associated with COVID-19 and continue to closely manage this risk to protect our people and communities.

Pilbara operations are returning to more normal operating conditions with rosters back to pre-COVID-19 settings although controls to protect their employees, contractors and communities remain in place. Total material moved was a record for the quarter with Pilbara iron ore production of 86.4 million tonnes (100% basis), 1% lower than the third quarter of 2019. A recovery in planned maintenance activity in the port led to 5% lower shipments.

Aluminium production of 0.8 million tonnes in the third quarter was 1% higher than the third quarter of 2019 with stable operations across our smelter portfolio.

Third quarter mined copper was 18% lower than the same period of 2019 due to lower grade at Kennecott as a result of pit sequencing to accommodate the extended smelter shutdown. Refined copper was 57% lower, primarily due to delays in restarting the Kennecott smelter.

Rio Tinto Chief Executive J-S Jacques said “We have delivered a good operational performance across most of our assets catching up on planned maintenance activity, particularly in iron ore, and continuing to adapt to new operating conditions as we learn to live with COVID-19. We have maintained our capex guidance and our 2020 production guidance across our key products.

Emeco Repays 2022 Notes

Emeco has announce it has repaid US$142 million, representing 100% of the 31 March 2022 notes outstanding.

The repayment of the 2022 Notes was funded from the net proceeds of the recently completed underwritten A$149 million pro rata entitlement offer and existing cash on hand. The note repayment will reduce annual interest costs by $19 million per year.

As previously announced, Emeco recently completed the refinancing of US$180 million (A$247 million3) of the 2022 Notes, replacing them with notes with an extended maturity date of 31 March 2024 (2024 Notes).

The completion of the refinancing and repayment of the 2022 Notes activates an option for Emeco to extend the maturity of its $97 million revolving credit facility to September 2023. This secures the long-term liquidity of the Company.

Emeco Managing Director and CEO, Mr Ian Testrow, commented: “We are pleased to complete the package of initiatives that provide Emeco with the strongest balance sheet in our history as a public company with net leverage of 0.9×1. We are excited to now be in a position to have the flexibility to implement a complete capital allocation framework, including distributions to shareholders in the future, as appropriate.”

Mr Testrow, continued: “With longer tenor on significantly reduced total debt and lower interest expense, we are set to generate strong free cash flow in the years ahead. This allows the Emeco team to fully focus on running the business and continue our evolution to becoming a leading mining services solutions provider.”

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Tonight’s Top Story – Diggers Wrap Up, Award Winners and A Night To Remember.

Once again Diggers and Dealers is done and dusted and all that is left to do is shake off the hangover, process all the information that has spewed out and look forward to next year’s event.  This year Diggers nearly didn’t go ahead but the owners took a leap of faith and pencilled in the October dates and then worked their butts off to ensure it happened.  Congratulations to the organisers for bringing together a wonderful three days of presentations, displays and functions.

For me a couple of the outstanding presentations were from Mincor and De Grey who outlined really exciting projects that they are involved in.  They are two companies that people should keep an eye on as the projects advance.  That is not to say that all the other presentations weren’t good.  Quite the contrary as the quality of the presentations this year was high.

This year the forum seemed to have an extra buzz about it as people are very bullish on the mining sector at the moment.  The locals in Kalgoorlie Boulder are expressing more confidence in the sector as well and town is really humming at the moment.  There are many projects in the pipeline that the local council is working hard on and this is on the back of Lynas starting construction of their processing plant on the outskirts of the city.  If they all come to fruition Kalgoorlie and surrounds is in for a huge lift.

At the end of every Diggers they have a gala night and awards are presented in different categories.  The winners of this year’s awards are:

The prestigious GJ Stokes Memorial Award went to Ms Gina Rinehart.  The award is in honour of Geoffrey Stokes who started the forum in 1992, with 150 delegates.  Sadly, Geoffrey passed away in 1997 at an early age but his legacy lives on and also recognised in the naming of the award.  As an aside, on Thursday morning after Diggers, the City of Kalgoorlie Boulder laid a plaque in Hannan Street outside the Palace Hotel, the original home of Diggers, as part of their Walk of Fame program.

Ms Rinehart is the first women to receive the award, which is made to someone who has made an exceptional lifetime contribution to the mining industry.  Ms Rinehart took over the Hancock company in the same year Diggers started and has steered the company to be the behemoth it is now.  Her astute business acumen has seen her increase her privately owned assets immensely but has also allowed her to do successful joint venture projects that have increased the value of the company.

Another of the awards, Dealer of the Year, seemed to be a no brainer and was not a surprise when dual winners, Raleigh Finlayson’s Saracen Mineral and Bill Beament’s Northern Star, were announced.  This comes off the back of their respective companies each buying 50% of the famous Kalgoorlie Superpit within a month of each other earlier this year.  The purchase was a great boon to the local community and has instilled new confidence in the sector in the region.  Add to that their yet to be approved $16B merger and these companies have really set the pace in 2020.  They are both young and energetic, which augers well for the new merged company.

Ramelius Resources took out the Digger of the Year award after announcing a 420% increase in net profit.  This came from its operations in the mid-west around Mt Magnet, the Vivien Project near Agnew and in the Westonia Green belt, the Edna May mine.  Producing 230,00koz last financial year it was a great year for the diggers.

Exciting explorer De Grey Mining won the emerging company award for its work in the Pilbara and the discovery of the Hemi project.

Other awards were presented to Dominic Piper in the media category and Georgia Kerr who was presented with the Ray Finlayson prize for Leadership and Academic Excellence.

Congratulations to all the award winners and a big thanks to Myles Ertzen, Sharon Giorgetta and their team at Diggers for once again putting on a great forum and showcasing the great city of Kalgoorlie Boulder.

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Morning News Bites – October 15

De Grey Mining Presents Hemi Discovery at Diggers.

Glenn Jardine, the Managing Director of De Grey Mining, presented to the Diggers and Dealers forum on Wednesday and gave an update on the Hemi project in the Malina Gold Province situated in the Pilbara.

The first thing Glenn mentioned was the similarity of the geological settings between the Yilgarn in the south of the state to the Malina Province in the Pilbara where the Hemi discovery has been made.  He noted that the discovery is not only transformational to the Pilbara but its importance to the company in the future.

The Hemi system spans ~3,000 metres North–South and ~2,000 metres East–West consisting of four main deposits being the Aquila, Brolga, Crow and Falcon.  Currently there are six drill rigs on site to hopefully prove up more resources.  Glenn showed a video set to the soundtrack “You have to have Faith” by George Michael, which gave a time-lapse of the drilling program with the drillholes being depicted in colour code to represent mineralisation grades.  It was an impressive way to show how the progress to date has occurred.

Other targets have been identified that De Grey believe could reveal an extension of the Hemi prospect.  With major infrastructure of gas and electricity within 20 kilometres of Hemi and Port Hedland, a major service centre just up the road, De Grey are in an ideal position to have low mining costs when the time comes.

For a long time, the share price of De Grey bumped along around the 5c range then rose to ~40c before drifting back to 5c and then making a stellar rise this year to sit now at about $1.30.  De Grey is determined to continue the value to their shareholders as they explore for more gold in this new Tier1 project.

Already sitting on 2.2Moz resource without the Hemi findings, the shareholders are sure to be rewarded in the future. (This is not to be taken as financial advice, it is only the opinion of the writer)

Red5 Limited Updated JORC for Great Western Deposit

Red5 (RED) has released an updated JORC for their Great Eastern gold deposit located just 55 kilometres south from the Darlot processing plant.  870,000t has been identified as containing 70,300oz total resource at about 2.5g/t.  One assay came back at 11.18g/t over three metres.

The first part of the mine will be an open pit that is expected to yield, over 13 months, about 35,500ozs before an underground operation commences to mine the rest of the ore body.

Red 5’s Managing Director, Mark Williams, said:  “The Great Western deposit has emerged as a strong source of satellite ore feed for the Darlot processing plant, with the completion of an initial Open Pit Ore Reserve of 35,424 ounces of contained gold paving the way for the start of open pit mining planned for January 2021. Importantly, this will also provide a platform from which to pursue a potential longer-term underground mining operation.

“Our recent drilling programs have reinforced the quality of the deposit, with in-fill drilling increasing the higher confidence Measured and Indicated categories within the Mineral Resource to over 80 per cent. In addition, we are looking forward to seeing results from deeper RC drilling designed to test high-grade gold mineralisation in deeper parts of the Great Western deposit, which currently remains open.

“The satellite ore feed from Great Western enables us to transition and progressively scale down our current underground mining operations at King of the Hills over the remainder of the year, as we prepare to start construction of the proposed new 4Mtpa bulk mining and processing operation in line with the recently- completed Final Feasibility Study.”

Drilling Commences at CleanTEQ Sunrise Project.

A drill rig mobilised to the CleanTEQ (CLQ) Sunrise Project (NSW) site has commenced a six-hole diamond core drill program. The program is aiming to intersect the dunite structures at depth (targeting 400-600m below surface) which are proposed to be the source of the platinum in the Sunrise laterite at surface.

The Sunrise laterite hosts a significant platinum resource of 103.1 Mt @ 0.33 g/t Pt for 1,076,170 ounces of platinum, using a 0.15 g/t Pt cut-off grade, making it one of the largest platinum resources in Australia. Of this total resource, approximately 90% (metal content) is in the measured and indicated categories. While the average grade over the global resource is relatively low, areas of significantly higher-grade platinum mineralisation exist within the resource envelope.

An area of high-grade platinum mineralisation has been defined within the Sunrise laterite resource, forming a newly-classified Phoenix Platinum Zone.

Despite extensive drilling over previous decades, only a handful of holes have been drilled beneath the Sunrise laterite.  Given the high platinum grades near surface and historic intercepts beneath the laterite, a program of work has commenced to test the structural geology of the Tout Intrusive Complex and to establish a platinum resource that will either integrate with the development of the Sunrise nickel-cobalt-scandium mine, or be developed as a stand-alone operation.

Wildcat Resources Commences Airborne Magnetic Survey in the Pilbara.

Wildcat Resources has commenced exploration activities at the Bolt Cutter Project in the Mallina Province – Pilbara Western Australia. Wildcat Resources has a dominant land position with three applications (E45/5613, E45/5623, E45/5612) in the under-explored Mallina Province – WA.

The Company has reviewed the historical data on the project and has identified that better magnetic resolution will allow for more efficient planning of the upcoming exploration campaigns.

The Mallina Basin is a large and highly prospective gold province and yet is grossly under explored. The exploration maturity of the Mallina Basin is lower than many other gold regions in WA, and recent exploration successes there may indicate that there is significant untested potential of the region.

It is adjacent to the newly discovered Hemi project that has turned out to be a major discovery for the area.  Given the recent significant exploration success by De Grey, the region could be viewed as having the potential to become a World Class Province.  Potential for other types of mineralisation in the region will also be investigated by Wildcat.

Golden Mile Resources Identifies Gold Mineralisation at Benalla.

Golden Mile Resources, has released an update of the first phase aircore drilling program on the Benalla Gold Trend at its Leonora East Gold Project located in the North-Eastern Goldfields of WA.

This maiden drilling program tested three of the four priority targets identified by the Company’s previous geochemical auger sampling over the Benalla Gold Trend. Target BGT2 also displayed a coincident magnetic anomaly, identified by the recent airborne magnetic survey, similar in nature to Kin Mining’s Cardinia Hill prospect.

Assay results from the program have identified multiple intersections of gold mineralisation across two mineralised structures that could represent continuations of Kin Mining’s neighbouring East Lynne and Collymore Trends.

The gold mineralisation is generally hosted in a felsic volcanic unit with associated quartz veining, disseminated sulphides (mostly pyrite, up to 5%) and potassic alteration, on or near the contact with surrounding mafic volcanic units. This style and setting are similar to the neighbouring Cardinia area.

A second phase of AC drilling at Benalla will commence next week, this will complete the remaining holes at target BGT3, as well as testing target BGT1, an undrilled 1km long auger geochemical anomaly of up to 387ppb Au, along with further follow up drilling at targets BGT2 and BGT4.

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Morning News Bites – October 14

It was another great day at Diggers with a diverse range of miners presenting. We will give you a snapshot of some presentations, which will include iron ore and nickel.

Mount Gibson Iron (MGX) was the first of the iron ore producers to kick off proceedings with Peter Kerr, their CEO, presenting. With their Koolan Island operations now in full swing the mine is producing the highest grade hematite at 65.2% and on track to export between 1.8 – 2.1Mwmt this financial year.  With cash costs expected to be around $65/Mwmt they will be looking at ways to reduce this in case the price of iron ore comes off its highs in the next year or two.  They are bullish though and looking at ways the mine life can be increased beyond the current five year plan. CAPEX has been high this year and some of that was the building of the new airstrip on the island.

Their Mid-West operations are low grade but the company is making the most of the high iron ore prices and mining continues in this region.  Extension Hill sales will continue into next year and the Shine project is expected to progress to targeted sales in mid 2021. With the company cash flow positive, debt free and providing a dividend, shareholders must be very pleased with how they are positioned in the market.

Fortescue Metals (FMG) presented and their CEO Elizabeth Gaines delivered. Elizabeth is taking the company to new highs and not just in production values. It is how they are achieving those production levels that is of some interest.  But first lets look at the eye watering figures.

178.2mt was shipped in FY19 up a healthy 6% on the previous year. C1 costs were just under US$13/wmt and a healthy dividend of A$1.76 per share was paid to lucky shareholders. Billions of dollars are to be spent on capital works across several projects, but with high prices and low costs you would expect the payback time to be small. The forecasts for production and costs in FY21 are very similar to the last financial year.

Fortescue is investing heavily in its personnel and the diversification of the workforce is opening up opportunities for people that may otherwise find it difficult to obtain work in this sector.  As an example there is a 14% employment rate of aboriginal workers across their Pilbara operations.  For a company of this size it is a credit that they are offering so many opportunities to aboriginal people.  Like other companies they are also experiencing higher participation rates with women in the workforce and currently 19% of the workforce is women.  Who better to lead this company than Elizabeth herself who is overseeing exciting times in the iron ore sector.

Legend Mining (LEG) had Managing Director, Mark Wilson present at Diggers and he was keen about the prospects of this junior nickel explorer. They are currently focused on the Fraser Range area, north of the Nova mine now owned by IGO.  They have some big players supporting them, mainly the Creasy Group and IGO, who have substantial holdings on the share registry.

They have nearly 3,100 square kilometres of land to explore and some early results are promising.  In one hole they have 19.8 metres at 2.71% nickel from about 230 metres below surface. Mawson and Hurley projects are showing a lot of promise and they believe that in these areas the resource will be bigger than what was modelled.  From current visual drill results they believe Mawson is open to the East and West.

The company is bullish on the future of nickel and believe they are in the right sector, with the right resource at the right time to make the most of the EV and battery storage market.

Poseidon Nickel (POS) presented at Diggers with Peter Harold the Managing Director addressing the attendees. It seems that nickel explorers and producers are more upbeat than they have been for a long time and Poseidon is no exemption. The presentation included a quote from Elon Musk which said: “I’d just like to re-emphasize, any mining companies out there, please mine more nickel”, and Poseidon is keen to do just that.

Their current projects include the Mt Windarra mine near Laverton, Black Swan and Silver Swan just outside Kalgoorlie and Lake Johnston near Norseman. A study is currently underway to check the feasibility of recommencing mining at the Emily Ann mine site that feeds into the Lake 1.5Mtpa Lake Johnston Mill.  Historically it has produced nickel at 3.5% and they believe they have a resource there that could produce 52kt.

The Windarra project is interesting because they believe they are sitting on 180,000oz of gold in the tailings from historical mining in the area. If they can turn those ounces into money they believe that it will pay for ongoing exploration and mining activities at the other sites.

Poseidon could be one nickel play to keep an eye on if all the plans fall into pace.

Listening to the presentations it is apparent that nickel just could be the new gold.  All the nickel companies that have presented so far have been very bullish on their outlook. Talk of the EV market about to take off, battery storage to be an even bigger market and the price slowly creeping up augers well for nickel miners.  Could we see nickel prices reach the highs of just over a decade ago or will it be a lot more subdued this time around, if it happens?  If I can be parochial, it would be great to see nickel surge and breathe new life back into towns like Kambalda. It is well placed for it to happen and if Kambalda booms, Kalgoorlie rockets.

Gold has been and looks like being a strong performer as well for miners and what were less than optimal projects are being looked at. Depending on who talk to there is still mutterings about gold hitting $10,000 per ounce. Good luck if that happens but I feel that in general the economy will be down the gurgles if that occurred.

Iron ore prices are high and the trifecta of nickel, gold and iron ore will see the WA economy bustle along, even when economies in other states are suffering.  Good luck to all the miners and their projects.  May they prosper and I hope that all of WA will benefit because of it.

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Tonight’s Top Story – Is Nickel The New Gold?

David Southam, Managing Director of Mincor Resources gave a lively presentation about their Kambalda operations and positioning themselves to be a major player in the Nickel sector.

He boldly declared that: “Nickel is the new gold!”, which raised a few eyebrows before going on to give a compelling case. David is sure that we are moving into a third wave of nickel in the Kambalda region. The first was the boom that put Kambalda on the map in the 60s and 70s.  It wasn’t until the 90s, when WMC divested themselves of the mines in the same region that the second wave occurred.  He believes that 2020 is the start of the third wave and Mincor will be well positioned to make the most of it.

They currently have an ore reserve of ~71,000t of contained nickel, they are fully funded to production and have appointed Pit N Portal as their mining contractor. The company has some exciting prospects with Cassini emerging as a major site for them. The Cassini Main site has a mineral resources of1.5Mt @ 4.0% Ni for 58.7kt of contained nickel and Ore Reserves of 1.2Mt @ 3.3% Ni for 40.1kt of contained nickel.

The newly discovered Cassini North site is showing a lot of promise with an Intercept of 2.5m at 6.6% Ni from the first hole.  David believes that it will be very similar to Cassini Main when fully explored.

David got excited when he spoke of the “Golden Mile” which is untested ground between the Durkin North and Long sites. This ground is now controlled by Mincor and David is keen to explore this ground that has yet to be explored and sits between two very lucrative sites.

As you would expect, David was very bullish on Mincor’s prospects, but this is based on his belief that nickel is about to shine again.  With low production costs and a rising nickel price, maybe it is Mincor’s time to have some time in the sun.

Bardoc Gold:

CEO Rob Ryan outlined Bardoc’s operations 40 kilometres North of Kalgoorlie. They currently have a 3Moz resource, a pre-feasibility study completed earlier this year and are well funded with AU$30M cash in bank.

Bardoc have pulled together a series of small projects that now come under one banner. It is anticipated that at current resources they have a mine life of eight years with a production target of 1.02Mozs.  A low cost of production will make the mine a lucrative money spinner for the company.  The plan is to sell 50% of the gold as a concentrate and the remainder in Dore from their Aphrodite.

Bardoc is sitting on ground that is ripe for exploration as there has been insignificant drilling carried out in the area.  This will see the resource grow and a low cost operation could be a going concern for many years to come.

Ramelius Resources.

It seems to be the year for records for this miner.  Production up 17% to 230koz.  Record net profit up $20% to A$113M.  The return to shareholder in dividends doubling from 1c to 2c and the company is now on the ASX200 bourse.

Ramelius is currently operating at about A$1,250 per Oz across its sites after working hard to get their cost management to a satisfactory level.  They have a series of mines around the Mt Magnet area including Vivien, Penny , Galaxy and Morning Star.  The Penny mine has proven to be a high grade resource with average grade of 15g/t.

These are complimented by the Edna May plant at Westonia in the wheatbelt.  Gold from Marda Gold and Edna May mine currently feed this plant.  Tampia mine will be up and running soon with long lead items ordered.  Meanwhile, Symes Find which is nearby is being drilled to prove up resources.

This is a snapshot of what occurred on day one of Diggers and we look forward to bringing you more valuable information from those presenting on day two.

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Morning News Bites – October 13

This week’s News Bites is dedicated to news coming out of the Diggers and Dealers’ forum currently underway in Kalgoorlie Boulder.

Day one didn’t disappoint, and it started with what many described as the best welcome to country they have ever heard.  Linden Brownley, a proud young Wongutha man, gave the welcome and you could have heard a pin drop in the auditorium.  The Premier, Mark McGowan, opened proceedings in a lively manner, which was well received.  When presentations started it was Bill Beament and Raleigh Finlayson that had everyone glued to their seats, if they could find one, to listen to what was happening with the proposed behemoth.  David Southam from Mincor followed the duo and his presentation was sprinkled with a bit of humour.

Forum Chairman, Jim Walker, welcomed everyone to this years Diggers and looked briefly to the past and what laid ahead for the forum.  He announced that next year the date for the forum will move back to the traditional time around the start of August.  He also paid tribute to the man who has overseen the logistics of putting Diggers together for the past 29 years.  Graham Thomson is hanging his hat up after joining the forum when Geoffrey Stokes kicked it off, and when the Stokes family sold it off the new owners were wise enough to keep him on.  Great job Graham, you should be proud of what you have done.

WA Premier, Mark McGowan:

Mr McGowan was quick to get in a jibe about Clive Palmer, even quipping that it would probably mean another lawsuit from the man.  He did however get down to the serious business and thanked the resource industry for the way they have behaved through the Covid19 restrictions.  He has no doubt that the WA resource sector and associated industries have carried the nation throughout the year, and it has reminded the eastern states of how much the west contributes to the economy.  He thinks it will be WA that leads the nation during the economic recovery, and it will be on the back of the sector that has done a lot of the heavy lifting already.

He said in the early days two pieces of information out of all the data he was receiving concerned him the most.  The first was the potential health implications of the virus if it was to spread through the community unfettered.  The second was the business sectors that would have long lasting consequences from the economic damage wreaked on them if it went unchecked.  The premier said it was a conscious decision to keep the resource sector open and that decision has paid dividends.  He paid tribute to the CME and its CEO, Paul Everingham, for the cooperation with the government in ensuring companies did the right thing.

The premier noted that WA is the only state not in recession and has committed to keeping the sector going.  He quoted some impressive figures concerning investment and growth and noted that the WA government has a good trading relationship with the likes of China.  WA exports $AU100B in goods to China, mostly iron ore, and from them we import $AU4B, a $AU96B trading surplus that he does not want to jeopardise.

In signing off his speech, he quipped: “It’s time to bet big on WA.”  How many will take the bet on WA and what it has to offer?

Northern Star and Saracen:

Northern Star CEO, Stuart Tonkin, kicked off the presentation running through their operations and production figures for each of their sites.  They also anticipate that production will increase to 1.25Moz in the year 2023 at their three main regions they operate in; Yandal and Kalgoorlie (excluding KCGM) in WA and Pogo in Alaska.

Raleigh Finlayson from Saracen took to the stage and gave an overview of their operations as well as talking about expanding on their mill capacity at both Carosue Dam and Thunderbox processing plants.

But what everyone wanted to hear was Bill and Raleigh’s plan for the Kalgoorlie Superpit that is about to become a super Superpit according to Raleigh.

Bill Beament went though some drilling results of new lodes they are finding in the pit.  He said it was surprising that they have found these since taking over the operation and these new finds are adding to the mine life of the pit.  One grade went 23.8M at 66.1g/t.

Mt Charlotte is having more exploration work and gold is being found in all types of rock structures in the mine.  Infrastructure is being upgraded or improved and some of this has already seen an increase in productivity of 50% in the first six months of their ownership.  The new ownership of the Superpit had also been well received by the workforce.

Raleigh Finlayson spoke about the merger and said the case was so compelling that the companies were able to make the decision easily.  Tier one assets were spoken about and the merged company would continue to look at other tier one assets.

The Superpit has produced an astonishing amount of gold for the size of the area.  Raleigh noted that the Superpit has had 85Moz in resource, which is more than all the combined assets of Saracen.  The good news is that many more millions of ounces are still in the ground, which will see the Superpit being part of Kalgoorlie Boulder for many, many years to come.

Their presentation was well received and with the positive outlook on the Superpit, other companies’ fortunes turning around and delegates feeling a buzz, the resource sector in WA is showing great signs.  The feeling in Kalgoorlie Boulder amongst the locals is that something good is happening and the city is humming more than this correspondent has seen in the last 30 years.

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Morning News Bites – October 12

The largest mining conference in Australia has kicked off today, with Diggers and Dealers now underway. KCGM set to recruit 700 jobs in Kalgoorlie Boulder as the Premier announces a mining extension has been granted at Super Pit special event.

Beacon Minerals Limited provided an update of activities at the Jaurdi Gold Project, announcing that it  produced 2,790 oz of gold during the month of September 2020. Beacon exceeded its production target from Jaurdi for the September 2020 quarter of 6,400 to 6,800 oz’s, with 7,453 ozs produced during the quarter, approximately 10% above the high‐end guidance and expects production from Jaurdi for the December 2020 quarter to be 6,600 to 7,000 oz’s. Debt $18.0 million (in the form of debentures) to be repaid today one year ahead of the repayment due date. On repayment of the debentures the company will be debt free.

Thomson Resources Ltd has managed to secure the RC drilling rig that undertook the Company’s maiden drilling program at the Yalgogrin Gold Project, for a short follow up drilling program commencing towards the end of October 2020. COVID-19 restrictions and the increased mineral exploration activity has meant that access to drilling rigs has become tight. The Company is pleased that Australian Mineral & Waterwell Drilling Pty Ltd were able to make the drilling rig available for Thomson between commitments to other customers.
Thomson’s drilling program in July 2020 discovered thick low-grade gold mineralisation from surface as well as deeper high-grade lodes, essentially on one north-south drill section. The follow up drilling program is proposed to extend the mineralisation by drilling sections either side of the first drill section and following the
mineralisation east and west. Samples will be analysed for gold and results should be available in November-December.

Ardea Resources Limited has announced that their first ever metallurgical testwork has been undertaken on four metallurgical samples selected from Ardea’s Big Four Gold resource, located on a granted mining lease within the Goongarrie Nickel Cobalt Project (GNCP), 65km north west of Kalgoorlie. It reports very high gold
recoveries from Big Four Gold deposit, with overall gold extractions of 97.7%. Significant proportion of gravity-recoverable gold revealed with potential for stand-alone toll treatment or incorporation into Ardea’s
broader gold strategy.

Terrain Minerals Limited updated the market of the drilling results from Terrain’s maiden RC Drilling Program at Smokebush Gold Project. A total of 12 RC holes (11 holes at the Monza prospect and 1 hole at Target
13) were completed for a total 981 metres as part of this first pass exploration program. The RC Drilling program was carried out over a 200-250m area to improve confidence in grade continuity and orientation identified in historic drilling and to test interpreted extensions to mineralisation. The drilling was concentrated at the Monza prospect area because this was identified as the most advanced target within the Smokebush project for hosting significant gold mineralisation. Multiple significant intersections were returned from drilling associated with shearing and alteration within meta-dolerite and felsic intrusive host rock.

Lefroy Exploration Limited reported initial results from the multi target drill program that Gold Fields Limited commenced in July 2020 on the company’s tenements over Lake Lefroy. The program is a follow up to the extensive foundation AC drilling that commenced in late January 2019 and is part of the AUD25 million Farm-In and Joint Venture (JV) agreement between Lefroy and Gold Fields that commenced in June 2018. The results from the ten initial RC holes continues to reinforce and advance understanding of the geological prospectivity beneath Lake Lefroy. Significant results include, 9m @ 3.58g/t Au from 96m including 1m @ 18.55g/t Au from 97m. 3m @ 3.25g/t Au from 82m including 1m @ 7.88g/t Au from 82m.  Gold Fields has completed the AUD4 million minimum exploration spend and is required to fund an additional AUD6 million for AFY2021 to earn a 51% interest in the Western Lefroy Joint Venture, which is part of the wholly owned greater Lefroy Gold Project (LGP) located 50km south east of Kalgoorlie.

 

 

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Today’s Top Story – Western Australia continues to be the envy of the world.

The price of iron ore has never been so important to the Western Australian economy as has been evident in the recently announced state budget.  On the back of soaring iron ore prices, the state government collected nearly $8.45B in royalties from the miners who exported millions of tonnes of the ore to overseas markets, in particular China.

The forecast for the next 12 months shows a similar amount of royalties will be collected before prices start coming off their highs in 2022, or earlier.  It has been a huge windfall for the state and has cushioned the impact of Covid19 on the economy.  While other states’ economies have wallowed, Western Australia has powered on and even produced a healthy surplus for the last financial year.

Whether it was good planning or luck, the decision by the state government to keep miners going, at almost any cost, has proven to be a master stroke.  It didn’t matter if they were mining gold, copper or any other mineral or iron ore, miners ploughed ahead as other industries took a hit.  Fortunately, the mining industry kept alive manufacturers and industry related to the sector.

The state government cannot be complacent though, as it would not take much for the price of iron ore to come off the boil or buyers to disappear.  If Brazil can get Covid19 under control and exports crank up from them, China could well look away from Western Australia as their main source of the ore.  With the sometimes-delicate relationship we have with China it could mean they hit us in the wallet – just because they can.

The price per tonne of iron ore reached a low of $37USD in 2015 and has since soared to be currently sitting at $122USD.  Miners are making the most of it as well as the government and mine expansions are on the increase to cash in on the bonanza.

The miners are also tackling the issue of staffing as the FIFO experience has shown that having workers self-isolate when they travel from interstate is proving costly and is in no way practical.  It isn’t good for workers either who are spending more time away from family, if they are able to travel from interstate.  This is making the companies rethink their strategy of employing someone no matter where they live in Australia and encouraging workers to pack up and move west.

This is creating problems in the housing market across the board as rental vacancies have reached extremely low levels in Perth and major regional centres.  Real estate agencies are experiencing the best sales figures in a long time but unfortunately for sellers the needle is yet to move on house prices.  This will change as supply starts to dry up.  It will probably mean a boon for the state government as stamp duty revenue is sure to increase for them.

During the last mining boom thousands of people flocked to WA to make the most of the circumstances.  When mining went off the boil many returned to the east coast.  Will we see the same happen again and will it be a short term hit or can it be sustained?

Already the unemployment rate in WA has fallen below the expected rate of 8% and likely to fall further if circumstances don’t change because of Covid19.  With changes to Jobkeeper and Jobseeker being phased-in, unemployed people are more likely to seek out employment which will bring the rate down even further.

WA must surely be the envy of the other states, even if the borders are shut to the east coast.  A healthy economy, tourism experiencing healthy numbers from WA locals and mining powering on it all looks rosy for the near future.  Can the government make the most of it and plan wisely for that future?