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MINING | Barra Resources

BARRA RESOURCES

Targeting two high demand commodities in Western Australia


Resource Global Network


MINING | Barra Resources

Barra Resources listed on the ASX in 2000 on the back of some gold assets owned by Australia’s largest underground mining contractor Barminco. The company’s initial focus remained on gold exploration and production in Western Australia, although its motivation to stimulate shareholder growth led to Barra taking an interest in the Mt Thirsty Cobalt-Nickel project back in 2006. At Mt Thirsty, Barra established a 32 million tonnes (Mt) resource at 0.13% cobalt and 0.55% nickel, however managing director and CEO Sean Gregory recalls how the project then sat on the firm’s balance sheet as a ‘sleeper’ for around 10 years, until recent movement in the cobalt price brought the project sharply back into focus. While rapidly accelerating cobalt prices in the last year has naturally dictated a flurry of activity on the Mt Thirsty project, Barra recognises the tremendous exploration upside around historical gold mines in WA. Thus, the company adheres to a dual commodity focus in this long-established and stable mining jurisdiction. “If you were to pick two commodities that people would like to invest in, certainly gold and cobalt would be close to the top of most


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MINING | Barra Resources

investor’s lists. That’s why we are progressing

“The weathering at Mt Thirsty is deeper

both,” says Gregory.  

and more pervasive such that the cobalt has broken away from the silicates and the

“This also provides a natural hedge in our

iron oxide, and the cobalt is now with the

balance sheet and for our investors and

manganese in a mineral called asbolane.  

enables us to fill up the year with news flow from both assets.”

Mt Thirsty  Western Australia has an incredibly diverse

“It is this mineral which is amenable to agitated atmospheric leaching, which allows us to recover that cobalt at relatively low capital costs.”

range of ancient geological structures and hosts several very large laterite nickel-

Barra delivered a scoping study for the Mt

cobalt deposits, many of which have been

Thirsty project in October last year which

discovered and taken into production.

outlined a host of attractive project metrics including a low capital cost of AUS$212

Yet Mt Thirsty goes against the grain in this

million, largely due to the aforementioned

respect, being a pure cobalt project with

geological idiosyncrasies within the deposit.

some nickel credits. The reason for this is the underlying geology, explains Gregory.

Based on conservative assumptions, which


Resource Global Network

Wood has the capability to extract cobalt and nickel for purification and recovery using methods such as high pressure acid leaching (HPAL) or pressure oxidation (POX). The extracted solution can be used for final products such as LME grade A cathode or intermediates such as mixed hydroxide (MHP), mixed sulphide (MSP), or cobalt and nickel sulphate crystal products. www.woodplc.com

allow for just 73% of the cobalt metal and

“For example, the scoping study was done

21.5% of nickel metal to be recovered

on a long-term cobalt price of US$72,000 per

through Barra’s process, the study concluded

tonne. Recently it has risen to about $90,000

that Mt Thirsty can deliver a healthy net

per tonne and if projected forward the NPV

present value (NPV) of $290 million.  

increases to around $500 million.  

“We think we can significantly optimise those

“As the cobalt price rises further still, the

recoveries in the upcoming pre-feasibility

economics of the project are just going to get

study and indeed all variables in the PFS

better and better. Critically, this surge in NPV

will be optimised to improve the already

is achieved without adjusting any other key

attractive economics,” claims Gregory.  

variables such as recoveries and nickel price,” he adds.  

Separating Barra’s future revenue streams off all profits will come from cobalt, with the

A charged-up cobalt market

balance of 16% from nickel. Therefore, a key

Nowadays it is common knowledge that

aspect to consider is the extent to which the

cobalt is one of the key components in

from the Mt Thirsty project reveals that 84%

project is heavily geared towards leveraging a rechargeable batteries in a multitude of cobalt price hike.

modern consumer products, from laptops to smartphones and electric vehicles (EVs).


MINING | Barra Resources As such, around half of the world’s cobalt production supplies the battery market. However, while the burgeoning battery market is certainly sweetening the deal for cobalt producers there remains 34 other industrial uses for cobalt, including in jet engines, hard alloys and ceramics. All things considered cobalt is already one of the most in-demand commodities in the world, and now the EV story is upon us.  “Every major commentator is forecasting a rapid uptake in EVs as we reach price parity for ownership of an EV versus a petrol vehicle.” Gregory refers to a recent study in the Journal of Applied Energy which identified that price parity between EVs and petrol vehicles on a total cost of ownership basis has already been reached in the US, UK and Japan.  “We see a major structural shift in front of us and that is manifesting itself in higher prices for cobalt,” he deduces. “On the supply side, 97% of all cobalt is a by-product of nickel and copper mines. Now as cobalt prices go up, the nickel and copper mines aren’t necessarily incentivised to start new mines.” 


ResourceGlobal GlobalNetwork Network Resource But, being a true cobalt project with nickel

Along with its 50:50 joint venture partner,

credits, Mt Thirsty is one of a limited number

fellow WA-based mining outfit Conico,

of projects being mobilised that can respond

Barra is charging into work on the PFS and

to this demand increase. “We see that those

expects to publish the study by the end of

simple supply-demand dynamics are going

the year, although Gregory stresses that the

to push the cobalt price higher going into the

company is taking a meticulous approach

future.”

to ensure maximum value is extracted for shareholders.

Another potential value-adding element down the line for Barra stems from the fact

The JV has been on foot for many years

that Mt Thirsty is located in the safe and

now and operates very effectively, he adds.

ethical mining jurisdiction of WA. The same

However, it’s also worth noting that while the

statement cannot be routinely applied to the

project already has a long 21-year mine life,

DRC’s industry, which supplies roughly 56% of additional tonnages from the deposit exist the world’s cobalt.  

outside of Barra and Conico’s acreage and are owned by Galileo Mining, who recently

Of that percentage, around 20% comes from

floated on the ASX at a significant premium.

artisanal mines, where serious concerns have been raised regarding human rights abuses,

“The present ownership structure really puts

child labour and low industrial standards.    

the opportunity in front of us for a regional development story and for some cooperation

“The intelligence that we are getting is that battery manufacturers are prepared to pay a premium for material that is sustainably sourced. We can certainly guarantee that from WA, we’ve got a well-established mining jurisdiction and very high environmental standards.”

in the region.


MINING | Barra Resources

“If you were to pick two commodities that people would like to invest in, certainly gold and cobalt would be close to the top of most investor’s lists” Sean Gregory, managing director and CEO


Resource Global Network “I’m now calling the region ‘cobalt valley’, based on the number of high quality players involved there and the opportunities available to develop a significant industrial centre for cobalt production.”

Old but gold Gold has been a staple of WA’s mining industry since the very beginnings of the trade at the end of 19th century.  Barra’s current gold portfolio is comprised of a brownfields asset in the shape of the Burbanks project and a greenfields deposit named Phillips Find, both of which are located around Coolgardie.  The Burbanks mining centre was first mined in 1885 and over 420,000 ounces of gold have been produced from the centre ever since. “We have a resource in the ground of 95,000 ounces and our geologists have identified an exploration target of 223,000-564,000 ounces.  “Based on that tremendous potential, we really think it is a fantastic investment for a relatively low cost to continue to explore that project and build on those ounces to add value.”  While the company has decided to limit its near-term activity across the gold portfolio so as not to distract from the cobalt project, it does hope to grow its existing gold resources and add value via some modest exploration expenditure. 


MINING | Barra Resources

“We have just announced the very positive

Barra will now move on to test other

results of a drill programme at Main Lode

targets at Burbank including Kangaroo Hills

within the Burbanks project, which has

along with targets at Phillips Find. “We are

significantly expanded the strike length of the

confident that by backing our geologists with

mineralisation out to 650 metres and is the

modest investment in gold exploration they

first step towards realising our exploration

will do their work and steadily build that

target.”

resource base.”


Resource Global Network which will be delivered by safety-focused contractor Egan Drilling. Meanwhile, on the cobalt front investors can expect swift progression through the studies, with the PFS next off the list. After an extensive tendering process Barra selected Amec Foster Wheeler, a subsidiary of global engineering house the Wood group, to undertake the main body of the PFS along with engineering and metallurgical testwork. They will be supported by Snowden Mining Consultants in mine planning, Golder Associates in many technical areas and Talis Environmental Consultants.  In the medium term, Barra is beginning to assess downstream partnership opportunities for its cobalt product, particularly with companies in the battery manufacturing market.  “We really see that the PFS should give the market a good baseline of the value of this project and we think it would be an appropriate time to bring in strategic partners to maximise value for our shareholders, who have been supporting us in moving the project through the development milestones.” Over the coming months, investors can expect a steady stream of news flow from the gold side of the business as the company invests in small-scale drilling programmes

ASX:BAR

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Published by Anderson Murray Media Ltd

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