Page 1

RESOURCE Volume 5, Issue 3

GLOBAL NETWORK

Mining, renewable energy and oil & gas worldwide

speaks to:

World Gold Council INTERNATIONAL COUNCIL ON MINING & METALS WEST AFRICAN GOLD FOCUS:

TERANGA GOLD HUMMINGBIRD RESOURCES AVESORO RESOURCES

The paths are paved with

gold in west africa

THE GOLD ISSUE


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MINING | Brookfield Multiplex

WELCOME

“West Africa has gone from having almost no gold production to a profile that is close to North America, which I never thought would’ve occurred when I started in this industry.” These are the words of Richard Young, president and CEO of Teranga Gold - a TSX-listed gold miner and our headline feature company in RGN’s 2018 gold issue, which pays homage to West Africa’s golden generation. A combination of many great geological formations, vast untapped reserves, modern mining codes and improving business conditions first attracted Young and Teranga to the region in 2010, when it acquired the Sabodala Gold Mine in Senegal. Teranga has spent the last four years optimising Sabodala’s production performance, while also expanding into Burkina Faso and Ivory Coast, thus epitomising the broader pattern of growth in West Africa’s gold sector. Our lead story reveals how Teranga has thrived in the region under a fundamental commitment to responsible mining, and we also speak to fellow West African

Executive Team Editor Jacob Ambrose Willson Content Manager Michelle Madureira Content Director (APAC and Americas) David Hunter Creative Director Hugo Currie ICT Director Stuart Clark Contributors Amit Aggarwal Mickey Fulp Jim Rogers

gold producers Hummingbird and Avesoro Resources, reflecting on each’s recent successes. We feature a wide range of gold miners from around the globe throughout the rest

Managing Director Simon Curran

of the issue and provide an up-to-date investment perspective through an exclusive interview with the World Gold Council – the world’s leading authority on the ‘safe haven’ metal. RGN is also proud to present an illuminating piece on the International Council on Mining and Metals (ICMM), after speaking to its CEO Tom Butler. ICMM has united several major players in the sector and led a charge towards sustainable development since its formation in 2001. You can read this, along with your usual fix of mining, renewable energy and oil & gas stories over the following pages. We hope you enjoy this issue and encourage you to connect with us on email, Facebook and Twitter. Thanks for reading!

Jacob Ambrose Willson

RGN is published by Anderson Murray Media: a diverse media and information services company focused on creating and distributing engaging content to business leaders across the globe. Anderson Murray Media Fulham Green, 69-79 Fulham High Street, Main Reception, Bedford House, London SW6 3JW Tel. +44 (0)207 148 5630

VISIT US ONLINE AT WWW.RESOURCEGLOBALNETWORK.COM


CONTENTS

WORLD GOLD COUNCIL

NEWS 10 Global resources news Our selection of mining, oil & gas and renewable energy stories from the last month

ASSOCIATION PIECES 18 World Gold Council The world’s leading authority on the global gold industry 28 ICMM Leading the progress narrative for sustainable development in mining

COLUMNS 42 Mickey Fulp The well-respected Mercenary Geologist returns with a passionate case for Nevada’s gold industry 50 EY Digitalisation is the key to future growth in the gold mining space 58 Jim Rogers Famous gold owner gives his view on the investment climate


ICMM

TERANGA GOLD


CONTENTS MINING 66 Teranga Gold Multi-jurisdictional West African gold producer reaches for mid-tier status 88 Hummingbird Resources Coming full circle at Yanfolila in Mali 102 Avesoro Resources Completing a turnaround in Liberia and expanding into Burkina Faso 114 Chalice Gold Mines Cashed up and debt free with Canadian and Australian gold assets 128 Raiden Resources Serbia-focused copper-gold junior partners with Rio Tinto 138 AusQuest Building a mutually advantageous alliance with South32 150 NTM Gold Breaking new ground in a historic Western Australian goldfield

MINING SERVICES 162 Process IQ Driving out hidden inefficiencies in gold and base metal plants

CLASSIFIED ADVERTISING 170 Classifieds

APPOINTMENTS & EVENTS 172 Appointments Notable appointments in the resources industry from the past month 173 Events Our pick of the top mining, oil & gas and renewable energy events happening around the world in the months to come


AVESORO RESOURCES

PROCESS IQ

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NEWS | Brookfield Multiplex MINING

GLOBAL RESO

Our selection of mi renewable energy news


Resource Global Network 11

OURCES NEWS

ining, oil & gas and s from around the world


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NEWS

HIGHER GOLD PRICES GIVE EXTRA SHINE TO BARRICK GOLD Q1 EARNINGS Barrick Gold Corp has reported a 5% rise in its first quarter 2018 earnings, reflecting higher prices for gold and lower depreciation. Prior to adjustments relating to the divestment of a 25% stake in its Cerro Casale project in Chile, Barrick’s net income was US$158 million (14 cents per share), a steep drop from the $679 million made in Q1 2017. However, the Canadian mining giant’s adjusted net earnings revealed a 5% increase to US$170 million, (15 cents per share) compared with $162 million (14 cents per share) in the same quarter one year ago. This rise in adjusted earnings is largely correlated with increasing gold prices

throughout the first three months of 2018, with average spot prices climbing to $1,329 per troy ounce, compared to an average of $1,219 a troy ounce in the prior year quarter. Like many majors in the resources sector, Barrick has become leaner and cut back its debt by over 50% during the past three years. The world’s largest gold miner by output said it plans to lower its total debt from $6.4 billion to about $5 billion by the end of 2018.


Resource Global Network 13

HUMMINGBIRD ANNOUNCES RAMP UP AT YANFOLILA GOLD MINE IN MALI West Africa-focused Hummingbird Resources has announced a ramp up in gold production from its flagship Yanfolila mine in Mali. The high grade asset began producing gold in December 2017, with the performance of the plant steadily improving month by month. The plant operated at an average of 95% of design throughput during the first two weeks of March and has also consistently delivered a recovery rate of around 96%, exceeding design specification. Total gold recovered to March 14 was 16,804 ounces (oz), of which 11,958 oz has been

poured and 4,846 oz are currently within circuit inventory. “We are delighted that the plant has performed so well and that the work carried out by our highly experienced team and contractors has so far been rewarded in ramp up operations with 96% recoveries, over 3g/t head grade and a steady increase in plant throughput towards design,” said CEO Dan Betts. “This is an impressive achievement in such a short space of time,” he added.


14

NEWS

JOBS IN GLOBAL RENEWABLE ENERGY SECTOR SURPASS 10 MILLION IN 2017 The renewable energy industry created more than 500,000 new jobs in 2017 worldwide, according to latest figures from International Renewable Energy Agency (IRENA). Incorporating the half a million new jobs added last year, total employment in the renewables sector across the world now stands at 10.3 million, exceeding the 10 million mark for the first time. The fifth edition of IRENA’s Renewable Energy and Jobs – Annual Review, launched at the organisation’s 15th council in Abu Dhabi, found that renewable energy jobs grew by 5.3% from 2016. China, Brazil, the US, India, Germany and Japan remain the world’s largest renewable

energy employers, representing over 70% of the world’s renewable energy jobs. “Renewable energy has become a pillar of low-carbon economic growth for governments all over the world, a fact reflected by the growing number of jobs created in the sector,” said Adnan Z. Amin, director general of IRENA. “The data also underscores an increasingly regionalised picture, highlighting that in countries where attractive policies exist, the economic, social and environmental benefits of renewable energy are most evident,” he said.


Resource Global Network 15

BRENT CRUDE RISES AFTER TRUMP PULLS US FROM IRAN NUCLEAR DEAL Brent crude is trading at US$76 a barrel – its highest since 2014 – after US President Donald Trump revealed his decision to pull the US of the current nuclear containment deal with Iran. The latest 2.2% rise in Brent crude to $76.47 caps a volatile period for the commodity, which had previously fallen by as much as 4% as the global trading market waited with bated breath for Trump’s decision. In a televised address, Trump declared his decision to pull the US from the historic nuclear containment deal with Iran that was reached in 2015 after 13 years of negotiation between Iran and several Western powers, including the UK and France.

Under the deal Iran agreed to limit its uranium enrichment levels until 2031, while in return economic sanctions imposed by the West were lifted, allowing Iran to resume selling oil across international markets. However, in his address Trump said: “[The deal is a] horrible, one-sided deal that should have never, ever been made.” He also said he would reimpose the economic sanctions that were lifted in the 2015 deal.


18

GOLD | World Gold Council

The world’s leading authority


y on the global gold industry

Resource Global Network

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GOLD | World Gold Council

Headlining RGN’s 2018 gold issue is the World Gold Council – the leading global authority on all things gold. This year, RGN’s editor Jacob Ambrose Willson interviews the council’s head of research and chief market strategist John Reade, encountering a number of pertinent topics within the contemporary gold environment. Using data from the council’s Gold Demand Trends Q1 2018 report, Reade provides an upto-date account of the forces shaping current demand, along with an outlook for the rest of the year. Other topics of discussion include new mine supply trends and the impact of cryptocurrencies on gold as an investment opportunity.

factors driving market change. This allows us

Jacob Ambrose Willson: Please provide a

2017 Gold Demand Trends report was that

quick summary of what the World Gold

global demand for gold fell by 7%. Explain

Council does and your own role at the

some of the reasons why demand for the

organisation.

precious metal dropped by this amount last

to operate with insight and act with authority in seeking to resolve industry issues, create pro-gold policies and raise standards across the industry. We concentrate on delivering structural change that has long-term impact and is at scale. Based in the UK, with operations in India, the Far East and the US, the World Gold Council is an association whose members comprise the world’s leading gold mining companies. I joined the World Gold Council in February 2017 as head of research and chief market strategist. In my role, I am responsible for producing strategic research and developing insights on the gold market; leading our global dialogue by engaging with leading economists, academics, policy makers, fund managers and investors on gold; and leading our research team. JAW: The headline trend identified in the FY

year? John Reade: The World Gold Council is the market development organisation for the

JR: The decline in demand in 2017 was largely

gold industry. Our purpose is to stimulate

due to lower investment demand. Partly this

and sustain demand for gold, provide

was because of tough comparisons to a very

industry leadership, and be the global

strong year previously, but some areas were

authority on the gold market.

weak, particularly a sharp drop in US bar and coin demand to a 10-year low. Jewellery

The World Gold Council has broad

demand reported an increase of 4% year

experience and deep knowledge of the

on year, but this still left the sector weak by historic standards.


Resource Global Network

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GOLD | World Gold Council

“Our purpose is to stimulate and sustain demand for gol on the gold market” – John Reade, head

JAW: Has the global gold industry been able

JR: We are expecting a recovery in the

to arrest this decline in demand during the

balance of 2018, with firm Chinese demand,

first quarter of 2018?

improved Indian demand and probably better investment demand – already we

JR: The first quarter of 2018 was also soft,

have seen stronger inflows into gold-backed

with overall demand down 7% compared to

exchange-traded funds in April, although we

the same quarter of 2017.

have not yet seen any reports of bar and coin demand recovery in the US.

Overall jewellery demand was in line, with China and the US compensating for a

In India, jewellery demand in Q2 started

weaker Indian market. Investment demand

well, with healthy demand during the April

in the first quarter was down year-on-year,

Akshaya Tritiya festival, despite higher local

continuing the trend of late 2017.

prices compared with last year.

JAW: What is the World Gold Council’s overall

Looking ahead, improving macroeconomic

outlook on the gold industry for the rest of

indicators suggest a positive outlook for

2018? Discuss any key market trends that

jewellery demand. In China, the industry is

have been identified by the World Gold

optimistic, expecting a recovery in jewellery

Council.

demand in 2018.


Resource Global Network

ld, provide industry leadership, and be the global authority d of research and chief market strategist

JAW: Demand for gold from emerging

JR: While new mine supply grew in 2017 and

markets across Asia has steadily increased

may grow again in 2018, the industry has

over recent years. Does the World Gold

struggled to make sufficient new discoveries.

Council foresee this trend continuing into

In addition, the gold mining industry reduced

the coming years as more Asians move into

capital development expenditure following

middle class status?

the 2013 fall in gold, and some previously favourable countries for mine development

JR: Yes, very much so. For the foreseeable

have become less hospitable. We expect new

future we expect greater economic growth

mine supply to peak in 2018 or soon after

rates from emerging economies than

and then decline slowly thereafter.

developed markets. Increased income and numbers of middle class consumers will

JAW: The World Gold Council’s membership is

increase the relative importance of emerging

made up of many world-leading gold mining

market gold demand and should lead to

companies. How closely do you work with

higher absolute gold demand levels.

these members and why should any major gold miner become a member?

JAW: Looking at the supply side, new gold deposit discoveries have slowed down in

JR: We support our members by stimulating

recent years. How well equipped is the

demand in new and existing markets through

current global mining industry to meet the

research, insight and partnerships with

world’s demand for gold?

23


24

GOLD | World Gold Council

John Reade, head of research and chief market strategist


ResourceGlobal GlobalNetwork Network 25 Resource leaders in investment, jewellery, industry and

With the US economic recovery now

academia. We work across the entire supply

the second longest on record and with

chain, from sustainable and responsible

unemployment approaching all-time lows,

gold mining through to the consumer

the chances of a recession in the US over the

marketplace.

next few years is increasing.

All our members have a seat on the board

Increased global trade tensions, a more

and many are actively involved in our

truculent stance from many world leaders

programmes and initiatives. The conflict-free

and ongoing uncertainty about the intension

gold standard, for example, which provides

of North Korea have elevated geopolitical

assurance that their gold is not contributing

risks too.

to conflict, was a member-led initiative. JAW: Finally, how has the reputation of gold Our members share our vision of ensuring a

as a safe investment been challenged by the

sustainable gold mining industry, based on a

rise of new investment opportunities such as

deep understanding of gold’s role in society,

the cryptocurrency market?

now and in the future. JR: There is no doubt that cryptocurrencies JAW: Does the World Gold Council foresee

and blockchain initiatives hit the headlines

any geopolitical turbulence or market turmoil

last year, but we have seen no evidence that

that would facilitate a rise in gold investment,

this frenzy affected demand for gold.

bearing in mind its status as a ‘safe haven’ commodity?

We’ve looked at volumes on futures and spot exchanges and spoken to bar and coin

JR: Gold does have a well-founded reputation

dealers in the US, where demand was weak

as a safe haven during times of economic

last year, and in no case have we seen gold

turmoil and often is boosted by geopolitical

demand hit by the surge and then decline in

turbulence, although the effect of the latter is

bitcoin and other crypto assets.

often short-lived. Forecasting either market turmoil or geopolitical turbulence is very difficult, but we believe that there is likely to be incidents of both over the next few years.

aj r


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28

MINING | ICMM

speaks to ICMM’s chief executive officer Tom Butler

Leading the progress narrative for sustainable development in mining


Resource Global Network

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MINING | ICMM

Back in the 1990s, the global mining industry seemed to be sleepwalking into its own funeral. The accumulation of several disastrous incidents, including tailings collapses, contaminations of rivers and a general lack of stewardship within communities living in the shadow of mining projects resulted in the mobilisation of large swathes of civil society against the sector. In light of this growing opprobrium at the turn of the century, the then CEO of Rio Tinto managed to convince a group of fellow majors that the reputation of the mining industry was under threat and that leaders of the industry needed to band together and take action. The result of these meetings was the formation of the International Council on Mining & Metals (ICMM) in 2001, after a twoyear consultation process concluded that a new and authoritative industry body was required for the industry to improve itself across all five continents. “What underpinned this [need for improvement] was the necessity of preserving access to capital, markets and resources and that is still the underlying purpose today of ICMM,� says CEO Tom Butler.


Resource Global Network

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32

MINING | ICMM


Resource Global Network “The purpose of ICMM is to help by preserving the reputation of the industry which helps maintain access to those three things.”

A new face for responsible mining When ICMM was put together its founding members signed up to a set of 10 principles which form the basis of the organisation’s sustainable development framework. Over the years this framework has been tightened through the addition of position statements, which are essentially extra policy commitments. ICMM’s rigorous 10 principles serve as a best practise framework for sustainable development in the mining industry and as a result, the organisation has played a key role in preserving and enhancing the reputation of the sector in recent years. This notion rings even more true for ICMM’s members, who are expected to implement the principles in full and to transparently report on performance. “What really put our members on the map was our first position statement, which was around protected areas and in particular a commitment not to explore or mine in World Heritage sites. “I think at the time, this was a very strong signal as it meant that some members had to pull out of some exploration work and it showed that the members were serious about these commitments.”

33


34

MINING | ICMM The organisation’s key aim has remained clear and consistent since the early days and that is to promote safe, fair and responsible mining practises. ICMM has four chief methods of achieving this aim, with the first strand focusing on leadership through performance. “This means setting the pace in terms of commitments that the members make and laying out what we consider to be good practise, or additional policy commitments that are raising the game across the industry.” ICMM’s second method involves listening and engaging with external stakeholders, civil societies, NGOs and representatives from other industries. Thirdly, the organisation tries to open up strong lines of communication from the mining industry itself, to better articulate the positive impact it has, particularly in developing countries. “The fourth method is focused on engaging with international organisations that are involved in the industry. We have a close relationship with the World Bank, OECD, International Maritime Organisation and other similar organisations. “This is to make sure that we are involved in any policy or approach that they are developing, and we’ve had a chance to have our say in it.”


ResourceGlobal GlobalNetwork Network 35 Resource


36

MINING | ICMM


Resource Global Network

An esteemed membership ICMM’s membership is comprised of some of the world’s largest and most influential mining companies in the world, from founding members such as Rio Tinto, BHP, Anglo American and Newmont to more recent additions like Glencore, Newcrest Mining and South32. However, Butler stresses that size is not a formal criterion and that all companies must follow the same admission process. “If a company wants to apply for membership, they have to go through a fairly rigorous admissions process which looks at how closely aligned their existing policies are to our sustainable development framework requirements.” An independent panel of three experts will assess the credentials of an applicant and identify any gaps between the company’s current policies and the requirements of the ICMM. If the gaps are too wide, they would advise the applicant to work on closing the gaps before re-applying. In other applications, the admissions panel will identify any gaps and produce a negotiated action plan, which admits the company on the basis that it agrees to close those gaps within two years. ICMM is structured to maximise collaboration between industry leaders in

37


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MINING | ICMM

the mining and metals space, but as well to

other stakeholders to grapple with specific

encourage communication with all types of

topics.”

stakeholders in the industry. Arguably, its most important feature is the

Contemporary industry concerns

fact that it is CEO-led. The council of CEO’s

Late last year ICMM convened a group of

from all member companies meet twice a

mobile equipment suppliers to talk about the

year and act like a board for ICMM.

topic of diesel particulate matter. This is a big contemporary issue especially underground

“The CEOs have agreed not to delegate

in terms of pollution.

attendance at those meetings and as a result it gives off a very strong signal to their

The convening was to see if ICMM could

own employees but also externally that

collaborate within the industry and help

they are personally engaged on the topic of

suppliers try and mitigate this pressing

sustainability.

issue. Another ongoing concern facing the global mining sector is that of environmental

“That kind of commitment is essentially

impact, particularly worries about water

demonstrating to the rest of the industry

usage.

that they are serious from the very top down about the commitments they have made to

Some of the world’s major mining hotspots,

ICMM. It also gives us the ability to convene

from South America to Southern Africa and


Resource Global Network many parts of Australia, are currently faced with water scarcity and ICMM is leading the discussion on efficient water usage at mine sites in these areas. Ensuring that supply chains are fully transparent is another key goal for the industry, after major concerns have been raised regarding human rights abuses in mining projects within certain areas, particularly cobalt mining in the Democratic Republic of Congo.

”Our members do not use child labour or artisanal labour to produce their products, but we are looking at how you can address traceability concerns and make people understand that what they are using is coming from responsible suppliers like our members.” However, during its years of operation the mining sector has gone a long way to

“People are putting a lot of pressure on end

addressing these issues and although it is by

users like Apple to demonstrate that their

no means perfect today, Butler believes the

supply chain is clean, and the end result is

linear narrative of progress will continue in

quite a lot of focus on our side in terms of

the coming years.

looking at what we can do,” says Butler. “I think there are lots of converging pressures “Our members do not use child labour or

which are all pushing in the same direction.

artisanal labour to produce their products,

The UN has announced its Sustainable

but we are looking at how you can address

Development Goals (SDG), and there is a

traceability concerns and make people

lot of pressure from society. As a result,

understand that what they are using is

financiers, banks and investors and pension

coming from responsible suppliers like our

funds are all paying close attention to

members.”

sustainability issues.

A catalyst for change

“In terms of the outlook, those converging

From the outset, ICMM has aimed to serve

pressures will result in not just ICMM

as a catalyst for change after the reputation

members, but general stakeholders in

of the global mining industry was left in

the industry having to respond to those

tatters by a series of environmental incidents

pressures and mine in a more sustainable

and continued neglect of local communities

way.”

during the 1990s.

ab r

39


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42

COLUMNS | Mickey Fulp

NEVA

Mickey Fulp, the well-respected Merc


Resource Global Network

ADA IS SIMPLY THE BEST

cenary Geologist returns with a passionate case for Nevada’s gold industry

43


COLUMNS||Ian Mickey Thomson Fulp 44 COLUMNS

In my opinion, Nevada is hands down the world’s premier venue for gold exploration and mining for a litany of reasons: •

It is the world’s 4th largest gold

producer behind China, Australia, and Russia with nearly 5.3 million ounces of production in 2016. •

It is a geologically endowed gold

province with several types of economic mineral deposits hosting world-class tonnages and/or grades. •

It currently has nearly 40 active gold

mines and also hosts the world’s largest and most comprehensive gold processing facilities. Six operating mills in Northern Nevada process a wide variety of simple, complex, and refractory gold ores. •

It is part of the United States of

America where geopolitical risk is low, mineral tenure is secure, and the rule of law is sacrosanct. •

In 2015, the mining industry had over

14,000 direct employees and an additional 65,000 goods and services jobs. The average mine employee was paid $92,000. •

It is located in an arid, moderate,

intercontinental climate with excellent infrastructure, unsurpassed accessibility, and a services industry that allow year-round


ResourceGlobal GlobalNetwork Network 45 Resource

MICKEY FULP The Mercenary Geologist Michael S. “Mickey” Fulp is a certified professional geologist with a B.Sc. Earth Sciences with honour from the University of Tulsa, and M.Sc. Geology from the University of New Mexico. Mickey has 35 years’ experience as an exploration geologist and analyst searching for economic deposits of base and precious metals, industrial minerals, uranium, coal, oil and gas, and water in North and South America, Europe, and Asia. Mickey worked for junior explorers, major mining companies, private companies, and investors as a consulting economic geologist for over 20 years, specialising in geological mapping, property evaluation, and business development. In addition to Mickey’s professional credentials and experience, he is highaltitude proficient, and is bilingual in English and Spanish. From 2003 to 2006, he made four outcrop ore discoveries in Peru, Nevada, Chile, and British Columbia. Mickey is well-known and highly respected throughout the mining and exploration community due to his ongoing work as an analyst, writer, and speaker.


46

COLUMNS | Mickey Fulp


ResourceGlobal GlobalNetwork Network 47 Resource mining operations and with a few exceptions in the Northern part of the state, year-round exploration. •

It has a low-density population that

outside of the two major metropolitan areas, makes its living off the land by farming, ranching and mining. •

It has no personal or corporate state

income taxes. Mining companies pay a 5% net mineral proceeds tax. With the recent Trump tax cuts, US-domiciled corporations and subsidiaries will pay a competitively low 21% federal income tax beginning in 2018.

”In 2015, Nevada’s mining industry had over 14,000 direct employees and an additional 65,000 goods and services jobs. The average mine employee was paid $92,000” Mickey Fulp, the Mercenary Geologist •

With exception of the Las Vegas

A US Forest Service bureaucracy that

formerly used bureaucratic, regulatory, and

and to a lesser extent, the Reno and Lake

legal tactics to advance the Obama regime’s

Tahoe areas that rely on gambling revenues,

anti-development agenda has now become

the population is rural, individualistic,

responsive and efficient under the Trump

and overwhelmingly supports extractive

administration. Timely processing of work

industries.

applications, permitting, and environmental documents is now the norm.

It has a reasonable regulatory state

bureaucracy that ensures environmentally

I prefer to put my hard-earned speculative

responsible, safe development, production,

dollars into gold explorers in the Western

and reclamation.

US and will continue to do so as the new bull market for all metals, including gold,

85% of the state is federal land, mostly

continues to develop.

Bureau of Land Management with significant military reservations and minor Forest

Ciao for now,

Service holdings. With exception of areas withdrawn for military purposes, the vast

Mickey Fulp

majority of federal lands are open to mineral entry.

Mercenary Geologist

ha r


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COLUMNS | Amit Aggarwal, EY

HOW ARE GOLD MINERS ACHIEVIN


Resource Global Network

NG LONG-TERM VALUE CREATION? Digitalisation is the key to future growth in the gold mining space Amit Aggarwal, EY global mining & metals analyst

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COLUMNS | Amit Aggarwal, EY

Gold miners have seen improved financial performance in the last few years on the back of strengthening gold prices and relentless costcutting measures. Industry players have used strong cash generation to reduce financial risk through debt repayments. And some of the gold companies that are now in better financial shape are currently looking for long-term value creation by identifying opportunities for growth. While yesteryear experiences will continue to favour capital discipline, strategies are beginning to shift to long-term value creation. This will enable gold miners to differentiate themselves and also to attract capital at competitive rates. Strong financial performance, and a focus on controlling costs and productivity, has also enabled gold miners to take on digital transformation initiatives and accelerate technology implementation. However, there still exists a disconnect between the potential of digital transformation and the successful implementation of new technologies, which gold miners will need to address to achieve their productivity ambitions.


ResourceGlobal GlobalNetwork Network 53 Resource

AMIT AGGARWAL Amit Aggarwal is a mining and metals analyst with EY. He has over 12 years of business and equity research experience in the mining and metals industry. He specialises in analysing the global gold industry and also has significant experience researching global steel, iron ore and coal sectors. He completed his MBA (Banking and Finance) from the Nanyang Business School, Singapore and Bachelor of Commerce from Delhi University, India. He lives in Delhi, India with his wife and two daughters.Â

EY EY is a global leader in assurance, tax, transaction and advisory services, and has dedicated Global Industry Centers around the world that serve as virtual hubs for sharing industryfocused knowledge and experience. The organisation’s 28 regions are grouped under four geographic areas: Americas; Europe, Middle East, India and Africa (EMEIA); Asia-Pacific; and Japan. Find out more about the EY Global Mining & Metals Network at www.ey.com/ miningmetals.


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COLUMNS | Amit Aggarwal, EY

Portfolio optimisation and shareholder returns Gold miners have generated significant cash in recent years, due to a recovery in gold prices, a relentless focus on cost reduction and asset sales in prior years. A positive outlook for gold prices is likely to lead to further cash generation. Gold miners have largely returned cash to shareholders through higher dividends and share buybacks, and at the expense of long-term capital expenditure for growth. Indeed, investors have highlighted the lack of longterm value creation across the gold sector. Sector players continue to review their portfolios as many face declining gold output in the future. The sector therefore needs to adopt a balanced capital agenda that not only recognises the call to reward shareholders but also facilitates sustainability of operations. Meanwhile, due to low spend on exploration and declining discovery rates in the recent past, reserves and resources have fallen in the last few years and miners are struggling with short mine lives. Most miners have, however, communicated a weak appetite for mergers and acquisitions (M&A) and/or major capital expenditures, and continue to favour returning cash to shareholders. It is worth noting that many mid-tier gold miners have augmented their portfolios by

longer looking at asset sales. Better market

taking advantage of asset sales executed

conditions have also resulted in a re-rating of

by large miners. But that window now

assets. In light of this, gold miners that look

seems to have closed as large miners are no

to M&A as a route to growth now run the risk


ResourceGlobal GlobalNetwork Network 55 Resource

of overpaying for assets.

as a means to reduce capital needs and to mitigate risk. JVs have the potential to

To achieve growth, some major gold miners

deliver substantial value to stakeholders

have preferred to form joint ventures (JVs)

when managed well. However, in a JV, non-


56

COLUMNS | Amit Aggarwal, EY operators may be particularly vulnerable to

• Ore sorting technology can reduce

operating risks as they have limited say in

processing costs by providing higher

day-to-day operations.

grade mill feed and by not processing diluting material.

Changing investor sentiment has given gold miners the opportunity to revisit their

Miners are also adopting innovative digital

growth strategies. Miners need to ensure

technologies to address long-standing

sustainability of shareholder value creation

industry challenges such as mineral reserves

by investing capital for long-term growth.

growth, low grade ore, safety, social license to operate and transparency among

There is also a need for players to look

stakeholders. For example:

at strategies for differentiation, whether through a focus on specific geographies, by

• Huge computer processing capabilities

choosing to operate in low risk jurisdictions

are enabling miners to identify new drill

or seeking operational excellence.

targets more efficiently.

Digital is enabling miners to improve productivity and address sector issues Gold miners remain focused on margin

• One major gold miner is using remote hard braking, advanced obstacle detection and warning systems to enhance operators’ safety.

improvement and have increasingly adopted digitalisation to innovate their operations,

• Electrification of mines is reducing the risk

lower costs and improve productivity. By

of health hazards in underground mines,

using technology, miners aim to reduce

and because less ventilation equipment

capital, labour and water intensities, while

is required, it is also reducing capital

also increasing mining intensity.

intensity.

Some of the ways digitalisation has

Lower usage of energy and water helps the

helped companies cut costs and improve

industry manage operating and capital costs.

productivity include:

And a focus on safety and environmental care builds trust and transparency with local

• Tyre management solutions are improving tyre life and safely increasing truck speeds by monitoring tyre temperature and

communities by addressing issues relating to the social license to operate.

pressure using sensors. For example,

The digital disconnect

this has enabled a major gold miner to

While the concept of digital mining is

save around US$17 million in annual

not new, there remains a gap between

productivity improvement since 2014.

companies’ objectives and what they are actually achieving.


Resource Global Network Indeed, EY identified digital effectiveness as the number one risk facing the mining and metals sector in a recent report. Experience shows that for mining companies to extract the full value of the next wave of opportunities, they will need to develop a comprehensive digital implementation strategy to close this gap.

Connecting the disconnected In addition to developing a strategic path

�Gold miners remain focused on margin improvement and have increasingly adopted digitalisation to innovate their operations, lower costs and improve productivity. By using technology, miners aim to reduce capital, labour and water intensities, while also increasing mining intensity.� Amit Aggarwal

forward when considering digital solutions, mining companies will need to: Build

technical and technological advances;

consensus between stakeholders on their

liaising with regulators and communities to

digital vision; prepare a robust business

plan and communicate health, safety and

case for digital implementation; and address

environmental (HSE) benefits and the impact

concerns relating to the perceived high cost.

of technology on employment; and speaking to academics and experts for deeper insights

They also need to address issues relating to

on how to innovate and attract the right

accountability for digital projects and their

talent.

benefits, the extent to which employees are trained and skilled in using new technologies

The digital agenda needs to be paired with

and how to use existing systems and

a market-to-mine approach to business, as

processes that are not being optimised.

well as strong leadership and a culture that supports reducing losses and increasing

Externally, miners will also need to

output. Companies that maintain the status

collaborate and partner more closely with

quo can only expect to yield the same results

others across the mining ecosystem.

they are seeing today.

This includes working with other original equipment manufacturers (OEMs) and technology providers to understand Amit Aggarwal is an EY Global Mining & Metals Analyst, based in India. The views reflected in this article are the views of the author and do not necessarily reflect the views of the global EY organisation or its member firms.

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58

COLUMNS | Jim Rogers

THE IN


Resource Global Network

NVESTOR’S PERSPECTIVE Famous gold owner Jim Rogers gives his view on the investment climate

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COLUMNS||Ian JimThomson Rogers 60 COLUMNS

SPEAKS TO JIM ROGERS Jacob Ambrose Willson: You have recently said you expect gold to fall below $1,000 in light of building geopolitical and financial turmoil – why would this be a good time for traders to invest in gold? Jim Rogers: My market timing is amongst the world’s worst, but if it happens I would use that opportunity to buy, because as people lose more confidence in governments and in money (paper money especially), they have always gone to gold and silver. Whether they should or not is irrelevant; they have and they will certainly continue to do so at least in our lifetimes. Therefore, I would be backing up on gold because as the economy of the world gets worse and worse and people lose more confidence in governments and paper money, then the refuge will be gold and silver. JAW: Gold is revered as a ‘safe haven’ investment and people flock to it in times of turmoil – Is there ever a case for refraining from investing in gold? JR: Many economists for decades have explained that gold is ‘a barbaric relic’ and that gold and silver have little economic value in the world. We all know that wheat has economic value. Gold does not have much economic value compared to other commodities, but as I said before it doesn’t


ResourceGlobal GlobalNetwork Network 61 Resource

JIM ROGERS Jim Rogers is a businessmen, investor, financial commentator, author and gold owner. The US national bought his first gold in 1971 and while he has given some away, he has never sold any of his gold reserves. He is the chairman of Rogers Holdings and Beeland Interests and co-founder of the Quantum Fund along with Hungarian-American investor George Soros. In the late 1990s, Rogers created the Rogers International Commodities Index (RICI), a composite US Dollar based total return index that represents the value of a basket of commodities consumed in the global economy, from agriculture to energy and metals. A firm believer in being exposed to gold as an insurance policy if nothing else, Rogers tells RGN where he foresees gold spot prices going in the near future and explains the pros and cons of investing in each type of the ‘safe haven’ commodity.


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COLUMNS | Jim Rogers


ResourceGlobal GlobalNetwork Network 63 Resource matter what people think, they’ve always gone to gold and they will again. JAW: Buying gold bullion or gold coins are considered one of the more risk-free ways of investing in gold, but is there any advantages to be taken from investing in gold mining or gold producing companies? JR: I don’t know anything that is risk-free in the investment world. But if you can find the right miner you are going to make much more money because you are going to get

”As people lose more confidence in governments and in money (paper money especially), they have always gone to gold and silver and they will continue to do so in the future” – Jim Rogers

huge financial and operational leverage. JR: Gold futures are good because you can The problem is that there are hundreds, if

get huge leverage. Or if you can find great

not thousands, of gold mines and miners in

companies, for example a great gold penny

the world.

stock that’s about to find a huge gold deposit and can go into production, you’ll make a

The famous American author Mark Twain

staggering amount of money.

once said: “The definition of a gold mine is a hole in the ground with a liar at the top.”

As far as most people are concerned coins

We’ve all seen millions of losses in gold mines

are useful because the problem with bullion

over the years, but if you find the right one

is that in a time of emergency its hard to take

and the right price, you will make much more

the bullion down to the grocery store and

money.

buy a loaf of bread.

Likewise, if you are really good at timing, you

They don’t know if its real or not and even

will make much more money in gold futures

if they accept that it is real, its hard to make

than in gold coins, bullion or anything else.

change.

But you have to be good at timing to do that. Coins are usually better, they are more JAW: In your opinion what are the better

transportable and easier to confirm and

trading instruments to use in this process?

recognise compared to bullion.

www.jimrogers.com

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66

MINING | Teranga Gold

TERANGA GOLD Multi-jurisdictional West African gold producer reaches for mid-tier status


Resource Global Network

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MINING | Teranga Gold


Resource Global Network

Teranga Gold went to IPO in 2010 under the guidance of Alan Hill and Richard Young - two veterans from the formative years of the world’s largest gold mining company, Barrick Gold. The pair have worked together for 30 years, striking up a symbiotic relationship since their days at Barrick, with Hill providing the technical and operational graft and Young the financial and strategic know-how. Back in 2010, the experienced pair were looking to build a new gold company in a high growth region of the world, and West Africa contained all the ingredients they were searching for. Thus, Teranga was born with a view to leveraging its initial asset, the Sabodala Gold Mine in Senegal, into something much bigger. With Hill in the role of chairman at Teranga and Young as President and CEO, the company laid out ambitious plans to become a mid-tier, multi-jurisdictional gold producer in West Africa. Sabodala first commenced production in 2009, although Teranga spent the next few years optimising the mine’s output before expanding the company’s presence into Burkina Faso with the acquisition of Gryphon Minerals in 2016. This was swiftly followed by

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MINING | Teranga Gold Teranga’s entry into Ivory Coast via two joint

form the basis of Teranga’s modus operandi

ventures, the first in 2016 and the second in

in West Africa. In fact, this attitude has been

2017.

fossilised into the business through its name Teranga – which means hospitality and

This expansion of the company’s organic

friendliness in Wolof, the main local language

growth pipeline demonstrates Teranga’s

of Senegal.

position as a multi-jurisdictional company in one of the highest growth regions in the

Senegal is the company’s original host

world for gold mining and is paving the way

country in the region and hosts a section

for its evolution to mid-tier status.

of the West African Birimian gold belt, a sweeping geological formation that has

Over the last two decades, West Africa has

provided a steady stream of world-class

transformed into one of the premier regions

gold deposits across multiple jurisdictions,

for gold exploration and extraction in the

including the Sabodala mine.

world, with many great geological formations, modern mining codes and increasingly

Sabodala is located approximately 650 km

receptive governments – an enticing prospect

Southeast of the capital city Dakar and is the

for foreign investors and mining firms.

largest-scale gold mine and mill in Senegal, although the industry is still in its nascency

“It’s been one of the fastest growing regions

and the Senegalese government recently

for gold production over the last quarter

revealed aims to become one of Africa’s top

century,” says Young. “West Africa has

seven exporters of gold by 2035.

gone from almost no production to having a production profile that is close to North

At the outset, Sabodala was producing

America, which I never thought would’ve

around 130,000 ounces (oz) of gold per

occurred when I started in this industry.”

annum, however, Teranga was intent on boosting its production profile and following

This unprecedented growth in the West

the expansion of its processing plant in 2012,

African gold mining sector has been driven by

has averaged annual production of more

a willingness to see industrial development

than 200,000 oz.

by leaders and governments, along with a clear but fair caveat that the rules are

The company also completed a mill

followed, and the benefits of responsible

optimisation project in 2015 and the results

mining shared equally.

were tangible in the company’s subsequent

What’s in a name? With this in mind, it was quickly decided that corporate social responsibility (CSR) would

output figures. “The Sabodala mine had a record year last year, following on a record year in the previous year,” confirms Young.


Resource Global Network

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MINING | Teranga Gold

“West Africa has been one of the fastest growing regions for gold production over the last quarter of a century.� Richard Young, president and CEO


Resource Global Network

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MINING | Teranga Gold During FY 2017 Sabodala produced 233,000 oz of gold, almost double its original output figures, and while the operation has matured Teranga’s unit mining and processing costs have fallen to the lowest in company history. “These [improvements] are a reflection of the investment we’ve made in training programmes for our Senegalese nationals. We’ve moved from 10-15% of our workforce being ex-pats at the time of IPO to between 5-6% today and really benefitted from the investment made in our employees.” Furthermore, the optimisation of operations at Sabodala has allowed Teranga to increase its free cash flow, which has played an integral role in Teranga’s broader expansion plans. Since 2013 the company has finalised four deals in the region, an impressive achievement given the downturn in gold prices at that time. Young hopes that of these four deals – two acquisitions and two JVs – in Burkina Faso and Ivory Coast, at least three (if not all four) can be advanced into producing mines. This, along with the optimised performance of the Sabodala mine, should comfortably take the company into mid-tier production status. “We are very pleased with these transactions,” says Young. “They set us up very well for the future, not only as gold prices rise but as we see an increase rise in our production profile in tandem.”


Australian Resource Business Global Network

A benchmark for responsible mining Although Teranga has been highly focused on attaining that coveted mid-tier status over the last few years, that hasn’t diminished the company’s philosophy with regards to setting the benchmark for responsible gold mining in West Africa. “The board has given us a very clear mission and that is to share the benefits of responsible mining with all of our stakeholders. From a shareholder perspective, that means our ability to operate and grow our business without issue, and for the local and regional communities, it is about ensuring they are better off after we leave.” Having been active in Senegal for over eight years, Teranga has established a broad range of CSR programmes, which is typified by the growth of its CSR group in the country. In 2010 the company had two individuals on the team, today there is about 50. “To start off with, we addressed historic stakeholder grievances,” reveals Young. “Then we began engaging with the local and regional communities to understand what their vision was and how we could participate in that.” After liaising with the local and regional communities over an extended period, Teranga was able to identify some clear priority areas, with the most pressing concerns being agriculture and food security.

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MINING | Teranga Gold


Resource Global Network

“That’s an area where we think we’ve done a tremendous job. This is a region which has a distinct rainy season, but when that ends there is absolutely no precipitation, meaning it’s a very short growing season. “So, we installed pumps with drip irrigation and have created 12 market gardens to date, which has allowed the women in this region to create sustainable livelihoods.” The market gardens have given nearly 1,000 women vital food security and economic assurance, while improving the health of families in the region that didn’t previously have access to fresh fruits and vegetables.

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MINING | Teranga Gold

“In terms of sustainable economic development, we think all of the things we are doing are going to help sustain this region long after we are gone.�


Resource Global Network

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MINING | Teranga Gold

Richard Young, president and CEO Teranga has also focused on youth and

are going to help sustain this region long

education, giving over 200 students from

after we are gone.”

local communities the opportunity to attend colleges and universities in Dakar

Development pipeline

and crucially covering the fees associated

Teranga’s social sustainability outlook is also

with those courses.

being implemented across its development stage projects in the other West African

In addition, Teranga offers training

countries where it operates. This been

programmes at site to those in the region,

epitomised by the company’s decision to

bringing in casual labour, teaching trades

change the name of a project in Burkina Faso,

and key skills that can be used locally,

on the request of the community.

regionally or at national level. The company received the Banfora Gold “In terms of sustainable economic

Project as part of its acquisition of Gryphon

development, we are also really focused

Minerals in 2016, however Banfora is actually

on small business enterprises and looking

the name of a large town about 90 km away

to help grow those enterprises in the

from the mine site and so the name did not

region. We think all of these programmes

give the local community the pride in the mine that they were looking for.


Resource Global Network

Consequently, the project was renamed Wahgnion, which means ‘together we will succeed’. Since then Teranga has made swift progress in advancing the mine through the development stages. A feasibility study was completed in late 2017, full construction work began in Q1 2018 and financing has recently been concluded. Teranga secured US$165 million in funding from Taurus Funds Management for the Wahgnion project, a sum that Young describes as pivotal to the company’s financing plans. Another significant development within the company came with the de-listing of the stock on the ASX in December 2017. When the company first listed, it did so out of an Australian outfit. But being a Canadianheadquartered company, the stock largely migrated back to the world’s largest mining and resource exchange (the TSX) and liquidity declined materially on the ASX. Therefore, the significant cost of the dual listing no longer made sense anymore and

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MINING | Teranga Gold

“With one producing mine, a second one on target to come on line next year and Golden Hill, we have an attractive organic growth pipeline.�


Resource Global Network

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MINING | Teranga Gold

the decision was made. Overall, Teranga’s

“We’ll have an updated reserve out mid-

shareholders have been overwhelmingly

year, which we believe will show increased

supportive of its growth strategy, particularly

reserves and better economics for Wahgnion.

prominent board member David Mimran.

On this project we are just getting started,” proclaims Young.

“David is our largest shareholder with 22% of the company. He’s also on our board and

Wahgnion currently has a nine-year mine

is the largest private employer in two of the

life but the company hopes to extend this to

countries in which we operate. He believes

between 11 and 13 years with this updated

in our vision and is helping us execute that

reserve.

vision.” The company also has an advanced The future looks bright for Teranga with the

exploration project, Golden Hill, situated

Wahgnion project on track to pour first gold

on the prolific Hounde belt in Burkina Faso.

next year, which will increase the overall

Work at Golden Hill is advancing rapidly and

production profile by 50% and potentially

Teranga is investing $8 million in Golden Hill

double the company’s free cash flow

drill programmes in 2018.

generation.


Resource Global Network

Teranga plans to release an initial resource

“Golden Hill is moving forward faster than

for the project’s most advanced prospects by

we could have ever anticipated and beyond

year end. Preliminary metallurgical test work

that, we’ve done two joint ventures in Ivory

programmes are underway and base line

Coast which we are really excited about. With

environmental studies are planned for later

one producing mine, a second one on target

this year.

to come online next year and Golden Hill, an advanced exploration project, we have an

“Taurus also provided an additional $25

attractive organic growth pipeline.”

million to take our Golden Hill exploration project through to feasibility, assuming that

With all this in mind, Teranga will certainly

the drill results continue to be as positive as

become a mid-tier gold producer in West

they’ve been. We’re very pleased with their

Africa, and with responsible mining at the

confidence in the project.

core of its philosophy, the firm is creating a positive legacy wherever it goes in the region.

TSX:TGZ

j a

85


AFRICA. IN THE PALM OF YOUR HAND.

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88

MINING | Hummingbird Resources

HUMMINGBIRD

COMING FULL CIRCLE A

The world’s leading authority


Resource Global Network

D RESOURCES

AT Y A N F O L I L A I N M A L I

y on the global gold industry

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MINING | Hummingbird Resources

For Dan Betts, managing director of Hummingbird Resources, trying to describe the company’s achievements in the first quarter of 2018 without using superlatives is a difficult proposition. The West Africa-focused miner achieved first production from the Yanfolila Gold Mine in Mali back in December 2017, before earmarking the first three months of 2018 as a key ramp-up period for its flagship project. Low and behold, in a Q1 production update Hummingbird announced that the mine had reached nameplate capacity, thus completing the company’s journey from construction of the mine to full commercial production. Hummingbird’s MD talks to RGN about 2018 production targets at Yanfolila, along with further exploration plans and development opportunities. Over the last three months, Hummingbird has rapidly progressed from a developer under pressure to deliver on time and on budget, to a cash generative gold producer. “It’s a complete change in the time and our situation in the business as we’ve got the cash flow. Its totally transformational and a


Resource Global Network

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MINING | Hummingbird Resources

“We want to show the market and any potential investors that we are not just going to - having become a cash generative business - get dizzy with cash flow and go off doing different things� Dan Betts, managing director


Resource Global Network huge milestone,” remarks Betts. While it has undoubtedly been an exciting period for the company, this transition has presented a whole new set of challenges to the team, who have had to ensure that every single small component is taken care of for the operation to run smoothly. “To do that in three months, which is a pretty short amount of time in the mining industry, I think is amazing and hats off to the team, overall they’ve done a fantastic job.” The next challenge for Hummingbird at Yanfolila is to maintain current production levels for the rest of the year and meet the overall production guidance for the mine that was set at between 105,000 ounces (oz) and 115,000 oz of gold. While Betts wishes not to belittle the difficulty of achieving this target – remember sustained gold production is dependent on a number of circumstances and Hummingbird is relatively new to the game – he feels that overcoming challenges is nothing new for the company. “I think we have to be diligent. We have built a fantastic operating team, the new manager is extremely experienced and has brought a lot of steady leadership and organisation to the operating team, making sure our maintenance schedule is proactive and not reactive.” Beyond the 2018 production guidance for Yanfolila, Hummingbird has also devised a

93


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Resource Global Network 95

TIMELAPSE VIDEO YANFOLILA GOLD MINE

detailed exploration plan for the surrounding

misleading according to Betts, as the gold has

area which should further cement the future

already been discovered by Hummingbird’s

of the operation beyond its current seven-

predecessor, and so the MD prefers to use

year mine life.

the term ‘Resource conversion’.

The project is located within the highly

“What we need to do is go to those Resources

prospective Yanfolila Greenstone Belt, which

that we inherited from Gold Fields - we have

has been subject to lots of previous mining

over 1 million ounces of gold in Resource

activity down the years, most notably by

outside of the mine plan - and we need to put

Yanfolila’s former owner Gold Fields.

more drill holes into it, understand it better

Low hanging fruit

and convert those Resources into Reserves to extend the mine life and extend the

In fact, Hummingbird actually inherited

profitability of the business – that is the low

a significant gold resource outside of

hanging fruit.”

the current mine plan, and it is for this reason that the company has identified an

This year, Hummingbird will proceed with this

exploration strategy for 2018 that focuses on

Resource conversion by setting up its own

‘low hanging fruit’.

data base and inventory of Resources, before converting them into Reserves. “I think it’s

However, the word exploration is somewhat

the most intelligent way to add value to the


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MINING | Hummingbird Resources


Resource Global Network

business, but we will only do it in a disciplined Nonetheless, Hummingbird is not solely way,” reveals Betts.

predicated on Yanfolila and the associated Resource conversion in the surrounding area.

“We want to show the market and any

It has a significant asset in Liberia called the

potential investors that we are not just

Dugbe Gold Project and also a material stake

going to - having become a cash generative

in fellow West African explorer, Cora Gold.

business - get dizzy with cash flow and go off doing different things.”

In fact, Cora Gold was created when Hummingbird teamed up with a private

Clearly for Betts and Hummingbird, the

company and agreed to hand over some of

name of the game is discipline and as

its West African exploration assets to the

such the company has pledged to spend

consequent business, in return for a 50%

no more than 15% of free cash flow on its

share in Cora, diluted to 34% post the IPO

exploration programme at Yanfolila each

fund raise.

year. This should amount to at least US$8 million, enough to add significant value to

Arms’-length exploration

the business while conforming to its highly-

Betts has previously commented on

regimented mantra.

the attractiveness of this ‘arms’-length exploration incubator’ model Hummingbird

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MINING | Hummingbird Resources

has with Cora and it seems like the relationship is about to bear fruits, judging by the stellar results of a maiden drilling campaign in Southern Mali. Cora’s Tekeledougou drilling programme identified two gold zones: Woyoni, with 56 metres at 2.2 g/t Au, including 22 metres at 4.86 g/t Au and Kouroudian, with 17 metres at 6.8 g/t Au including 1 metre at 102 g/t Au. “If there is any continuity there and they can build a resource base, it’s only 8 km from our plant so it could be a monumental winwin for both of us. They can effectively save themselves the huge CAPEX of building a mine and can be fast-tracked into cash flow by running through our mill.


Resource Global Network

“We know them well, we trust the management team, and we have great faith in Jon Forster and his skills as an exploration geologist. Overall, we are totally supportive; Hummingbird’s representatives sit on the board and we are totally behind them, so good luck to them.� All things considered, Hummingbird has significant growth plans for Mali over the coming years and fortunately has been blessed with a pro-mining government that is also highly cooperative and considerate towards foreign investors. Working with a wholeheartedly supportive regime has become even more coveted when considering the recent plight of foreign mining companies in countries such as Tanzania and the Democratic Republic of Congo, where outfits have been subject to

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MINING | Hummingbird Resources

hasty unilateral action during the last 12

together and the only way that works is if

months.

communities believe in what you are doing.

While Mali is in the process of resolving a

“This is reflected in the tangible actions

$100 million VAT dispute with Randgold

you take in their villages and communities,

Resources, the government has reassured

and we’ve made a significant positive

Hummingbird and its fellow miners that there contribution, which we will continue to do. will be no knee jerk reaction and it remains

Where we’ve made the greatest impact is

fully supportive of mining developments in

within local healthcare, having run successful

the country, according to Betts.

projects regarding malnutrition-awareness, health and hygiene education and premature

Hummingbird has also been very conscious

birthing issues, to name but a few.

of the role it plays within the communities that it operates in right from the beginning

“In particular, our relationship with Critical

of its time in West Africa and has tried to

Care International, who have been managing

commit in a meaningful way to improving

our health care response, has been

living standards and quality of life.

exceptional. The tangible evidence is that they’ve been saving dozens and dozens of

“We are a guest in their communities and the only way to succeed is if everyone works

lives so I’m really proud of that,” beams Betts.


Resource Global Network

Brave new world

“We are also looking to explore and extend

To conclude, Hummingbird has taken its

the mine life, but we are really focusing on

first steps into the challenging sphere of

making the operation absolutely hum, if you’ll

running a full-scale commercial gold mine,

pardon the pun.

after progressing from explorer and mine developer to producer at Yanfolila in rapid

“That’s the first and foremost priority

time.

this year. If you get that right you have unbelievably strong cash flows, and we are

Therefore, in acknowledgement of the

clearly under-valued based on those cash

challenges faced by a typical African gold

flows, and you have optionality in terms of

company in the first three to six months

exploration internally and M&A.”

of production, Betts reveals that the main priority for Hummingbird over the next 12 months is consolidation.

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MINING | Avesoro Resources

Completing a turnaround in Liberia and expanding into Burkina Faso


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AVESORO RESOURCES

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MINING | Avesoro Resources

On May 10th, West Africafocused gold miner Avesoro Resources published a glowing financial update, with gold production and sales more than trebling in the first quarter of 2018, which helped quarterly revenue rise to US$91.4 million. This incredible figure represents more than 90% of the full year 2017 revenue of $98 million reported by the company in March, after it was able to complete a successful turnaround at the New Liberty Gold Mine in Liberia. Avesoro’s annual performance was also bolstered by the acquisition of two producing gold mines in Burkina Faso, which combined with the revival of New Liberty to create a positive spiral in the company’s fortunes, propelling it towards mid-tier status.

industry, after achieving first marketable

“We are delighted with the continued strong

introducing a number of initiatives to boost

operational performance delivered in the

operations at the mine.

production as recently as March 2016. However, dark clouds were quick to form around Liberia’s inaugural large-scale gold mine. Just two months after reaching full production, Avesoro (then operating under the name Aureus Mining) was forced to suspend operations at New Liberty amid commissioning delays and a tailings leak, which was exacerbated by a deteriorating financial position and retreating gold prices.

A timely intervention It was at this point that Turkish gold miner MNG Gold swooped in to arrest the company’s decline, signing a deal to become the majority shareholder of Aureus and providing a cash injection totalling $150 million to rescue the New Liberty mine, before renaming the company Avesoro. After refreshing the boardroom with several appointments from MNG’s team, Avesoro commenced a new strategy for New Liberty,

first quarter,” says Avesoro’s CEO and director Serhan Umurhan.

“Primary amongst these was the decision to transition to an owner-operator mining

“All of our mines performed in line with

model, which significantly reduced the

expectations, leaving us on track to meet

ongoing costs of mining operations. We also

2018 production guidance. We go forward in

purchased additional fleet to allow for an

2018 from a position of strength.”

increased mining rate and to catch up on the stripping shortfall the company inherited.”

New Liberty is the first and largest commercial gold mine in Liberia’s fledgling

Furthermore, Avesoro has improved


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MINING | Avesoro Resources

All of our mines performed in line with expectations, leaving us on track to meet 2018 production guidance. We go forward in 2018 from a position of strength.” Serhan Umurhan, CEO and director equipment availability, recruited additional

However, fast forward to Avesoro’s Q1 2018

high-quality staff for both the mining

production report and irrefutable evidence

operation and process plant, undertaken

emerges of the turnaround at New Liberty.

a proactive maintenance schedule and optimised the process plant allowing for

The mine produced a record quarterly gold

an increased throughput from 90ktpm to

output of 27,870 ounces (oz), a 9% increase

140ktpm.

on the production sum achieved in the previous three-month period at the end of

Factor in improved tailings and surface water 2017. management and the result is a stable and profitable mine, which was not much more

Addressing the size of the task the company

than a far-fetched dream back in mid-2016.

had on its hands, Umurhan says: “It has


Resource Global Network

undoubtedly been challenging, but we knew

The next challenge for Avesoro at New

there was a quality asset here and that we

Liberty is to continue delivering high

had the capabilities within the team to bring

standards in line with the company’s renewed

it into stable production.

mine plan and production targets. However, the miner has also devised plans to extend

“As the most recent record production results the LOM at New Liberty. have shown, we have succeeded in achieving that. I would like to thank all our staff who

“We have a lot of inferred gold ounces below

have shown great determination in bringing

the pit shell that are not currently included

about this result.”

within the mine plan and have just completed a 52-hole drill programme with the aim of

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MINING | Avesoro Resources

increasing the confidence level in these

from the Youga and Balogo gold mines in

ounces, with extremely encouraging results

Burkina Faso during the first quarter of the

to date confirming the resource model.”

year, with the combined production figure of both mines increasing by 39% on the last

The results of this drilling programme will be

quarter to 40,218 oz.

combined with near mine exploration that is currently underway. “2018 is an exciting

This is an impressive result considering

year for exploration across the whole group,”

Avesoro purchased the mines only

reveals Umurhan.

last year in what the company called a

Welcome to Burkina Faso Avesoro also delivered strong output growth

‘transformational’ move, in the sense that it gives them the chance to grow their portfolio and expand their geographic reach in the West Africa region.


ResourceGlobal GlobalNetwork Network 109 Resource

In particular, Avesoro was able to apply its

“To date, the average mined grade from

skills at the Youga mine to deliver the highest

Balogo has been approximately 18 grams per

quarterly production from the process plant

tonne (g/t) and during the quarter this has

in a decade and has already extended the

fed through to the process plant, with the

mine life and devised a more cost-effective

feed grade for the quarter increasing by 37%

mining process.

to 4.5 g/t.�

The Balogo mine is also held in high regard

Youga and Balogo are proven gold-producing

by the company despite its previous owner

assets that complement the New Liberty

struggling to raise the necessary finance

mine and provide an instant boost to

that would reflect its true potential. Avesoro

Avesoro’s production portfolio, in addition to

began mining the high-grade asset in March

adding high quality exploration upside that

2017.


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MINING | Avesoro Resources

will provide further organic growth in the

“We will continue to focus on delivering

future.

on our production guidance through 2018 whilst also assessing various other M&A

Taking into account the additional output

opportunities.

from the Youga and Balogo mines, Avesoro’s total Q1 production figure came to 68,088 oz,

“We have a very strong platform to grow from

which represents an all-time high return and

both organically and by acquisition.”

keeps the company on track to meet its 2018 guidance of between 220,000 oz to 240,000

A golden horizon

oz.

Umurhan also has a reasonable right to believe that external market conditions

“Our primary ambition is to become a

will further sweeten the fruits of success

premier mid-tier gold producer and that

born out of Avesoro’s increased operational

ultimately means we have to reach 500,000

productivity.

oz [annual production rate] and the acquisition of Youga and Balogo has been a

Gold is widely considered a ‘safe haven’

significant first step in reaching that target,”

commodity and will continue to be perceived

Umurhan proclaims.

in this way by investors long into the future.


Resource Global Network

Interest in gold as a portfolio buffer also

After completing a turnaround at New Liberty

peaks during times of geopolitical tension or

and bolstering its production portfolio with

upheaval and this is when gold spot prices

the two Burkina Faso acquisitions, Avesoro is

tend to rise, which is only good news for

well on the way to a golden horizon.

international gold mining companies, and Avesoro’s CEO and director expects gold

In the short term, the company is confident

to rise in the face of escalating tensions

it can soon reach a 300,000 oz annual

between the world’s two largest economies.

production target through organic growth and exploration across its three mines, but in

“President Trump’s foreign policy and the

the long term it will look to achieve a 500,000

current brewing trade war with China have

oz annual guidance through M&A activity and

increased political instability and uncertainty

is currently assessing various opportunities

in these regions and we are seeing investors

throughout the continent.

turn to gold as a traditional haven.”

AIM:ASO TSX:ASO

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STUDIES draglobal.com

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MINING | Chalice Gold Mines

CHALIC GOLD

Cashed up and debt free with Canad and Australian gold assets


CE D

dian

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MINING | Chalice Gold Mines

Alex Dorsch of Chalice Gold Mines traces the company’s history back to 2006 when it listed on “Here the Australian Stock Exchange, we originally owning the historic are 18 Chalice gold mine in Western months Australia. However, the CEO later and explains how it wasn’t until we’ve built the 2009 venture into Eritrea a substantial in Northern Africa that the portfolio of company was materialised, after exploration assets its acquisition of the Zara Gold in the world-class Project. Chalice advanced the domains of Canada and project over the next three years, Australia,” says Dorsch. The until a significant US$114 million CEO believes that what sets bid, lobbed by a Chinese-Eritrean Chalice apart from its exploration consortium convinced the competitors is the company’s company to sell. Using the funds combination of financial capability and broad technical and commercial from the Eritrea sale, Chalice spotted an opportunity in Canada strengths. and snapped up a gold project in Financial and technical 2012, before making a healthy profit again with a divestment in proficiency “It’s a unique business model where the 2016. company can apply its strong financial

By this point Chalice had developed a strong

position as well as its deep technical and

nous in reading the market and commodity

commercial ability to really interrogate

price cycle, with an ability to smell the right

projects quickly, pick opportune times to

time to invest in order to maximise investor

acquire and make material progress in

returns.

developing each one.”

The company changed tact slightly in 2017,

Returning to its transaction history, the sales

when the board found there was a growing

in Eritrea and Canada put the company in a

appetite for risk in the sector and decided to

commanding financial position, in that it has

build a commanding exploration portfolio,

been well cashed up and debt free ever since.

targeting discovery in Canada and Australia. This is a rare position for a junior exploration


Resource Global Network

company to find itself in; having a war chest

highly regarded industry veteran Tim Goyder.

of over AUS$40 million. Crucially, the healthy

He has a great track record of success and is

balance sheet has meant Chalice has not had

an integral part of the business as executive

to rely on capital markets and going back

chairman.

to shareholders every time it needs to raise funds to support development plans.

“Beyond that, within the wider team there is a demonstrable depth and breadth of

Dorsch also regards the board and 25-strong

experience which I think is another key driver

Chalice team as another key area of strength

of the business.�

within the business. “We have a very experienced board led by well-known and

The decision to focus its exploration portfolio

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MINING | Chalice Gold Mines


Resource Global Network

on Canada and Australia ended up being

“We like the geological selling point and

a no-brainer for the board for myriad

investment certainty that comes with

reasons beyond the obvious low sovereign

mining friendly jurisdictions, so from that

risk attached to operating in these secure,

perspective it’s a very attractive proposition

mining-friendly regions.

to be operating in those countries.”

In fact, mining-friendly is a bit of an

East Cadillac Gold Project

understatement, particularly in the case of

Chalice’s flagship asset is the East Cadillac

Québec. The Canadian province rebates

Gold Project, located in the world-class Abitibi

Chalice around 30% of its direct exploration

greenstone belt in Québec along the Cadillac

expenditure and on top of that, there is no

break, which hosts over 100 million ounces

state royalty – making it a very attractive

(Moz) of gold discovered and a number of

region for exploration.

globally significant gold mines.

“It’s the endowment of both regions and

“We are in very good company and have a

their geological potential,” says Dorsch. “We

regionally significant ground position now

consider Canada and Australia world-class

covering over 27 km of strike along that

domains, with a lot more to give in terms of

break. We are very encouraged by what we

exploration potential.

have seen from the work to date.

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MINING | Chalice Gold Mines


ResourceGlobal GlobalNetwork Network 121 Resource

“We’ve only had the property for just over 18

property in October last year and have only

months and have continued to expand the

just completed that programme in early

ground holding, while undertaking a back-to-

April,” reveals Dorsch.

basics, ground-up exploration programme to give it the best chance of success in making a

From the initial phase of drilling Chalice has

substantial discovery.”

made two promising gold discoveries to date, with a large portion of results still pending

When Chalice first picked up the project, they

and a number of additional targets waiting to

noticed it had significant exploration gaps

be tested. The drilling was performed by two

and was likened to a patchwork of random

reliable international drilling contractors.

sampling and ineffective drilling. Seeing this, Chalice stepped back and began with regional “We had great support from Foraco, G4, sampling and all the modern geophysical

ALS, MRB & Associates, Abitibi Geophysics,

tools it had at its disposal, including 3D

amongst others in Val-d’Or; they have all

Induced Polarisation, aeromagnetic and

done an excellent job. To drill the best part

LIDAR surveys.

of 30,000 metres on time, under budget and without significant incident is very

“We used all of those tools successfully and

commendable, so we are really happy with

started our first phase of drilling on the

that outcome.”


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MINING | Chalice Gold Mines


Resource Global Network

Alex Dorsch, CEO

Australian assets

“It is a difficult area to explore but we have

Turning to the Australian portfolio, Chalice

the right EM and gravity signatures on our

has established two main projects Down

block that gives us a lot of excitement about

Under: The Warrego North Project in the

exploration success,” says a hopeful Dorsch.

Northern Territory and the Pyramid Hill Gold Project in Victoria.

Chalice also recently picked up a district scale land position at Pyramid Hill, extending over

The former is located in the very well-

3,350km2 of ground North of Bendigo in

endowed Tennant Creek area in close

Victoria. Initial findings indicate that there is

proximity to several historic mines dating

a real lack of exploration under the Murray

back to the mid-20th century, including the

Basin cover in that area.

1.6Moz gold-producing Warrego Mine. This notion has been strengthened by the “We are immediately Northwest of the

Victorian government’s declaration that there

Warrego mine, a very high-grade historical

is potentially over 32Moz of gold extending

gold-copper mine in the Tennant Creek IOCG

North of Bendigo, which has given Chalice

domain. The area has many similar mines,

extra motivation to begin work on the project

all with a relatively small surficial footprint

very shortly.

but very high-grade ore bodies extending at depth.

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MINING | Chalice Gold Mines

Commodity markets

acquire projects that we genuinely want to

Chalice is looking to accelerate work across

run.

all of its projects over the next 12 months but will also uphold an aggressive acquisition

“Our strategy is very much based on making

strategy.

timely acquisitions of undervalued assets and at the moment our focus is on gold and

“We are looking at upwards of 10

nickel sulphide projects.”

opportunities at any one time and enjoy the luxury of having a significant amount

Dorsch believes that macro conditions

of capital to deploy – but we always look at

shaping the gold market have not had quite

acquisitions with an owner’s mindset; we

as profound an effect on prices as usual,


Resource Global Network the cycle by the company. Hence, Chalice is keeping its ear to the ground with regards to opportunities in this space. “Ours is a distinctive and unique value proposition,” concludes Dorsch. “Typically, junior explorers don’t have the ability to operate at our level, so I like to think we have a particularly strong value proposition given we are trading around our cash backing, with a proven model based on acquiring assets at opportune times,

citing ongoing political instability in North

progressing them rapidly and delivering

Korea and the Middle East.

value to shareholders.

However, Chalice continues to monitor these

“Having that financial ability, commercial

external forces and remains bullish on gold

mindset as well as the technical ability really

and other base metals, which are viewed

does differentiate us.”

as being at the beginning of an upturn in

ASX:CHN TSX:CXN

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128

MINING | Raiden Resources

RAIDEN RE

Serbia-focused copper-gold j


ESOURCES

junior partners with Rio Tinto

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MINING | Raiden Resources

Formerly known as Subzero Group, Raiden Resources was relisted on the ASX in February 2018. In the months building up to its revival, the firm busied itself with the takeover of Timok Resources, which heralded the dawn of Raiden’s entry into the recently revived resource sector of Serbia. Through the acquisition of Timok Resources, Raiden gained ownership of two wholly-owned Serbian entities, giving it access to a number of highly prospective coppergold projects in the Eastern European nation. Then, in an unprecedented development for a recently listed junior, Raiden executed an option to an earn in agreement with Rio Tinto, merely one month after it assumed control of its Serbian assets. The restructuring process at Raiden saw Dusko Ljubojevic appointed managing director along with several other appointments at board level. Ljubojevic is a highly experienced geologist of Balkan descent who has spent many years with juniors and major companies across Africa, Asia, Australia, North America and Eastern Europe, including in Serbia. “That was one of the reasons I came on board,” he says. “We started focusing on this region because we were aware of the


Resource Global Network

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MINING | Raiden Resources

Limestone ridge potential it has as a re-emerging copper-gold

Timok acquisition that Raiden was able to

producing district, which despite the fact

establish a foothold in Serbia’s mining sector

that it has and continues to yield world-class

under its new identity. The board’s ultimate

discoveries, remains underexplored.”

goal is to explore its projects and continue to expand the extensive copper-gold portfolio in

Working in Serbia is nothing new to many

solid jurisdictions. Ljubojevic believes Raiden

of the company’s new board members

has gained an enviable portfolio in a Tier 1

and management team and this previous

jurisdiction.

experience will provide Raiden with a major advantage as it begins to advance its Serbian

“This is about as good of a ground package

operations.

as any exploration company could hope to secure in its initial portfolio. The projects are

“We are essentially hitting the ground

situated within a district which is dominated

running. We are not evaluating a new

by major development companies such as

jurisdiction and are very comfortable here

Rio Tinto, Freeport McMoRan, JOGMEC (Japan

with the service providers, the regulators and

Oil, Gas and Metals National Corporation),

we know how to operate in Serbia.”

and a number of producing state-owned mines. Plus, it is located in a favourable

However, it wasn’t until the completion of the

mining jurisdiction.”


Resource Global Network

Magnetite sample In Serbia, Raiden holds a significant acreage

which is home to the Timok Magmatic

position of over 300 km², encompassing

Complex. Timok is a relatively small district

a sizeable portfolio of approximately six

which is one of the main copper producing

projects which are either granted or under

centres in Europe and has become the

application. The projects are at varying

focus of several international companies’

stages, from defined, drill ready targets, to

endeavours who have recently entered

early stage exploration projects, providing

Serbia.

the company with a solid pipeline of opportunities.

“Our portfolio includes two projects within Timok and the areas remain underexplored.

These projects are located in some of the

What we are targeting are porphyry copper-

most prospective geological regions of Serbia

gold and epithermal mineralisation which

and in some instances, these areas that have

constitute the Bor and Majdanpek deposits

seen little to no modern exploration activity

and have been actively mined for decades

to date. “This provided a fantastic opportunity

by the Serbian state mining company, RTB

for an explorer to move in,” says Ljubojevic.

Bor.”

Most of the projects are located within the

Ljubojevic explains how there are possibly

Carpatho-Balkan zone in Eastern Serbia,

further extensions of Timok style geology

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MINING | Raiden Resources

“SERBIA IS PROBABLY THE MO DESTINATION FOR MINING IN EUR THE NUMBER OF MAJOR CO DUSKO LJUBOJEVIC, M which strikes South towards the Bulgarian border, where the company has secured three more projects – Donje Nevlje, Pirot and Stara Planina – all of which are conducive for porphyry style and intrusion related mineralisation. Focusing on the Stara Planina project, it has two large geochemically defined anomalies

both of these in equal

which were confirmed by geophysics

measure: “Serbia is

undertaken by Raiden in late 2017. The

probably the most favourable

geophysics correlated very well with the

investment destination for mining and

surficial geochemistry and will be followed

exploration companies in Europe, and that is

up in the company’s maiden drill programme

reflected in the number of major companies

this year.

in the country.

This is just one example of the promising

“It’s a relatively small country and you have

geology and targets which are a hallmark of

a number of global development companies

Raiden’s Serbian portfolio. Any mining firm in

competing for the acreage, which says a lot

the world would say that the geology of any

about the quality of the jurisdiction and the

given host region is central to the chances of

prospectivity of the geology.”

a successful project, but equally important is the quality of the host jurisdiction.

Modern mining has taken place in Serbia for over a century, therefore it has a very

According to Ljubojevic, Serbia provides

well-established mining workforce that is


Resource Global Network

OST FAVOURABLE INVESTMENT ROPE, AND THAT IS REFLECTED IN OMPANIES IN THE COUNTRY” MANAGING DIRECTOR The Rio Tinto JV agreement has undoubtedly been the most significant news item coming out of Raiden during its first few months of operation, but what will the US$31 million earn-in deal actually translate into for the junior? very costcompetitive in comparison with many Western jurisdictions. Infrastructure is also highly developed as a legacy of the former Socialist state, when extensive road and rail systems were constructed throughout the

“In the short run, it allows us to focus our own initial funding and time on our most advanced asset – the Stara Planina project,” noted Ljubojevic. Raiden is well cashed up with a budget of over $4 million, meaning it can properly test the large targets at its most advanced project.

entire country. “In the medium term it provides us with a In fact, rail systems run right through most of

partner with not just ability to finance, but

Raiden’s projects and power is probably the

also has experience and technical skills in this

cheapest in Europe, says Ljubojevic. When

geological environment and targeting these

it gets there, the company will also benefit

porphyry systems.

from an in-country smelter facility and good transportation links to neighbouring

“In the long run, Rio Tinto is a partner which

countries via rail, leading to numerous ports.

has the ability to not just explore but to develop in case there will be a discovery. We

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MINING | Raiden Resources

Malachite and azurite within porphyry


Resource Global Network

Andesite porphyry, showing varying degrees of alteration and leaching are in partnership with somebody that can

are prospective for porphyry systems.”

add some real long-term value.” Under its new incarnation, Raiden has Capturing the attention of one of the world’s

already achieved what most junior mining

largest mining companies, not even one

companies can only dream of. The company’s

month into its relisting, is a major affirmation

JV with Rio Tinto will provide it significant

of the quality of Raidens’ portfolio and the

upside potential on the joint venture

management team’s ability to close the deal.

properties, while allowing it to fast-track its other more advanced projects aggressively.

“Many juniors state they are targeting Tier 1 deposits, but in our case this has been

In the mining industry, the story always ends

confirmed,” Ljubojevic declares.

in production. But, for Raiden the focus will continue to centre on discovery in a region

“A company like Rio Tinto is after Tier 1 deposits. By entering into this agreement with us, it signals to the market that our projects

ASX:RDN

which continues to produce Tier 1 assets.

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MINING | AusQuest

AUSQ

Building a mutually advanta


Resource Global Network

QUEST

ageous alliance with South32

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MINING | AusQuest

AusQuest is a multi-commodity junior explorer with major ambitions. The ASX-listed company has maintained the same philosophy since its original listing back in 2003, and that has been to focus on largescale discoveries that would pique the interest of players from the mid to large-cap space. “We’ve never got into the small mine game,” admits managing director Graeme Drew. “The idea was always to retain an interest in projects that a major company would eventually develop. This is a niche which fits our background in terms of our people and their expertise.” AusQuest has followed this principle closely throughout its history, establishing a number of promising joint ventures with large companies in Australia and overseas, at times coming close to fashioning a project with the legs to sustain the appetite of a

The alliance with South32 was a momentous

major.

occasion for AusQuest and a realisation of a fundamental company aim, but what has the

However, this changed when the company

deal translated to during its first 12 months

entered the Peruvian copper-gold

and what is in store for the future?

exploration space in 2011. Six years later AusQuest was finally able to attract the

The art of the deal

major partner it had been searching for,

“We have regular technical meetings with

signing a strategic alliance agreement (SAA)

South32 and regular communication with

with South32, a giant of the Australian

their people. We work closely with them

mining sector having been spun out of BHP

presenting the projects, discussing the results

in 2015.


Resource Global Network

and agreeing the way forward including drill

have so far provided us with in excess of

targets and programmes,” reveals Mr Drew.

$8 million and that is likely to increase over the next six months as we move into some

AusQuest’s technical team is strong and

exciting drilling programmes.”

boasts over 200 years of collective experience in the mineral exploration space, a good

In Peru, where AusQuest has identified three

fit with the well-documented technical

separate projects, over 8,000 metres of

experience of South32’s team.

diamond drilling is planned for the first two projects in the next six months. This drilling is

“From a financial point of view, we now have

estimated to cost US$4 million with South32,

10 projects under the SAA and they [South32]

as part of the agreement, providing the

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MINING | AusQuest means to fund these campaigns along with capital to support additional drilling at some of the company’s Australian projects. South32 provides technical and financial support to AusQuest’s various drilling programmes in Peru and Australia, earning the right to exclusivity over all these titles as well as the right to earn equity in each of them. South32 can claim equity up to 70% by spending US$4 million on each project and has the right to go to 80% if it chooses to fund a pre-feasibility study on any project. Alternatively, South32 could choose to end its participation in a project, leaving AusQuest to fund pro-rata to maintain its equity. “If we present a project to South32 and it is rejected twice then it becomes our project. But, our aim is to have all of our projects accepted because when you are looking for major deposits, the more frogs you kiss the more chance you’ve got of finding the prince,” Drew quips. “Realistically if one of them comes in, we’ll be extremely pleased. If more than one comes in it will be a dream come true.” AusQuest is also providing management for the initial drilling programmes, which is a major bonus for the company because it has already expended substantial time and effort developing the prospects and has the knowledge and commitment to successfully drive them through the early drilling stages.


Resource Global Network

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MINING | AusQuest

“This is a little different to handing the

it gives us financial incentives (bonuses) to

projects over to a major or bringing another

provide new projects and opportunities to

company in just to do the drilling, often

South32 on an annual basis, which then helps

without the same conviction that we would

us to undertake (pay for) the generative work

have.

to provide the pipeline of projects that they are interested in.�

“Overall, we think the relationship is working extremely well. The agreement is relatively

One of the more recent outcomes of a

unique in terms of the way it is structured as

strategic meeting between the two partners


ResourceGlobal GlobalNetwork Network 145 Resource AusQuest’s strategy because when developing multi-asset ventures, junior explorers often fall into a momentumsapping trap. They successfully raise funds for a drilling programme, achieve interesting but not compelling results and then have to wait for an extended period while raising more capital for further drilling. However, in AusQuest’s case this common pitfall has been effectively bypassed by the SAA, as the funding arrangement gives the company the breathing space required to focus on testing several prospects at the same time. “I think it’s almost unheard of to have 10 projects being funded under the one agreement. This is fantastic from our point of view. It gives us the chance to succeed and South32 multiple chances to have a potential development.” While Drew concedes that it is highly unlikely all 10 will deliver viable returns, he maintains they will all be subject to the best scientific tools; mapping, sampling, geophysics and drilling, which gives them a fighting chance of discovering orebodies. came in March 2018, when AusQuest confirmed that South32 would be extending

The Peruvian pipeline

its funding to cover four additional

In total, AusQuest has five projects that are

exploration opportunities, taking the total

currently at the drilling stage, two of which

to 10 projects under the SAA and triggering

are in Peru. Generally, the Peruvian targets

a second bonus payment of US$500,000 to

are large scale plays and occur undercover,

AusQuest.

particularly in the South where there is lots of soil, sediment and volcanic cover masking the

This serves as further vindication of

rocks.


146

MINING | AusQuest

This is bread and butter work for AusQuest,

Also at the drilling stage is the Cerro de Fierro

having applied techniques learned from

prospect, an iron oxide-copper-gold (IOCG)

its experience searching for undercover

target at the Northern end of AusQuest’s

mineralisation in Australia, including airborne

target area.

and ground geophysical surveys. “We recognised its prospectivity based on the Delving further into AusQuest’s Peruvian

combination of magnetics and radiometrics

portfolio, Mr Drew highlights the Chololo

from our proprietary airborne survey data.

Porphyry Copper prospect as first cab off

There was a large potassium anomaly which

the rank in Southern Peru. It was found

suggested regional potassic alteration of the

through mapping and sampling, while

rocks, and an isolated magnetic response

ground geophysics revealed a large-scale IP

several square kilometres in size sitting

chargeability anomaly, which bodes well for a

within it, making it an obvious target for IOCG

new copper discovery.

mineralisation.”

The undercover target has never been tested,

Subsequent mapping and sampling has

and AusQuest is excited to be starting a wide-

confirmed the presence of abundant copper

spaced 5,000 metre drilling programme in

in the area, not only in structures but also in

May.

the rocks as well, plus there is potential for


Resource Global Network

the prospect to be sweetened by the possible

of process water that would be useful when

co-existence of gold.

developing new deposits,� Drew ponders.

AusQuest is currently undertaking drill

As drill programmes across five projects fast

permitting for the Cerro de Fierro project and

approach, AusQuest can look back upon its

hopes to have this completed by mid-year at

strategic alliance with South32 as a defining

which point access construction can begin.

moment in the junior’s history. With the

This is necessary for both projects as they

technical and financial support of a major

occur in elevated regions of the country.

industry player, the company has a golden opportunity to establish a world-beater of

“All of our projects in Peru are close to the

a project at home in Australia or in its new

coast, so infrastructure requirements are

Peruvian frontier.

potentially less than for the larger deposits that occur inland within the Andes. Being close to the sea could also provide a source

ASX:AQD

j

147


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150

MINING | NTM Gold

NTM GOLD


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Breaking new ground in a historic Western Australian goldfield

151


152

MINING | NTM Gold

When ASX-listed junior explorer The Mertondale Shear Northern Manganese merged Zone with fellow Western Australia“The main mineralising structure is the focused junior Redcliffe Mertondale Shear Zone which is a major Resources in 2016, the former linking structure between two major regional gained access to the Redcliffe structures,” says Muir. “It’s highly fertile, Gold Project, located 240 km and there has been quite a lot of gold found North of Kalgoorlie and 40 km previously in the Mertondale Shear.” Northeast of the historic gold mining town Leonora. Renamed In fact, over 1.4 million ounces (Moz) of gold NTM Gold and with a new single has been extracted and produced from the asset focus, the amalgamated Mertondale Shear in both past and present company made instant progress endowment, most of which has been shallow in the shape of five successful oxide gold. However, large swathes of the drill programmes towards region have received little to no exploration the back end of 2016, which attention due to the presence of deeper significantly enhanced NTM’s cover. It is amongst these underexplored areas that NTM has focused its efforts. understanding of the geology and the mineralisation present across the site. Drilling continued “Nearby exploration and existing deposits highlight the potential of the region and throughout 2017 while the company refined its management whilst there has been some exploration, it hasn’t been conclusive with regards to finding team under the leadership of veteran geologist Rodney Foster. mineralisation at deeper depths. So, it’s been our philosophy to drill deeper and we’ve had

At the start of 2018, Foster handed the

some good exploration success so far.

reins of the company to Andrew Muir, another highly experienced geologist with

“We are also in the unusual position of having

an additional 13 years in the finance sector.

a reasonable sized land holding. We’ve

RGN finds out how the new managing

got about 170 km² of prospective ground,”

director plans to build NTM through

reveals Muir.

advancing the Redcliffe project. “We already have a modest resource The Redcliffe project is located in the vast

base which is growing, but one of the key

Eastern Goldfields of Western Australia,

differentiators between us and our peers is

within a prolific gold bearing structure of

that we have four or five processing plants

which NTM has secured a substantial tenure

within 50-75 km of our project.”

in.


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153


154

MINING | NTM Gold

Therefore, while the project is well connected gold rest with the Redcliffe project, which has to WA’s unofficial gold capital Kalgoorlie, it

a current resource estimate of 278,100 oz

is also conveniently located within trucking

(5.48 Mt @ 1.57g/t Au).

distance of a number of processing plants, which gives NTM a range of development

NTM has completed a succession of drilling

options once the company looks to

programmes across a number of prospective

commence gold production.

targets over the last 18 months, many of which have provided excellent results.

However, there is plenty of work to be done before the company can begin to think about “We are getting grades of up to 10-15 g/t in processing any ore, and its hopes of striking

some of the higher-grade parts. Not all of


Resource Global Network

them are like this, but we are chasing higher-

metres of defined strike that could potentially

grade shoots at depth. To date, the high-

rise to 1.5 km.

grade parts are probably averaging at 5 g/t which is easily mineable underground.�

The Bindy prospect

Until recently the drilling completed at Bindy was coarsely spaced at 100 metre intervals, so during the first quarter of

Some of the most impressive results from

2018 the company returned with a more

the sustained drilling activity at the Redcliffe

comprehensive infill RC drilling programme.

project comes from the Bindy prospect, a large mineralised system with over 800

155


156

MINING | NTM Gold


ResourceGlobal GlobalNetwork Network 157 Resource At the beginning of April, the company published an enticing set of assay results from the infill programme at Bindy, with notable intersections including: 20 metres @4.25g/t Au (Incl.10m @ 7.92g/t Au), 10 metres @4.20 g/t Au (Incl.5m @ 7.83g/t Au) and 15 metres @2.37g/t Au (Incl.5m @ 4.93g/t Au). Overall, this drilling programme has significantly enhanced NTM’s understanding of the prospect and increased the company’s confidence in the grade distribution by giving a fuller picture of the continuity of mineralisation at Bindy. In the same statement, NTM also revealed it had initiated diamond drilling at the Nambi prospect, another target within the Redcliffe project for which the company has high expectations. The diamond drilling was quickly completed and now NTM is analysing the data and will publish the results in due course. Significantly, there was visible gold in the drill core, further boosting expectations of the deposit. Taking into account the wealth of drilling activity conducted over the last 18 months, NTM hopes to significantly increase the overall resource at the Redcliffe project, with an updated resource announcement due by mid-2018. “Based on the drilling we’ve done to date I am very confident that we can significantly increase our resource base in both the short term as well as the long term. We are confident that there will be a meaningful resource base on the project,” Muir declares.


158

MINING | NTM Gold

Investor support

Widening his gaze to the contemporary

On the investor side, the company has been

global commodity market, Muir believes

continually well funded from its investor base

there is always a case for having a portfolio

on the ASX and this was demonstrated by a

with exposure to gold. “It has safe haven

recent $1.25 million capital raise, a crucial

status and with the current geopolitical

result for the junior as it looks to continue

climate at the moment, we think that gold is a

with its aggressive drilling campaigns.

very good place to be.

“We had some very strong demand from the

“Of course, the Australian dollar is also

market so we decided to increase the raise

helping. With the dollar at about 80 cents

to $1.5 million. We also had bids for over $4

it boosts the Australian gold price up quite

million which was a fantastic outcome.

nicely. The sentiment largely shifts on US dollar pricing, but we think gold is an easily

“But given our current capacity and aims, we

understandable commodity, it’s a very

didn’t want to make the raise too big. We’ve

transparent, very liquid market and you can

still got plenty of funds to go out and do what

always sell it.”

we need to do in the short to medium term.”


Resource Global Network

For now, NTM is occupied on getting its

“We are active, we are drilling, we will have

updated mineral resource out by the middle

strong news flow over the next few months

of 2018, but beyond this it aims to expand

with the drill results coming through at all

greenfields exploration across its large land

three major prospects and we will have the

holding in the Mertondale Shear.

resource update by mid-year.

“In addition to the majority of our deposits

“That will be a major piece of news and value

having significant upside at depth and

point for the company. Beyond that we will

strike, there is 15 km of our 40 km length of

be looking to expand exploration beyond the

tenements that hasn’t been tested properly,

deposits in an aggressive exploration drive.”

so that’s another target for us,” says the MD.

ASX:NTM

159


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162

MINING SERVICES | Process IQ

PROCESS IQ Completing a turnaround in Liberia and expanding into Burkina Faso


Resource Global Network

163

Driving out hidden inefficiencies in minerals processing plants

AVESORO RESOURCES


164

MINING SERVICES | Process IQ

Process IQ was formed by Pieter Strobos and Daniel van der Spuy after the South African duo emigrated to Australia in 2000 and 2006 respectively. The directors of the company have been involved in the mining industry for the vast majority of their professional careers, crossing paths at Mintek South Africa before they decided to set up a process control and instrumentation service company based in Perth in 2011. Process IQ has achieved triple-digit growth annually since then and is now well-known and respected in the mining industry.

‘technology exhaustion’ from the hail of silver bullets out there,” says Strobos. “Process IQ fulfil the role of ‘technology integrator’, assessing many different technologies and applying appropriate solutions for mining companies. “Since the personnel at Process IQ are proficient in a wide variety of technologies, we can provide efficient support services to mines, particularly remote operations. “The majority of the measurement techniques we supply are unique. For example: fast online measurement of cyanide (Cynoprobe), carbon concentration, dissolved oxygen and pH in CIP gold plants and elemental analyses (like Ni, Cu, C and sulphur with Blue Cube MQi) and particle size measurement in flotation plants.

A large degree of Process IQ’s clients stretch back over 17 years to when Strobos first

“We also assist in introducing unique and

settled in Australia. The firm’s business

improved measurement control techniques

director tells RGN how Process IQ has

in SAG and Ball milling circuits.”

developed into a client–focused mining technology and service business that

An example of one of the company’s most

understands minerals processing and is

recent products is MillSlicer. “Vibration

continually sourcing the best technologies

technology is used to analyse the impact on

that can be applied to the mining industry to

the mill shell, and from that we can provide

solve problems.

the operators with a visual presentation of what’s going on inside their mills as well as

Process IQ is unique in that it not only uses

five additional signals that has never before

traditional technology but is at the forefront

been used in mills.

of developing and applying emerging technology related to Industry 4.0 in the

“This can have a substantial economic impact

mining industry.

on mines as it has a direct influence on throughput and liner wear of mills.”

“Some mining companies often suffer from


Resource Global Network

165


166

MINING SERVICES | Process IQ

In fact, Strobos reveals that some clients

companies, for instance to optimise grinding

have reported throughput improvements

circuits.

of between 10-20% after combining this technology with their advanced

“Through our remote monitoring capability,

control algorithms. This is a significant

we can provide expert data analyses and

operational improvement that could make

support services to mining clients anywhere

a huge difference to a company’s financial

in the world in real time.

performance. “Many suppliers of cloud-based systems start MillSlicer was developed by the firm’s US

their presentations with ‘imagine’ while we

partner, Digital Control Lab, and Process IQ is actually do solve real-life problems for the registered as distributor of the technology in

mining industry,” says Strobos.

Australia, South East Asia, Russia and Africa. Process IQ currently services many gold, base “We have skills that cover the full spectrum of metal, battery mineral, mineral sands as well automation and optimisation, including basic as iron ore mines, working with brownfields and specialised instrumentation through to

and greenfields sites.

advanced control systems and the Industrial Internet of Things (IIoT) platforms with

As a first step, Process IQ will typically visit

artificial intelligence (AI) for monitoring and

an existing plant to conduct a detailed review

optimisation.

of the operation. This may include a gap analyses on the existing instrumentation

“In Perth we have experts in every aspect

and control infrastructure, talking to site

of minerals processing - from design

personnel, collecting data and identifying

through to operations and support. Process

opportunities to improve throughput,

IQ collaborate with other METS (Mining,

recovery and efficiency.

Equipment, Technology and Services)


Resource Global Network

“For study managers of greenfields projects,

processing plant is a significant expense for

we advise thinking about ‘The Digital Mine’

a miner, through losses of valuable metals in

early on - typically before the detailed

the tails or inefficient or sub-optimal use of

feasibility study (DFS) phase. Process IQ can

equipment, power or reagents.

assist by specifying the Basis of Design at this early stage to ensure the process and control

The problem is that these types of losses

system design of new mines are future-

don’t appear on quarterly or annual financial

proof.”

statements, therefore it is often difficult to account for internally and can easily be

Several factors can affect the safety and

ignored. However, it is just as important for

performance of metallurgical processing

productivity to audit these types of losses as

plants, including mineralogy, feed grade, the

the more obvious ones.

age of equipment and instrumentation, level of process control, skill level of operators and Through the application of digital remote managers – as well as their ability to harness

data analytics, Process IQ can solve process

data and turn it into useful information to

problems even before the client becomes

drive decisions.

aware of it.

It is Process IQ’s role to evaluate these key

The manual handling of data is a big problem

performance indicators and provide cost-

in the mining industry, according to Strobos,

effective solutions to inefficiencies or unsafe

with platforms such as IoT and AI forming

work practices.

part of a natural solution to the manual data problem.

Mining companies need a social license to operate, and part of this is being sustainable

This is another key area of business for

- namely being good stewards of the earth’s

Process IQ, which is a vital consideration

natural resources. An inefficient mine or

amongst metallurgical mills and plants. In

167


168

MINING SERVICES | Process IQ

“Some mining companies can often suffer from ‘technology exhaustion’ from the hail of silver bullets out there. Process IQ can assist by fulfilling the role of ‘technology integrator’ Pieter Strobos, business director


ResourceGlobal GlobalNetwork Network 169 Resource many cases, plant operators continue to

efficiencies and reduce errors and downtime

persist with manual measurements and

on equipment.”

laborious filling in of manual log sheets to record data. These are often shelved and

Strobos believes that the biggest novel

seldom looked at. This information could

development made by Process IQ is the

be valuable if it were automated, digitised,

IoT platform and the application of AI. The

analysed and used in process control.

business director hopes that the company can lead the process of digitisation in the

Process IQ is spearheading the transition

mining sector, which is currently lagging

towards digitisation of data in the mineral

behind advanced manufacturing and other

processing industry through its automated

industries in terms of automation and

analysers, IoT platform and application of

machine learning.

machine learning. The mining industry is faced with several “One example is working with a client to get

unique challenges such as unpredictable

their data directly from the lab into our cloud- feed materials, which make automation based platform where it can be integrated

challenging. To some extent, mineral

with other plant data for viewing, analyses

processing absorbs a lot of the natural

and optimisation.”

variability, making it easier for downstream processing.

In support of its digitised data handling services, Process IQ offers a wide range of

However, a lot of technology has been

measurement devices to help operators

developed over recent years that can now

augment other information such as in-field

also be applied in mining to handle this

status and availability of equipment.

variability through online measurement and machine learning.

“The use of cloud-based services enables us to cross traditional boundaries and

Finally, Strobos has a simple message for

access information from sources such

any METS companies: “Partner with us in

as design drawings, asset management,

your digital transformation journey to help

process control, part procurement and

improve mining.”

availability, operators shift information, etc. This information can greatly enhance

a j


170

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172

APPOINTMENTS & EVENTS

APPOINTMENTS Billionaire Agarwal names new boss of Vedanta Resources Diversified miner Vedanta Resources has ended its year-long search for a new boss with the appointment of Srinivasan Venkatakrishnan. Venkatakrishnan has been CEO of Africa’s largest gold producer AngloGold Ashanti for five years but will leave the post to take the helm at Vedanta on August 31. Vedanta’s billionaire owner Anil Agarwal has been looking for a new leader since former Rio Tinto CEO Tom Albanese announced his departure.

Saudi Aramco makes symbolic female board appointment Lynn Laverty Elsenhans has been appointed to the board of Saudi Aramco in a milestone move for Saudi Arabia, a country with very few female executives. The US oil executive joins the world’s most profitable company under a significant shake-up of its 11-member board. Elsenhans is a former chief executive and chair of US oil refiner Sunoco and was named one of the world’s most powerful women in 2008.

Orocobre lands appoints new director to board from TTC Lithium brine producer Orocobre will welcome Masaharu Katayama from Toyota Tsusho Corporation (TTC) to its board of directors. The appointment follows the placement of Orocobre shares to TTC, which allow the latter to appoint a representative to Orocobre’s board. Orocobre’s chairman Rob Hubbard said: “[Katayama] brings a wealth of talent and corporate experience with him from his role with TTC.”

Susan Dio appointed chairman and president of BP America BP has appointed Susan Dio as chairman and president of its American operation, effective from May 1st, 2018. Dio succeeds John Mingé, who will move to chair a study by the National Petroleum Council (NPC), before retiring in March 2019. “Susan’s breadth of operational and commercial experience gained with BP around the world make her ideally suited for the key role of representing BP in the US,” said chief executive Bob Dudley.


Resource Global Network 173

EVENTS Our pick of the top mining, oil & gas and renewable energy events happening around the world in the months to come

World Renewable Energy Congress June 25-27 Stockholm Sweden 2018 Precious Metals Summit - Beaver Creek September 20-22 Colorado US Mining Investment Europe June 6-7 Frankfurt Germany The Third UK Onshore Oil and Gas Summit July 05 Birmingham UK Solar and Storage Finance Asia July 02-03 Singapore

Want to promote your resources event? Email the editor at editorial@resourceglobalnetwork.com


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