RESOURCE Volume 5, Issue 7
GLOBAL NETWORK
Mining, renewable energy and oil & gas worldwide
‘S BEST OF
Plus exclusive preview of the
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Cheryl Carolus Chairperson Gold Fields
Nicole Bieske Head of Program - Mining for Sustainable Development Transparency International
Hon. Winston Chitando Minister of Mines & Mining Development Zimbabwe
Amaka Anku Practice Head, Africa Eurasia Group
Julian Treger CEO Anglo Pacific Group
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MINING | Brookfield Multiplex
WELCOME
RGN’s ‘best of’ issue is an opportune moment to take stock of the progress made in the global resources industry during 2018. The oil and gas sector endured a challenging year amid increasing price volatility, but renewable energy continued its inexorable climb around the world.
Editor Jacob Ambrose Willson
The mining industry had another stellar year, with exploration, mine development and commodity production ramping up across key mining hubs including the Americas, Africa and Australia.
Content Director (APAC and Americas) David Hunter
Australia was the focus of RGN’s first issue of 2018, which included an interview with the ASX plus a host of ASX-listed miners with projects in-country and in other international mining jurisdictions. Lithium, aka the ‘new white gold’, followed in issue two riding a wave of momentum from the electric vehicle and energy storage sectors. RGN’s lithium issue provided a supply-side overview, spotlighting future battery grade lithium chemical producers like Nemaska Lithium, Lepidico and Lithium Australia.
Executive Team
Content Manager Michelle Madureira
Creative Director Hugo Currie ICT Director Stuart Clark Managing Director Simon Curran
RGN’s annual gold issue provided an authoritative voice on gold demand in the shape of a World Gold Council Q&A, along with features on a range of gold miners from West Africa, Australia and Canada. Issue four considered a key macro issue facing the entire world – with polluting carbon-based energy seemingly on the way out, can renewables and nuclear energy step into the void and supply reliable, clean energy to an increasingly power-hungry world? We celebrated the 125th anniversary of the first discovery of gold in Kalgoorlie in issue five, before publishing a bumper TSX issue featuring Canada-listed heavyweights such as McEwen Mining and OceanaGold. Everyone here at RGN would like to extend our thanks to our featured companies, advertisers, contributors and readers for your support over the year, and we hope to see you at the 2019 Investing in African Mining Indaba. You can read an exclusive interview with the Indaba’s managing director Alex Grose, along with other African mining content, in this issue.
Jacob Ambrose Willson, Editor
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 RGN 2018 REVIEW 8 Testimonials Glowing feedback from several satisfied feature companies 10 Featured Companies A selection of the diverse range of resources companies featured in RGN over the past year
NEWS 14 Global resources news Our selection of mining, oil & gas and renewable energy stories from the last month 20 RGN onsite Mines and Money 2018 review
MINING INDABA 2019 PREVIEW CONTENT 30 Mining Indaba preview Q&A RGN talks to Mining Indaba’s MD and director of content ahead of its 25th anniversary event 44 Minerals Council South Africa An exclusive interview with Roger Baxter – CEO of South Africa’s rebranded Minerals Council
CONTRIBUTORS 54 Michael Cronwright (MSA Group) Considering Africa’s bright prospects in the booming critical materials mining space 62 Willem Middelkoop (Commodity Discovery Fund) Comparing recent Pilbara gold discoveries with the famous Witwatersrand deposits
BEST OF 2018: MINING 72 Orocobre RGN speaks to the lithium triangle’s first new brine producer in 20 years 84 Blue Sky Uranium Leading uranium discovery in Argentina
MINING INDABA PREVIEW Q&A
MINERALS COUNCIL SOUTH AFRICA
CONTENTS 96 Teranga Gold Multi-jurisdictional West African gold producer reaching for mid-tier status 118 Prospect Resources Advancing the second largest JORC compliant hard rock lithium resource in Africa 128 McEwen Mining Asset rich leverage to gold, silver and copper 140 Ironbark Zinc Applying the finishing touches on a large-scale zinc project over a decade in the making
BEST OF 2018: RENEWABLE ENERGY 154 Lake Turkana Wind Power Africa’s largest wind farm connects to Kenya’s national grid 170 Gemini Wind Park A watershed project for the Dutch offshore wind industry 182 juwi Renewable Energies A new focus on hybrid energy solutions across sub-Saharan Africa
BEST OF 2018: OIL & GAS 196 Otto Energy Part of an exploration renaissance in the Gulf of Mexico basin 208 Leigh Creek Energy Producing first syngas at the Leigh Creek Energy Project
CLASSIFIED ADVERTISING 224 Classifieds
APPOINTMENTS & EVENTS 226 Appointments Notable appointments in the resources industry from the past month 227 Events Our pick of the top forthcoming mining, oil & gas and renewable energy events
IRONBARK
OTTO ENERGY
LEIGH CREEK ENERGY
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REVIEW | Testimonials
RGN has spent time garnering feedback from companie Here is what a few e
“Resource Global Network was dedicat integrating them into well-polished fea - Richard Young, president & CEO, Teran
“The people at RGN delivered a produc the time frame they had discussed. Their unique business mod like ourselves to distribute a beautifully crafted brochure.” – Ja
“It has been very enjoyable to work wit friendly.” – Caigen Wang, managing dire
“It has been a pleasure to work with th stand out by understanding the nature of the business we are seamless collaboration on the article. - Dusko Ljubojevic, mana
“We are very happy with the quality of others. Their professional service and q - Alex Dorsch, CEO, Chalice Gold Mines
“It was a pleasure working with Jacob A They were professional, responsive and efficient. I am impresse magazine.” - Layton Croft, CEO, Pancontinental Gold Corp
Resource Global Network
es featured in the magazine over the course of the year. executives have said:
ted to learning the different aspects of our story and ature articles. It was a pleasure working with them.” nga Gold
ct that was elegantly done in exactly del allows an exploration company ames Anderson, CEO, NuLegacy Gold
th the RGN team who are very professional, patient and ector, Tietto Minerals
he RGN team on this project. They involved in. This allowed for aging director, Raiden Resources
the end product and would definitely recommend RGN to quick turnaround is impressive.”
Ambrose Willson and the RGN team. ed with the high quality of RGN’s
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REVIEW | Featured Companies
Over the course of 2018, RGN featured a diverse range of resources com appeared on RGN’s news site or in the magazine, either as feature com these organisation
Resource Global Network
mpanies across its various platforms. Below is a selection of outfits that mpanies or advertising partners. RGN will continue to work closely with ns as we enter 2019.
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Conveying Excellence with High-End Conveyor Belts Every conveyor belt, every climate zone and every topography calls for perfect conveyor belt technology. ContiTech provides knowledge, experience, a globally encompassing and competent network and a broad product range to give your conveyor belt applications a technological lead. More than 140 years of rubber expertise make us a strong partner, enabling our customers to benefit from the synergies within the Continental corporation. We implement innovative conveyor belt technology reliably, sustainably and safely from development to commissioning and after-sales service.
conveying excellence
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NEWS | Brookfield Multiplex MINING
GLOBAL RESO
Our selection of mi renewable energy news
OURCES NEWS
Resource Global Network 15
ining, oil & gas and s from around the world
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NEWS
AUSTRALIA SEEKING TO BUILD POTENTIAL $7 BILLION HYDROGEN EXPORT MARKET Hydrogen gas produced by solar and wind energy as well as brown coal is set to become the next big focus for Australia’s energy industry and export market, according to a recent report. The report, conducted for the Australian Renewable Energy Agency (ARENA) by consultants ACIL Allen, said that Australia is seeking to supply what could become a US$7 billion hydrogen market to China, Japan, South Korea and Singapore by 2030. Hydrogen exports could grow the same way that Australia’s LNG industry has over the past 30 years, according to ACIL, the Australian government and gas producer Woodside Petroleum, although it would
initially be a fraction of the forecasted $35 billion brought in by LNG exports in 2019. The global drive to cut carbon emissions and the falling cost of wind and solar power has turned hydrogen gas, traditionally used as rocket fuel, into a clean energy alternative to fossil fuels such as natural gas and coal, despite the concept being over four decades old. “We are seeing commercial pressure emerging from Woodside’s customers in Japan and Korea, who are encouraging us to develop hydrogen power as a carbon-neutral energy source that can ultimately be derived from renewable sources,” said Woodside CEO Peter Coleman.
Resource Global Network 17
MINING INDABA AND IGF HOST AFRICAN MINING SUSTAINABILITY MEETING Mining Indaba and the Intergovernmental Forum on Mining, Minerals, Metals and Sustainable Development (IGF) brought together a number of major industry organisations on October 17th to discuss the role of communities in shaping the development of Africa’s mining sector. The meeting took place at the IGF’s annual general meeting in Geneva, which unites industry and government leaders to address some of the most pressing environmental, economic and social issues that result from mining activity. The Alternative Mining Indaba, International
Council on Mining and Metals (ICMM), UNECA’s African Minerals Development Centre and the South African Department of Mineral Resources all participated in the meeting facilitated by directors of the Mining Indaba and IGF. Discussions focused on the Communique released by the Alternative Mining Indaba and signed by all parties at the 2018 Mining Indaba event. Each organisation tabled key measures introduced over the last year to help mining companies make a greater contribution towards sustainable development across Africa. For instance, ICMM highlighted its wideranging community support programmes, which aim to strengthen relations between companies and communities with a particular focus on integrating social transition considerations into mine closure planning.
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NEWS
PROSPECT RESOURCES DELIVERS POSITIVE DFS FOR ZIMBABWE LITHIUM PROJECT The Arcadia Lithium Project in Zimbabwe is one step closer to production after Prospect Resources completed a definitive feasibility study (DFS) for the lithium and tantalum resource. ASX-listed Prospect has forecasted average annual spodumene concentrate production of around 212,000 tonnes, 216,000 tonnes of petalite concentrate and 188,000 pounds of tantalite concentrate over a 12-year mine life. Outcomes of the DFS on the 2.4 million tonnes (Mt) per annum base case included life of mine revenue of US$2.93 billion (excluding tantalum credits) and average annual profit of $106 million. The pre-tax net present value at a 10%
discount rate is calculated at $511 million, delivering a payback for the project of 2.5 years from first production and an IRR of 44%. Capital costs for developing the project are estimated at $165 million, with operating costs of $285 per tonne from open-pit mining. Arcadia is Africa’s second largest undeveloped lithium project with a mineral resource of 43.2 Mt, behind only the Manono project in the Democratic Republic of the Congo.
Resource Global Network 19
SOUTH AFRICA FINALLY UNVEILS NEW REGULATORY CHARTER FOR MINING SECTOR South Africa has published a revised version of the new charter for the mining sector, which will attempt to reverse the recent decline in the industry and attract fresh investment. The unveiling of the third version of the charter brings to an end a seven-month engagement process, after President Cyril Ramaphosa asked newly appointed Mineral Resources Minister Gwede Mantashe to halt its implementation and hold consultations with stakeholders in the industry. “The charter is an important contributory element to efforts aimed at stimulating the economy. It aims to create regulatory certainty, sustainable growth and a competitive and transformed mining
industry,” said Mantashe. “It is important to South Africa realising her long-term objectives of eliminating poverty, reducing inequality, and creating jobs.” The charter spans seven elements: Ownership, mine community development, employment equity, procurement, beneficiation, housing and living conditions and human resource development. In ownership, the revised charter upholds plans to raise the level of black ownership to 30% from 26% for new mining rights, but companies that have already met the 26% threshold will not have to increase it.
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MINING | Mines and Money 2018
2018 – A ROUND UP: TELLS TH SUCCESSFUL MINES AN
Resource Global Network
HE KEY STORIES FROM ANOTHER ND MONEY CONFERENCE
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MINING | Mines and Money 2018
In the last week of November, the international mining community gathered in London for the 16th annual Mines and Money conference, which delivered four jam-packed days of networking, presentations, debates and more. Over 100 mining companies exhibited across the main floor and over 225 distinguished speakers graced the main stage over the course of the event. Meanwhile in the spotlight theatre, mining firms went headto-head in regional pitch battles ahead of a ‘World Cup final’ on the last day. Various investor roundtable slots provided a tailored element to proceedings and at the conclusion of each day, attendees were able to wind down and enjoy a host of social events. RGN was at this year’s Mines and Money and brings you a key round up of the event, which managing White Rock Minerals - Mines and director Simon Curran describes as the best one he has attended for quite some time. The star of the show However, the real favourite of the exhibitor The 100+ exhibitors served up a truly
floor was unquestionably RNC Minerals -
international flavour to the event, with
the company made famous by the recent
companies of varying sizes travelling from
discovery in Western Australia of some of the
major mining hubs in Africa, Australia
largest gold bearing rocks in mining history.
and North America, along with other less renowned jurisdictions such as Finland,
What’s more, TSX-listed RNC took some of
Mongolia and Myanmar.
the ultra high grade specimens with them to London and displayed them at their stall, to the amazement of all of those in
Resource Global Network
d Money World Cup Final Mining Pitch Battle winners, 2018
attendance. In total, the Father’s Day Vein
one of the highest grade gold mines in the
discovery has delivered 25,355 ounces of
world.
gold (as of October 31st) since its discovery on September 9th.
“We have mined high grade gold at nine different locations and there is potential to
On day four of the event, RNC’s CEO Mark
find a lot more of these high grade specimens
Selby offered a presentation on the main
from the Father’s Day vein. We now have the
stage, where he re-told the company’s
capital available to undertake our exploration
incredible discovery at the Beta Hunt mine,
programme,” concluded Selby.
which had lived a previous life as a nickel mine for 43 years but is now set to become
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MINING | Mines and Money 2018
Is everything battery metals now? The ongoing rise of battery metals, as a result of growing global clamour to electrify the transportation industry, has been a major talking point for the mining industry during recent years, and Mines and Money provided a significant platform for these discussions at this year’s event. This was evidenced by an illuminating battery metals keynote debate on day two, with panellists including Benny Oeyen from Anglo American, Jay Roberge of Tehama Ventures, Bushveld Vanadium’s CEO Fortune Mojapelo and Professor Donald Sadoway from MIT. The panellists discussed the environmental concerns driving up demand in battery metals, enjoyed a healthy debate on which specific commodities are likely to be most important to battery makers and electric vehicle manufacturers, and discussed the importance of energy storage alongside the production of battery metals. “The EV story has received a lot of attention in recent years, but energy storage will play a crucial role in this story,” said Mojapelo of Bushveld Minerals, who are one of the only operational primary vanadium producers in the world. South Africa-based Bushveld went on to win the Mines and Money Mining company of the Year - Africa award for 2018, after a stellar
Jacob Ambrose Willson, RGN editor
performance which saw the AIM-listed
Re-
Resource source Global Network firm consolidate its position as a globally significant vanadium producer and further advance into the energy storage sector through its subsidiary Bushveld Energy. Other winners included Nemaska Lithium, who picked up the Excellence in Sustainability award for its work with the Cree First Nation communities of Québec during the development stages of its Whabouchi lithium project. OceanaGold also won the Social License to Operate award and mining veteran Peter Hambro was given the Lifetime Achievement accolade.
London calling Elsewhere, Australia-based Resolute Mining arrived at the conference after announcing its intentions to list on the London Stock Exchange at the start of the week. The Africafocused gold miner sees London as a natural home for large mining companies with African assets. Resolute’s CEO John Welborn went on to deliver an address on the company’s Syama underground mine in Mali – the world’s first fully automated sub-level cave mine in Africa. “If you can remove people from these sub-level mines, safety levels will drastically improve,” said Welborn during the presentation. The Syama mine has been developed on schedule and on budget, with sub-level caving due to commence shortly. When in full production, Syama will deliver 300,000
Simon Curran, RGN managing director ounces of gold per annum.
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MINING | Mines and Money 2018
Battery Metals panel - Mines and Money 2018
RNC Minerals presentation - Mines and Money 2018
Resource Global Network
Resolute Mining presentation – Mines and Money 2018
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MINING | Mines and Money 2018
Mining Pitch Battles
The Africa pitch battle took place on day
Throughout the week, a selection of mining
two, with West Africa-focused Mako Gold
companies took part in the Mining Pitch
impressing the judges enough to qualify for
Battle competition, with entrants seeded into
the final on day four.
regional divisions ahead of qualification to the World Cup Final, the last scheduled event
The Australia heat followed on day three,
of the 2018 conference.
which saw White Rock Minerals emerge victorious. White Rock owns the Mt
On day one, Cabral Gold came on top in the
Carrington gold-silver project in New South
Latin America pitch battle after showcasing
Wales, along with the polymetallic Red
its district-scale CuiĂş CuiĂş Gold Project in
Mountain project in Alaska.
Brazil and from the Europe, Middle East and Asia heat, Xanadu Mines qualified for the
Just hours before the World Cup Final on day
final based on the strength of its Mongolian
four, TSX-listed Nevada Exploration won the
projects.
Canada pitch battle after president James Buskard delivered a compelling presentation
Resource Global Network
on the company’s portfolio of new district-
Rock Minerals had won the 2018 Mines and
scale projects along Nevada’s Cortez Trend.
Money World Cup Final Mining Pitch Battle, to the delight of CEO Matt Gill.
With the event winding down to a conclusion at the end of day four, presenters from
This brought an end to proceedings at the
each of the five finalists were pitted against
2018 Mines and Money conference, with
one another in front of the ‘dragons’ den’ of
delegates, investors and companies coming
judges and the gathered audience.
away from the event with a renewed feeling of optimism after a week of deal-making and
After the final presentations were delivered
knowledge transfer at the number one global
and suitably interrogated by the judges and
event for mining investment.
the audience, it was announced that White
ar j
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MINING | Mining Indaba 2019 preview
Resource Global Network
RGN talks to Mining Indaba’s MD and director of content ahead of its 25th anniversary event
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MINING | Mining Indaba 2019 preview
The Investing in African Mining Indaba is one of the biggest occasions in the international mining community calendar, and the 2019 event promises to be bigger than ever as it celebrates its 25th anniversary in Cape Town. Once again, the Indaba will bring together the largest amount of investors, mining executives and junior miners from across the globe under one roof with a key focus on championing Africa’s sustainable economic development. The organisers have built an exciting agenda that combines new themes with staple Indaba programmes, all with an emphasis on driving investment into African mining. RGN sat down with Indaba’s managing director Alex Grose and director of content Harry Chapman to get an exclusive preview of this landmark event. Alex Grose – managing director event of any industry in the whole world by Jacob Ambrose Willson: The Mining
the London Conference Awards. It wasn’t
Indaba has recently changed hands after
a question of whether we were successful,
it was acquired by ITE in October. How
it was a question of whether we fitted with
has the transition from Euromoney to ITE
Euromoney’s ongoing strategy, and we didn’t.
been managed?
So, when an approach was made by ITE they seriously considered it and eventually
Alex Grose: Firstly, I’d like to say that in
accepted.
recent years under Euromoney we have successfully turned the Indaba around, and
I now know that ITE have been looking at this
this year we were voted the best large-scale
event for years. It goes with their strategy of trying to own and operate the best large-
Resource Global Network scale must attend events in the world, cross-
are the DRC and Tanzania. Resource
sector. We now have a home alongside lots
nationalism is certainly something that
of other world-class, large scale events.
people wanted to find out more about.
Euromoney had several events within its portfolio, but only one or two big ones. Now
We had 34 government ministers at
we are at home with people who are used to
the Indaba last year, and I think most
running lots of large-scale events.
events would be happy with one or two. If you’re going to make an investment in
The transition is fairly simple. It shouldn’t
Africa as opposed to Canada or Australia,
mean much difference to anyone, apart from governments play a big role in that, in their a different name on the bank accounts. We
regulation, how stable they are. That is
have brought over the same management
something we saw coming through last year.
team. We haven’t lost one member of staff and we have new offices in Paddington as
The importance of sustainability was
opposed to Fleet Street.
another continuing theme. I don’t think that’s going away and its going to become
JAW: Casting your mind back to the 2018
more important, particularly with regards to
Indaba, what were the key take-homes
community engagement and beneficiation.
for attendees and for the global mining
We moved sustainability up the agenda last
community?
year and gave it a full day rather than a focus towards the end of event.
AG: The big theme of the 2018 Indaba was a growing optimism in the market, as
JAW: Have you seen that optimism from
opposed to what we had seen 12 months or
the 2018 Mining Indaba bleed into new
24 months ago, and an increasing interest in
investments, greater deals and more
governments. Maybe in the past there hadn’t project start-ups in Africa over the course been much of a focus on governments, but
of the year?
I think what has been happening recently in South Africa and Zimbabwe was very
AG: There is certainly more optimism, as
interesting for people. If more discussions
evidenced by the number of mergers and
on the role of governments in the sector
acquisitions we’ve seen this year, such as the
can reignite those countries as really good
high-profile merger between Barrick Gold
investment opportunities, then African
and Randgold Resources.
mining stands to benefit massively. But crucially over the last year or so, we have We also saw a lot of interest in resource
started to see the return of the generalist
nationalism, and people asking the question
investor. We’ve always had the investors that
what does it mean for Africa and for
are sitting on a resource fund, but maybe
investments in Africa? The extreme examples
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MINING | Mining Indaba 2019 preview
in the past we lost the generalist investor to
majors, they have come off a bit from the
other areas. I think those generalist investors
heights of a few months ago.
now see resources as a must-have in their fund because of the performance of some
There are sectors that are hotter than others,
of the big resources companies. We’ve seen
such as battery metals. Everyone expects coal
a big return from the generalist investor and
to die but it hasn’t and so there will be peaks
the generalist funds, which is great for the
and troughs in different things but overall, I
industry.
feel confident but in a cautious way.
JAW: Would the return of the generalist
JAW: The Indaba is celebrating its 25th
investor confirm the notion of the mining
anniversary in 2019. How far has the
industry exiting recovery mode and
African mining industry come over the last
moving into growth mode this year?
quarter century and what impact has the Mining Indaba had on its development?
AG: It would be difficult for the Indaba and the industry to reach the highs of five years
AG: Of course, having the world’s largest
ago. I don’t know if it will ever be that big
investment event in Africa is going to help
again, because when I speak to the industry
drive capital into Africa without doubt.
and ask how it is getting on, the phrase I keep
However, it would be difficult to substantiate
getting is ‘cautious optimism’.
this and provide numbers. That is why this year, we will be confirming a bursary for a
I don’t think people are fully confident that
masters student at the University of Cape
we are in full-on growth mode. I think people
Town to look at this in a bit more detail.
are confident that the industry is recovering with commodity prices coming back, but even
One of our 25th anniversary initiatives is to
if you look at the share prices of some of the
sponsor local university students to look at
Resource Global Network
Resource Global Network
what the Mining Indaba does in terms of bringing more investment into Cape Town, but that’s not really the interesting thing for us. Ours is what impact do we have on corporate and government policy around Africa? The initiative is called the Indaba Scholarship at the University of Cape Town. JAW: Summarise to our readers why they should attend the 2019 Mining Indaba and what they can expect to see at the 25th anniversary event? AG: We think we have totally changed this event over the last few years under the current management team. We believe we have taken it back to the true ethos of the event, which is about driving capital into African mining, focusing on investment, mining companies and governments. The people that have attended over the last
Harry Chapman – director of content year or two have loved it and our ongoing challenge is to change the perception some people had of what the event had become four or five years ago. I want people to come back and try it, see what we’ve done to
JAW: Harry, can you summarise the mood ahead of this special 25th anniversary Indaba and explain how this milestone edition will be celebrated?
change it and engage with us to help us keep
Harry Chapman: I think the biggest thing is
changing it.
that our overall theme for the event is now championing Africa’s sustainable economic
We have the largest gathering of investors in
growth. Our theme used to be ‘where
Cape Town during the time of the event and
the world connects with African mining’,
we are really looking forward to welcoming
and while we are certainly not stopping
all our distinguished delegates, speakers and
connecting people, the theme now is more
partners for our 25th anniversary year.
about supporting the industry.
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MINING | Mining Indaba 2019 preview We see ourselves as having an important
They were one of the stakeholders that
role to play in the market and in helping
were missing from the event previously
drive investment into African mining, but also
and communities are a very important
to champion sustainability and economic
stakeholder.
development as well. This ties in to a lot of themes on the continent at the moment,
We have also brought sustainability-focused
particularly in South Africa with President
content throughout the whole agenda. Even
Ramaphosa’s investment drive.
though we have a day on sustainability, that doesn’t mean that’s it. It’s on the main stage,
JAW: On the topic of sustainability, is this
in other sessions, and appears throughout
theme going to be crystallised into a day
the content of the conference.
at the Indaba or will it permeate through the entire four days of the event? HC: There will be a whole day dedicated to sustainability. This day has been moved from the Thursday slot two years ago. We convened an advisory board together including some community groups and key organisations like ICMM and the Minerals Council South Africa. They advised us on what to do and we actually brought that up to the Tuesday for the first time in 2018, but we also included a lot of community voices within that.
Resource Global Network
We have Newmont Mining and Asanko Gold covering resource nationalism, which demonstrates how mining companies won’t be ignoring it. We will also have independent groups involved in that discussion like the World Bank, who are acting quite closely with a lot of African governments. One of the other themes to point out is the focus on junior mining companies. That is still really at the core of the event for 2019 and is really crucial. Indaba has gone through a lot of changes over the past two years since our JAW: A topical theme in African mining at
management team was tasked with restoring
the moment is resource nationalism. How
it to a fully focused investment event.
will this be represented at the Indaba? You’ll see a big focus on the juniors at the HC: The simple thing to say is you’ll see it
conference, one-on-one investor meetings,
being covered and talked about openly in the
enhanced content with more analyst-led
agenda with key stakeholders. We will have a
discussions, more debates in the junior
session on that on the main stage, where we
mining showcase and forum and also a
will have people like Peter Hambro talking.
battery metals day.
He is a big name in the mining sector and can talk quite openly about his experiences.
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MINING | Mining Indaba 2019 preview
JAW: How is the event being laid out to
You can imagine that if you put the exhibitors
maximise deal-making opportunities for
next to the investors, you’ll get quite a nice
the junior miners?
cross-pollination of people bumping into each other. We will have about 750 investors
HC: We have something called the
and deal-makers going through the pavilion
investment pavilion, which is where all the
throughout the duration of the event.
juniors will be exhibiting. Within that we have the investor lounge which is where all
Next to that, there is the junior mining
the investors will go to do their one-on-one
forum which is where all the juniors will be
meetings.
presenting.
Resource Global Network
That includes the battery metals day, along
JAW: How important is the battery metals
with various analyst presentations on gold,
sub-sector to African mining at the
PGMs and many more commodities.
moment and is that being recognised by the Indaba’s 2019 agenda?
So, we’ll have all that activity happening at the investment pavilion and then separate to
HC: I think it is very important. There are
that, we’ll have the Investment Battlefield.
definitely mixed views out there on the longterm demand and how quickly it will come,
This will be smack bang in the middle of the
because its primarily being driven by electric
show floor and if you are under a $50 million
vehicles. There are a lot of differing figures
market cap, you can enter to present and
relating to supply and demand figures for
compete.
different commodities.
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MINING | Mining Indaba 2019 preview
But one thing that is for certain is that the
mining companies aren’t exactly clear on
battery metals revolution is coming, we are
what the car makers want, because it’s a new
just not sure how quickly it is coming, and for
technology. We are bringing car makers and
us, we need to make sure that we cover that.
battery manufacturers together with mining companies in the battery metals day.
One of the things that we have found is that there is a gap between the production
JAW: Finally, the Mining 2050 theme is
levels of the mining companies and the
back by popular demand in 2019. How
car makers that have set the demand. The
important is it for African mining that
Resource Global Network said there would be $370 billion worth of additional revenue and profit to reap from digitisation in the mining sector. That to me points out how important it is. Mining 2050 is about connecting people who are focused on innovation with those who are developing the technology and having a frank discussion about where that technology needs to go and where companies need to invest. Within Mining 2050, you’ll see many mining COOs, project directors and heads of operations giving their views on future technology. You’ll see a lot of the guys who are developing that technology also taking part in the discussion. We think that is really important. We have a role to play in terms of driving innovation within the African mining sector and supporting it. That’s what Mining 2050 is there to do. We will also be looking at some big topics like future of work. As all this technology comes in and there is increased automation, what does that mean for jobs, for labour, how is that managed, how are people upskilled? These are very important there is a clear drive towards innovation
conversations that need to be had, so again
with things like automation and AI?
we are making sure we convene people to talk on that.
HC: Innovation is key. I was at an event in Geneva recently where someone picked
Register to attend Mining Indaba and save 10%
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44
MINING | Minerals Council South Africa
MINERALS COUNCIL
An exclusive interview with Roger Baxter – CEO of S
Resource Global Network
L SOUTH AFRICA
South Africa’s rebranded Minerals Council
45
46
MINING | Minerals Council South Africa
The mining industry in South Africa finds itself in a state of flux in 2018 after its reputation as an investment destination was damaged by several allegations directed towards the government and the ministry of resources under Jacob Zuma’s ill-fated presidency. However, since President Cyril Ramaphosa’s election in February confidence is slowly being restored in the mining industry, particularly after the appointment of new Mineral Resources Minister Gwede Mantashe. One of the first orders of business for Mantashe was to publish a third version of the Mining Charter, which had been revised after a seven-month engagement process with key stakeholders. As a result of these changes taking place in the sector, there is a growing belief that a new era of growth and prosperity in South African mining could soon commence. This attitude is personified by Minerals Council South Africa, who recently rebranded to mark a break from the past.
Roger Baxter – CEO
Resource Global Network Jacob Ambrose Willson: Roger, first talk
South Africa’s mining sector and to what
me through the decision to rebrand to
extent have the organisation’s purpose
Minerals Council South Africa. Did you
and values remained the same through
feel that, with the changes taking place in the rebranding? South Africa and in the mining industry, it was the right time to move forward with a RB: The Minerals Council is well aware that new name and logo?
a new logo and name will not create a new legacy. Rather, the rebranding is a reflection
Roger Baxter: Since it was first formalised
of the organisation’s and industry’s changing
1889, the organisation has undergone a
efforts and aspirations that have developed
number of name changes in its history which over time. have always coincided with mining and political developments in South Africa.
In all that the Minerals Council does, we will endeavour to represent and lead members
On May 23rd 2018, the Chamber of Mines
in a way that reflects our vision and values.
of South Africa was formally renamed the
More than that, through our membership
Minerals Council South Africa (Minerals
compact, we will hold members accountable
Council), unveiling a new logo and brand
for the commitments that the Minerals
identity. The decision to rename the
Council and our members have made.
organisation was taken by the Chamber of Mine’s Council in 2017 in line with our
The Minerals Council’s vision is to ensure that
changing face, ethos and role.
‘mining matters’, in a positive sense, for South Africa, for companies, employees, mining-
The decision was not taken lightly and
affected communities and the country as a
followed extensive research undertaken by
whole.
a leading South African brand agency. While it was acknowledged that the Chamber of
Its mission is to play a leadership role in
Mines has had a long history of contribution
enabling the South African mining sector
to the South African mining industry, it is
to achieve its real potential for investment,
also understood that there are negative
growth, transformation and development in
associations with its past.
a socially and environmentally responsible manner.
The Council was of the view that it was time to signal clearly that this industry is moving
Members are obliged to conduct their
forward, building a new legacy and creating a business according to the agreed Minerals future all South Africans can be proud of.
Council values, dictating the minimum standards of conduct required of them in
JAW: In what ways will the Minerals Council look to advance the position of
order to become a member of, or remain a
47
48
MINING | Minerals Council South Africa
member of, the Minerals Council. The five
Minister Mantashe is, in the Minerals
values of the Minerals Council are:
Council’s view, a man of integrity and dignity, and who brings with him a sound and
• Responsible citizenship
fundamental knowledge of the industry.
• Respect
He is a person with whom our industry has long held a constructive and respectful
• Trust
relationship. He is an extremely tough negotiator, demonstrated both during his
• Honesty
time as general secretary of the NUM and in his subsequent political positions.
• Accountability These attributes have been demonstrated JAW: How closely has the Council worked
during the engagements over the new Mining
with the government since President
Charter published in September this year.
Ramaphosa’s election in February and what changes have you noticed in your
Furthermore, Minister Mantashe has
cooperation after the appointment of
demonstrated his sincere commitment to
new Mineral Resources Minister Gwede
working with the mining industry to ensure
Mantashe?
that our industry regains its rightful position as a key flywheel to the engine of the South
RB: We appreciate the restored relationship
African economy and there have been
with government the industry has enjoyed
a number of engagements between the
since February this year. The Minerals Council Minister and his team and industry leaders has undertaken numerous meaningful
of various mining sectors to discuss the
engagements with the Mineral Resources
challenges faced by these sectors and to
Minister since then, as well as with the
find solutions that will ensure the long term
President, and looks forward to many more.
sustainability, growth and transformation of the mining industry into the future.
Resource Global Network
The Minerals Council welcomes President
of South Africa. His continued emphasis on
Ramaphosa’s interventions on key issues
good governance and growing the economy
related to the economy as a whole and the
are vital for the country.
mining industry in particular. JAW: South Africa recently gazetted a The swift and decisive action taken by the
revised version of a new Mining Charter,
President in a number of critical areas is a
following months of consultation with
clear demonstration of his commitment to
industry stakeholders. What is the
ethical leadership and governance in state
Council’s verdict on the updated charter?
institutions, to addressing the structures, effectiveness and governance of state-owned
RB: In summary, the Minerals Council,
enterprises, to recognising the importance
on behalf of its members, welcomes the
of minerals and energy to the South African
publication of the Mining Charter and broadly
economy, and to re-imagining the future
supports its intentions and content.
49
50
MINING | Minerals Council South Africa This new Charter is the product of substantial
found itself in choppy waters in recent
engagement between key stakeholders and is
times but pulled out of recession in Q2
a compromise that reflects different difficult
of 2018. Do you feel that, under new
choices that have been made.
government direction, the industry is on the brink of a full recovery? What else
This Charter provides a better balance
needs to be done by key stakeholders to
between the mutually reinforcing concepts
ensure recovery and growth?
of promoting competitiveness and transformation.
RB: The investment environment is looking up. However, there are also deep challenges
The Minerals Council considers this charter to
that we face which we can turn around.
represent a policy instrument that provides a clear and durable framework for securing
We are making good progress on some of the
a transformed industry with meaningful
obstacles: regulatory and policy uncertainty,
broad-based economic empowerment
and corruption in the regulatory system.
within which the critical goals of growth and
Engagements with the DMR Minister and
competitiveness can realistically be achieved.
his team recently show an understanding of the need to get to grips with addressing
Nonetheless, the Minerals Council remains
infrastructural constraints.
concerned about some key issues, specifically regarding the limited applicability of
Trust with the regulator is being restored.
continuing consequences of past transactions Challenges in the area of rising costs, and on disposal of BEE shareholding, the
in particular in administered prices will be
treatment of renewals of mining rights as
more difficult, but again the new government
new rights, the practicality of the Inclusive
is addressing the challenges even as their
Procurement provisions relating to local
enormity is being acknowledged.
content targets for mining goods, the targets for services, and the turnover threshold for
What the industry needs is:
junior miners. • A shared vision of the mining industry The Minerals Council is engaging Minister Mantashe on these unresolved issues. It is
• Ethical leadership and good governance
also hoped that greater clarity and certainty will be obtained towards the end of the year, as the guidelines for implementation are
• Policy and regulatory certainty and a competitive environment
developed. • Available, efficient, cost-competitive and JAW: The national mining industry has
reliable infrastructure
#MakingMiningMatter
OUR ‘BIG FIVE’ Responsible citizenship
Respect
Trust
Honesty
Accountability
The values that steer us and our members in creating a new legacy for the South African mining industry. Distinguished by investment, growth, transformation and development in a socially and environmentally responsible way.
@Mine_RSA
www.facebook.com/Mine
Minerals Council South Africa
www.mineralscouncil.org.za
52
MINING | Minerals Council South Africa
• Improving productivity and competitiveness • Creating a ‘greenfields exploration boom’
companies, suppliers, investors and a range of other stakeholders. JAW: Key themes of the 2019 Indaba range from resource nationalism to
The industry is encouraged by the approach
sustainability and gender equality in
of the new political leadership, and we in the
mining. What are you most looking
industry are committed to playing our part.
forward to discussing with the countless companies, executives, ministers and
JAW: The Investing in African Mining
more stakeholders present at the event?
Indaba returns to Cape Town for its 25th anniversary year in February.
RB: These are all critical issues for South
How beneficial has this major industry
Africa’s mining industry, and doubtless, too,
gathering been to the South African
for our peers elsewhere on the continent.
mining sector down the years? We look forward, too, to discussions on It has been, and remains, a most important
the state of the commodity markets and
forum for discussion on key issues affecting
how this will determine the way forward
the industry and for the opportunities it
for the industry, the importance of the
provides for interaction between mining
junior/emerging miner sector as well as the
Resource Global Network
modernisation of the industry in various
was to return to the top quartile of the most
respects.
attractive mining investment destinations.
JAW: Finally, what is your outlook on
This could create another 200,000 jobs in the
South Africa’s mining industry in 2019 and
economy with 50,000 direct jobs created in
what will the Minerals Council be doing to
mining alone; increase output, exports and
ensure the sector is working towards its
procurement substantially; grow direct and
2030 target of doubling real investment in
indirect taxes, and royalties paid to the fiscus.
mining? The mining industry would also be in a RB: Along with policy certainty, the
better position to increase its contribution
development of a competitive strategy for
towards infrastructure development
mining is crucial to encourage investment in
and social projects in mining-affected
the industry.
communities. It remains a truism that if mining succeeds, the country succeeds.
South Africa’s mining investment could almost double in four years if South Africa
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COLUMNS | Michael Cronwright
A NEW ENERGY
Considering Africa’s bright prosp
Resource Global Network
Y IN AFRICAN EXPLORATION
pects in the booming critical materials mining space by Michael Cronwright
55
COLUMNS||Ian Michael Thomson Cronwright 56 COLUMNS
A lot of the recent activity in the exploration industry in Africa is driven by the global adoption of alternative energy generation and storage technologies, with a particular focus on lithium, cobalt, tantalum, tin, vanadium, and nickel. As a result, I have had the privilege of working on some interesting lithium, tin and tantalum deposits like Manono, Rubicon/Helikon and Kamativi and visited many of the pegmatite belts in Africa including those in Mozambique, Namibia, Zimbabwe, Uganda, Rwanda, Burundi and South Africa. Critical materials (which include the critical metals) are materials considered particularly
These metals cannot readily be substituted
important in the technology industry and
and are seen as having strategic value by
emerging innovations, amongst other
governments and industries that are focused
industries, and defined on the basis of
on de-carbonising the energy sector and
their economic importance and supply risk.
maintaining their technological edge.
Technologies include smart devices, wind turbines, LED lights, electric vehicles, power
The recent correction in the lithium
generation and off-grid storage, all of which
carbonate prices, to around US$12,000-
require metals such as tin, tantalum, rare-
15,000 per tonne (p/t), from the heady levels
earth metals, lithium, cobalt, vanadium and
earlier in the year at around $20,000 p/t,
nickel.
is still well above the long-term average of around $5,000-6,000 p/t from 2005-2015 and
ResourceGlobal GlobalNetwork Network 57 Resource
MICHAEL CRONWRIGHT Michael is the critical metals principal consultant at the MSA Group. He has 19 years’ experience in African geology and exploration across a variety of commodities and significant exploration project management experience.
$7,500 p/t in 2016. It comes as a timely reality check to those companies with small subeconomic projects in challenging jurisdictions, and a reminder that commodities’ high prices at times are not sustainable and often revert back to their long-term averages; in those cases, only the projects on the lower end of the cost curve make it. What is indisputable, however, is that there is a definite trend of all major motor manufacturers committing to EV technologies
He is a QP/CP in lithium, tin and columbo-tantalite. Michael has a M.Sc. in Exploration Geology from Rhodes University with a dissertation reviewing the pegmatites of the Alto Ligonha Pegamatite Province in Northern Mozambique. He started his career at the Council for Geoscience in 1999 where he was involved in World Bank mapping projects in Mozambique and Madagascar. In 2006 he moved into the geological consulting industry and since 2013 has been with The MSA Group.
58
COLUMNS | Michael Cronwright
”Africa’s track record in the g to be sniffed at with Zimba lithi
critical m
in some form or other and governments
with predictions of supply shortfalls are
committing to green technologies. Many
driving a search for new lithium, tin, cobalt
governments and major cities have
and nickel resources in Africa (and the rest of
announced ‘bans’ on diesel and internal
the world).
combustion vehicles, some starting as early as 2025. Despite these not being legislated it
Many of the historic pegmatite belts
does demonstrate a move to a greener future known for their tin, beryl and tantalum and cleaning up the pollution that plagues
mineralisation are being revisited for their
cities like Mexico City, Paris and London.
lithium potential by junior exploration companies from London, Toronto and Perth.
Beijing has already started the process with
Africa’s track record in the global lithium
the electrification of its public transport
market is not to be sniffed at with Zimbabwe
system. In Norway over 50% of new car sales
being the 5th largest lithium producer in
in 2017 were electric. The current demand
the world with all production from the
and forecasted increase in demand together
Bikita Mine in the form of petalite for the
ResourceGlobal GlobalNetwork Network 59 Resource
global lithium market is not abwe being the 5th largest ium producer in the world” Michael Cronwright, metals principal consultant
for the Chinese market and is also looking at producing lithium carbonate in country rather than exporting a mineral concentrate. This is a trend we’ll probably be seeing a lot more of particularly with some of the more isolated projects with access to power. MSA is also seeing many junior exploration companies getting involved in projects with the view to be able to produce in the short term and provide returns to their shareholders. They are probably better described as junior miners. There are numerous other lithium projects through Africa including the old tin mines at Kamativi and Manono, the pegmatites of the Alto Ligonha Pegmatite Province in Mozambique, the Northern Cape pegmatites, the pegmatite belts in Ghana, Nigeria, and Cote d’Ivoire. Many of the Chinese lithium convertors have also taken positions in many of these projects.
ceramic and glass market and now looking at producing spodumene concentrate for the
Juniors are also looking into the reprocessing
battery market.
of old tailings dumps, examples being the lithium-bearing tailings at Kamativi and Uis.
Consequently, Zimbabwe has seen a lot of
Slag and waste dumps are also being looked
activity with many juniors taking positions
at for nickel, cobalt and ferrochrome. Some
over the old beryl and tantalum mines in the
of these projects will require innovative
Archaean greenstone belts with Prospect
approaches to their success but represent
Resources’ Arcadia lithium project being
some of the low hanging fruit in the industry
the most advanced exploration project at
if executed successfully.
the moment, looking at producing lithium carbonate within Zimbabwe. Desert Lion
Another important consideration for many
Energy’s lithium project at the old Rubicon
exploration and mining companies is the
and Helikon mines in Namibia has recently
production of by-products such as feldspar
produced lepidolite concentrate destined
or tin and tantalite concentrates from the
60
COLUMNS | Michael Cronwright
lithium deposits, similarly some of the tin and
However, with concerns over ethical sourcing
tantalite projects like Afritin’s Uis Tin Mine,
of cobalt, tin and tantalum, many juniors,
focused on the hard rock, could potentially
miners and technology companies are
produce lithium concentrate as a by-product.
looking at innovations through blockchain technologies to ensure ethical sourcing or
Other commodities in the spotlight with the
looking at replacing the cobalt with nickel
green energy boom include cobalt, nickel
dominant cathode technologies (which Tesla
and vanadium which have seen a significant
is currently in the process of doing).
rise in price over the last 12 months. Cobalt in particular is used by Tesla and Apple
Recent bans on cobalt concentrate exports
in their battery cathode technologies and
from Glencore’s Katanga Mine, in the DRC,
has attracted a lot of interest from juniors.
due to high uranium content further adds to
Resource Global Network can leverage off this and play a bigger role in the value adds to its mineral endowment. With the bubbles of the recent past fresh in the minds of many explorationists, backing the right project is critical; the ability to flip projects is not as simple as it was in the past with investors being spoilt for choice and a lot more discerning and commodity agnostic. In my opinion the junior exploration company mentality is slowly being replaced by that of a junior miner with a more medium to long term view on projects with a view to actually being a producer. A good project isn’t always about being bigger and/or higher grade. It is about having the right management team that can think outside the box in terms of fast tracking and de-risking projects, applying new technologies in the exploration process and understanding the processing aspects and potential product unique to the project early on. One example is the application of geometallurgy, which has been the buzzword the woes of cobalt producers and explorers
for the last decade or so, with many
and raises question marks on the security
companies now realising that the improved
of supply. There has thus been a focus on
understanding of the mineralogy, mineral
identifying new sources of these metals
textures, and deleterious elements is needed
outside the traditional mining jurisdictions
to determine if a project will be able to
and also a focus on metals like nickel.
produce a saleable product at a lower cost compared to other projects.
What remains to be seen is whether Africa
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COLUMNS | Willem Middelkoop
THE PILBARA SPECIAL – IS THE PILB
Comparing recent Pilbara gold d
Resource Global Network
BARA THE NEW WITWATERSRAND?
discoveries with the famous Witwatersrand deposits by Willem Middelkoop
63
COLUMNS||Ian Willem Thomson Middelkoop 64 COLUMNS
I got hooked on discovery investing when I made a very early investment of 10,000 shares in Aurelian Resources at 30 cents each, just six weeks before the Fruta del Norte discovery in Ecuador, in 2006. Ten months later they traded North of $40 dollars. Let’s just call this beginner’s luck. Ever since, I have been looking for an even better story and started the Commodity Discovery Fund (2008) along the way, to pool money to invest in the best discovery plays. Now we think the Pilbara conglomerate gold story could be the next big thing. Since 2017, loads of flat, rounded gold nuggets have been discovered, just South of Karratha, by two exploration companies, Canadian-listed Novo Resources and Australian-listed Artemis Resources. All these watermelon-seed shaped nuggets seem connected to a 2.7 billion years old conglomerate horizon. Indeed, that’s the same age as the Witwatersrand (Wits) deposits in South Africa, which in the last 150 years have produced over 40% of all mined gold, from the same type gold bearing conglomerates.
ResourceGlobal GlobalNetwork Network 65 Resource
WILLEM MIDDELKOOP
Willem Middelkoop is a successful entrepreneur, investor and publicist. At the end of 2008, he gave up his journalistic work as a market commentator for Dutch National TV and started the Commodity Discovery Fund. He also started Amsterdamgold.com in that same year, a web shop for gold and silver bullion, which was sold to the listed Value8 in 2011, after yearly sales grew to over ₏100 million. Willem is a member of the Advisory Board of the London-based Official Monetary and Financial Institutions Forum (OMFIF). He is also a founding shareholder of Startupbootcamp Amsterdam, a business accelerator program. Besides this, he is author of eight books covering financial markets and the economy. At the end of 2013 he published The Big Reset (Amsterdam University Press/ University of Chicago Press). He sold a total of over 150.000 books in seven languages, including Arabic and Chinese. Willem lives with his wife and two sons (13 and 16) in The Netherlands and has a bachelor’s degree in Business Administration.
66
COLUMNS | Willem Middelkoop
After the large investment by Kirkland Lake
system is the result of a single geological
Gold, Novo shares, and a handful of other
event, and may have a close relationship with
exploration companies with huge land
the Wits event. From West-to-East the same
packages in the Pilbara, enjoyed a sharp
style of nuggets have been found over 600
rise in the autumn of 2017, before a severe
km. We don’t think the system is connected
correction took them down by 70-80%.
throughout, and that everything will be gold bearing, but this is a massive system for sure.
But now after a full year of exploration, we have proof that the Pilbara conglomerate
An independent geologist stated during a
ResourceGlobal GlobalNetwork Network 67 Resource million in Novo Resources, together with its billionaire chairman Eric Sprott. According to Makuch, the Pilbara discovery has the potential to ‘turn the gold mining industry upside down’: “It’s a potentially very large deposit, physically the gold is there and we were able to trace the gold over 8 km in that one area (Comet Well), and if you tie it all the way toward DeGrey is, you’ve got around 90 km of exposure of conglomerates that you’re finding nuggets and watermelon seeds everywhere […] “The way we structured the investment into Novo is the company is financed properly to go and do the work and carry exploration without having to worry about what’s happening in the market.” Novo has showed that doing all the exploration work is tough, because of the nuggety nature of this system. Its chairman Dr. Quinton Hennigh, who has been on the hunt for a Wits-style gold discovery for most of his career, has just decided to start trial mining in 2019. 2017 Pilbara conference in Perth, that the
Keith Barron, the geologist who discovered
Pilbara gold discovery is ‘for real’ and could
the 10 million ounce Fruta del Norte deposit
be compared to the Wits, although there are
in Ecuador, has been checking out the Pilbara
huge differences.
discovery as well. After his visit to the Pilbara he wrote on his blog:
Another interesting statement was recently made by Kirkland Lake Gold CEO Tony
“Already and at this early stage it is pretty
Makuch, who operates the Fosterville mine
obvious that this is a large-ish deposit, but it
in Australia and has invested over $100
seems to me that almost everyone, except
68
COLUMNS | Willem Middelkoop
perhaps for Eric Sprott, who has a reputation
anywhere in Africa, Asia or South America,
for seeing value early, has missed the
there would be 100,000 plus artisanals on
point. What is the point you ask? This thing
top of it using sledge hammers, pneumatic
is ostensibly at surface, so it is like mining
drills, or pluggers and dynamite to get at the
placer gold! [..]
nuggets…and bugger the grade numbers. It is there, it’s going to be mined by someone, and
“Quinton has a unique deposit which
the ultimate grade and origins for the time
presents a unique opportunity. You just
being are just White Noise.”
have to stop applying the usual logic to it and think outside the box […] Let me make
This boom-bust scenario is remarkably
a prediction. The Novo Discovery will be the
similar to the first phase of development of
lowest cost gold mine in the industry, by a
the Witwatersrand, home to the richest gold
massive margin. Maybe sub $100/oz!
fields on Earth.
“That’s what should be attracting people’s
The Wits has produced over 1.6 billion
attention. I can tell you that if this play were
ounces of gold since the late 1800s and 1
Resource Global Network
billion ounces of gold remain to be mined in
Novo resources recently added a large land
current reserves. In the Pilbara, currently no
package near Egina, over 100 km East of
gold mines exist.
Karratha. In 2019 Novo needs to prove, by test mining the Egina grounds, that they have
The capital of Johannesburg was founded on
found a profitable new Wits.
top of the conglomerate gold discovery in the 1880s. In 1888, four years after the initial discovery, there were already 3,000 people
Willem Middelkoop is the founder of the Dutch-
living in Johannesburg, two years later there
based Commodity Discovery Fund. The fund
were 30,000 and in 1895 the city had grown
own shares in Novo and Artemis resources.
into a larger city than Cape Town, with over 100,000 inhabitants.
a b
69
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72
LITHIUM | Orocobre
OROC
speaks to the lithium triangle’
Resource Global Network
OBRE
’s first new brine producer in 20 years
73
74
LITHIUM | Orocobre
Orocobre is the newest brinebased global lithium carbonate producer in over twenty years and is positioning itself to become a top global supplier of battery grade lithium ahead of the forthcoming EV boom. However, the company is not operating exclusively in the lithium space and is building a substantial industrial chemicals company with lithium, potash and boron assets based in Argentina – home to a major portion of the fabled ‘lithium triangle’. Orocobre operates under three separate entities in Argentina, with its flagship operation Salar de Olaroz set to receive a major boost to its production capacity after Japanese firm Toyota Tsusho purchased a 15% stake in the business and agreed to invest in expanding the facility. RGN’s editor interviews Orocobre’s managing director and CEO Richard P. Seville.
Our flagship operation, Salar de Olaroz, in the Jujuy province of Northern Argentina has been developed over this period and is the newest brine-based lithium carbonate supplier to emerge in over 20 years. It would not have been possible to develop this worldclass resource without the strength of our strategic partnerships. The Olaroz Lithium Facility began as a joint venture project built in partnership with Japanese trading giant Toyota Tsusho Corporation (TTC) and the mining investment company owned by the provincial government of Jujuy, Jujuy Energia y Mineria Sociedad del Estado (JEMSE). The Olaroz Lithium Project Joint Venture is operated through Orocobre’s Argentine subsidiary, Sales de Jujuy S.A. (SDJ), the ownership of which is held in a Singaporean company, Sales de Jujuy Pte Ltd, that is the joint venture company with partner TTC and JEMSE. The effective Olaroz project equity interest will be Orocobre 66.5%, TTC 25.0% and JEMSE 8.5%. JAW: Orocobre is currently engaged with several developments in all three of its
Jacob Ambrose Willson: Explain Orocobre’s
operations – How does the company ensure
company strategy with regards to entering
progress is consistent across all three
into partnerships to advance lithium, boron
partnerships?
and potash assets in Argentina? RS: Orocobre has been operating for Richard P. Seville: Orocobre has been
more than a decade. We are not a new
operating in Argentina for over 10 years.
company and as such, we have carefully
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WE HAVE CAREFULLY AND METHODICALLY DEVELOPED A CORPORATE STRATEGY AND COMMENSURATE STRUCTURE OVER THIS TIME THAT ENABLES US TO DEVELOP THE WORLDCLASS LITHIUM RESOURCES AT OLAROZ AND BORON CHEMICALS AT BORAX ARGENTINA” RICHARD P. SEVILLE, MANAGING DIRECTOR AND CEO
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LITHIUM | Orocobre
Richard P. Seville, CEO
Resource Global Network
and methodically developed a corporate
structure is critical to ensure that our
strategy and commensurate structure over
resources maintain their focus on creating
this time that enables us to develop the
value from these projects.
world-class lithium resources at Olaroz and boron chemicals at Borax Argentina. These
JAW: How important is it for Orocobre to
are established operations that are both in
expand its Olaroz project so that it endures
production and expanding.
the mass demand growth expected from the lithium-ion battery market over the coming
In addition, our strategy and structure enable
decades?
us to also maintain an ‘exploration’ profile through our 35% interest in Advantage
RS: In January this year, we announced a
Lithium.
significant strategic initiative to accelerate our expansion plans at Olaroz through a larger
In November 2016 Orocobre entered into
Phase 2 expansion of the lithium facility. This
a joint venture agreement with Advantage
strategic initiative involved a 15% placement
Lithium on its Cauchari Project and a number
to TTC, priced at a 17% premium to 30-day
of exploration projects.
VWAP.
Having a well-established strategy and
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LITHIUM | Orocobre
This initiative fully funds Orocobre’s
Fukushima, Japan with expected operating
expansion plans to bring Olaroz to a total
costs of US$1,500/tonne. This will further
annual production capacity of 42,500 tonnes
develop our ability to deliver high purity
lithium carbonate production.
battery grade product to the growing global lithium market.
But just as importantly, it continues to strengthen our longstanding strategic and
JAW: The Olaroz facility has also been held
joint venture partnership with TTC.
up as one of the lowest cost producers of lithium carbonate in the world – What
Our partnership with TTC does not preclude
other factors, besides being a brine deposit,
Orocobre from selling our product to a wide
contribute to the low production costs?
range of customers in the global industrial, technical and battery markets, which already
RS: Orocobre’s cost of lithium chemical
number more than 70.
production is currently approximately $4,000 per tonne and we expect that to
Additionally, Orocobre and TTC are finalising
reduce further to $3,000 per tonne once our
plans to jointly develop a 10,000 tonnes per
expansion is complete.
annum lithium hydroxide treatment plant in
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Hard rock sourced lithium spodumene
with dry, windy conditions enhances our
concentrate (not chemicals) is reportedly
brine-evaporation process. Olaroz is also
$800-900 per tonne of concentrate. The
serviced by gas pipelines, high voltage
concentrate must then be converted to
electricity, and paved highways.
lithium chemicals at a cost of $2,000 - $3,000 per tonne (which currently is almost all done
Three major seaports, Buenos Aires in
in China) before it is ready for sale.
Argentina and Antofagasta and Iquique in Chile are serviced by international carriers
It takes 8.5 tonnes of concentrate to produce
and are easily accessible by road and/or
just 1 tonne of lithium chemicals. Taking
rail, all this coupled with onsite treatment
the mid points, hard rock sourced lithium
facilities (that can produce up to 100%
costs around $10,000 per tonne {($850 *8.5)
battery grade lithium carbonate) help keep
+$2,500 + freight = approx. $10,000/tonne}.
our overall cost of production down.
Orocobre’s Olaroz Lithium Facility is
JAW: Orocobre posted half-year revenue of
supported by favourable conditions in terms
$63.1 million in Feb 2018 – How pleasing is
of both the operating environment and local
this financial performance and what is your
infrastructure. Very limited rainfall combined
grand vision for the company? Can Orocobre
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LITHIUM | Orocobre
“OROCOBRE IS OBSERVING A VE LITHIUM CHEMICALS MARKET DRI ELECTRIFICATION OF TRANSPORT AND GRID-BASED S break into the land of the giants with regards
tight supply and attractive pricing dynamics.
to global lithium producers (i.e. the Latin American oligopoly)?
Orocobre is observing a very strong and sustainable lithium chemicals market driven
RS: Our financial performance for the half
by ongoing demand for electrification of
year to 31 December 2017 was solid and we
transport and implementation of home and
continue to consolidate our position as a
grid-based storage systems.
mainstream, profitable, low cost producer of lithium carbonate.
Orocobre and our strategic partner TTC are investing significantly in the world-class
The global market fundamentals for lithium
Olaroz Lithium Facility as it is a low cost, high
remain intact with strong demand growth,
margin operation with a very large resource
Resource Global Network
ERY STRONG AND SUSTAINABLE IVEN BY ONGOING DEMAND FOR T AND IMPLEMENTATION OF HOME STORAGE SYSTEMS� capable of sustaining multiple stages of
On the demand side, the end game is
expansion.
becoming clearer – for example:
We believe, and our research shows that
The UK and France have banned the sale of
the long term growth opportunities for
internal combustion engine vehicles by 2040,
lithium producers remain intact and in fact,
China is heading in the same direction, and
are continuing to strengthen. There remain
India plans to only sell EVs by 2030
significant headwinds for new production and supply additions we believe remain over-
Austria, China, Denmark, Germany, Ireland,
stated.
Japan, the Netherlands, Portugal, Korea and Spain have all set official targets for electric car sales.
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LITHIUM | Orocobre
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For example, 750,000 EVs were sold last year,
past 20 years. Just as importantly, we are
OPEC suggests that by 2040 the global vehicle
one of the lowest cost producers of lithium
fleet will include 266 million EVs, Bloomberg
chemicals in the world with a lithium
New Energy Finance suggests by 2040 there
production cost of $4,336 per tonne for
could be 530 million, or one third of all cars
the half year to Dec 31, 2017 and a gross
will be EVs
operating margin of 62%.
So, in terms of demand, the propensity to
We believe that maintaining a low cost
buy electric vehicles is rising, meaning lithium
production base will be a key competitive
prices will remain higher for longer.
advantage for any lithium producers going forward.
Orocobre is already competing in a global market against both established and emerging players. We are the first brinebased lithium producer to emerge in the
a jcr
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MINING |Blue Sky Uranium
CRITICAL ELEMENTS Developing a project in Québec – the premier lithium districtof the Western world
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BLUE SKY URANIUM Leading uranium discovery in Argentina
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MINING |Blue Sky Uranium
Blue Sky Uranium was incorporated in 2006 with the primary objective to take advantage of opportunities for large-scale uranium discoveries in Argentina. Executives at the TSX-V listed exploration company were well aware of a number of highly prospective regions in the South of the country, which have been known to host uranium deposits of a style not too dissimilar from those commonly found in Australia and Western Africa. Over the last 12 years, Blue Sky has acquired around 450,000 hectares of property in Southern Argentina and partnered with Areva, the world’s largest integrated uranium company, until 2011 when the Fukushima disaster in Japan sent the industry into deep freeze.
“Since then, we’ve made some tremendous strides forward due to the new people we’ve been able to employ, namely our new geologist Guillermo Pensado, who is a uranium geologist with a very large pedigree, over 20 years’ experience in Argentina.”
Part of the Grosso Group Cacos has been part of the overarching Grosso Group since its founding 25 years ago, working closely with legendary South American mining executive Joe Grosso in the running of Blue Sky. “We [the Grosso Group] have had an uninterrupted 25-year history of mineral exploration in Argentina in all kinds of metals including lithium, silver and gold and for us Argentina has been ripe with opportunity because it is so unexplored. We’ve demonstrated that so far by making three world class discoveries.” The resource management group advanced the Gualcamayo mine in San Juan province, which is estimated to contain 3.3 million ounces (Moz) of gold and is now in
“It has only been in the last 18 months that
production by Yamana Gold and also has
we’ve really reactivated the company,” says
silver deposits in Southern Argentina, most
Blue Sky’s president and CEO Nikolaos Cacos,
recently discovering the Chinchillas deposit.
discussing the company’s new lease of life after its projects were temporarily placed on care and maintenance in the aftermath of Fukushima.
Resource Global Network The deposit will now be brought into
after the new plants come online in 2019.
production through a lucrative partnership
Much like other sources within its energy mix,
between Grosso Group’s Golden Arrow
Argentina imports uranium primarily from
Resources (previously featured in RGN Vol 4
Kazakhstan and Canada, which has proven to
Iss 7) and SSR Mining. “However, we believe
be a drain on funds.
that the group’s fourth discovery in Argentina is under Blue Sky,” says the CEO.
“Argentina is shifting its focus from importing hydrocarbons and using up all its valuable
Nuclear power is beginning to pick up again
US dollars in foreign exchange and is moving
after reverberations from the Fukushima
towards uranium as a source of reliable,
incident have been fully absorbed by global
efficient and cheap energy.
markets. Multiple reactors are being built across the world, with 56 currently under
“The government is very keen to have a
construction according to Cacos, many
domestic source of uranium and Blue Sky
of which are in countries you wouldn’t
has the project right now to gear up to be
necessarily expect, such as Japan and Saudi
Argentina’s first domestic supplier of uranium
Arabia.
and then become an exporter after that.”
Argentina is home to an advanced nuclear
While it is too early for the company to
energy industry itself. South America’s
confirm Argentina as its first customer, Blue
second largest economy has three nuclear
Sky is working very closely with the federal
power plants in operation, another one
government, in particular within the Rio
under construction, two more that are
Negro province in which it is active, which has
commissioned and two more in the planning
a budding nuclear research industry.
stage. “We are getting a lot of support and are At the moment Argentina needs around
building a really positive rapport between
500,000 pounds of uranium a year to feed
us. We are very confident that Argentina is
the plants that are currently in operation, but
looking at us as a first source of uranium,”
this is set to rise to one million pounds a year
Cacos purrs.
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MINING |Blue Sky Uranium
Carbon-free energy Having seen global uranium prices bounce back in recent years, Cacos is one of many staunch advocates of nuclear energy as a clean, reliable and long-term source of energy. “I believe uranium is our best way of achieving a carbon-free source of energy,” he says. “Reactors can have a long life. The new reactors being built are extremely safe and in terms of energy efficiency I remember reading in a recent article that half a barrel of uranium has enough energy to supply one person’s entire lifetime need of energy. “I think even in Japan when the Fukushima reactor was damaged by the tsunami, it was a very old reactor. There were other new reactors there that weren’t damaged at all. I think part of it is also fear.
Resource Global Network “However, if used properly and safely it is a
in what you are looking for and work closely
natural form of energy that with the proper
with them and that way we can focus our
safeguards is the best form of energy we can strategy.” use.” These local geologists pointed Blue Sky to a Blue Sky has established exploration activity
region surrounding Cerro Solo. Just North of
in two provinces of Southern Argentina; Rio
the deposit, a number of outcroppings were
Negro and Chubut, both of which straddle
located in Rio Negro that generated a great
the geologically diverse Patagonia region.
deal of excitement amongst the geologists.
Despite being highly prospective uranium-
Blue Sky subsequently purchased a very
bearing regions, there had been next to no
large land package and flew a radiometric
exploration projects when the company
survey spanning 28,000km, which remains
arrived in the provinces, aside from the
to this day the largest flown for any metal in
atomic agency for Argentina’s (CNEA) deposit Argentina. in Chubut called Cerro Solo. “It was just amazing to see on a map almost “Initially, we teamed up with local exploration a quarter size of Switzerland all these geologists, they knew where we should be
radioactive anomalies that were popping up,”
focused and that’s always been the Grosso
recalls Cacos. “We were able to acquire really
Group modus operandi: Find the best experts large packages, almost an entire district of potential uranium discovery.”
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MINING |Blue Sky Uranium
Resource Global Network After the airborne surveys, Blue Sky staked the properties and afterwards it was a matter of trying to locate the radiometric anomalies that had showed up on the surveys. “We sent a crew of geologists driving through the properties and it’s very interesting what they saw. Patagonia is a very flat and semiarid area in Argentina and its very sparsely populated, less so than Siberia. “Our team was following a typical dirt road in the area and were raking through the gravel just to clean it up and you could actually see this yellow carnotite right on the side, so the spectrometers in the geologists’ Jeep went off, they got out and within a matter of a few minutes they found the uranium.”
Amarillo Grande With the proliferation of uranium in the region all but confirmed by the geologists on the ground, Blue Sky began to put together a big geophysical mapping programme and conducted trenching to gauge how deep the uranium was occurring, before commencing a drill programme across the large, 140 x 50km land package which is now called Amarillo Grande. “We initially prospected over the entire 140km length of the project but decided in the last year to really focus on one area and we chose the Ivana area,” says Cacos. “We used some very focused geophysics, which turned out to be an excellent guide to how the mineralisation was flowing through.” The type of mineralisation present across the target is called a surficial type deposit, which tend to occur over large areas at a relatively low grade, comparable to uranium deposits found in Namibia or in Western Australia such as the Wiluna deposit. However, the results of a recent drill programme have allowed the company to expand the high grade core at the Ivana target by a further 1km, while
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MINING |Blue Sky Uranium infill drilling results also revealed consistent higher grade thicknesses, including individual results as high as 10,517 ppm or > 1% uranium over 1m. These results are a significant mark-up on the low grades commonly found in the comparable African and Australian deposits, which tend to come in at around 500 ppm or 0.5% uranium. “Our results are really exciting because this is the type of economic grade that can really add up very quickly when you do a resource calculation. We have closed off a series of 3,000m of infill drilling at Ivana, and are very close to publishing our initial resource calculation.” With the resource calculation due in the first week of March, Cacos expects to see an immediate institutional following based on the high grades present in the deposit and the fact that Blue Sky picked up the property for pennies back when it had no real value. “We would become candidates for those uranium investors that are going to see not just the potential of this initial deposit but also that we now have a completely understood model that we can replicate in other areas in this property. We are sitting on an entire uranium deposit with the potential of up to 100 million pounds or more.” Blue Sky’s short term targets in 2018 are three-fold: To put out an initial resource
uninterrupted 25-ye which has been rip
Nik
Australian Resource Business Global Network
“We [the Grosso Group] have had an ear history of mineral exploration in Argentina, pe with opportunity because it is so unexplored�
kolaos Cacos, president and CEO, Blue Sky Uranium Corp
93
Resource Global Network
estimation, to continue its geophysical
potential, as prices for the mineral have
programme that has been an excellent
soared in recent months owing to its
guide to discovery thus far, and to publish
usages as a steel hardener and in high-tech
a preliminary economic assessment on the
batteries.
resource. “We’ve always known about it but didn’t take “We are targeting what we believe is
much notice because vanadium was typically
economic in this environment today, and I
between $3-5 per pound, but now it fetches
want to demonstrate that,” says a confident
between $12-13 and all of a sudden it’s
Cacos. “If prices of uranium go up that’s
become a very significant metal.
fantastic, but we are focused on what would make money today.”
“This is a real game changer here, its giving the Amarillo Grande project an entire new
Finally, the occurrence of vanadium alongside
complexion.”
uranium at the Amarillo Grande deposit is also adding further juice to its economic
abj
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MINING | Teranga Gold
TERANGA GOLD Multi-jurisdictional West African gold producer reaches for mid-tier status
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MINING | Teranga Gold
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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.
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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
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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.�
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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.�
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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
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Building a Multi-Asset Mid-Tier West African Gold Producer
TSX: TGZ OTCQX: TGCDF
“It was a pleasure working with the RGN team. The entire process - from the initial interview to the layout and finished piece - was seamless and professional. ” Orlee Wertheim Head of Business Development, Global Mining, Toronto Stock Exchange TSX Venture Exchange
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MINING | Prospect Resources
Resource Global Network
PROSPECT RESOURCES
Advancing the 2nd largest JORC compliant hard rock lithium resource in Africa
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MINING | Prospect Resources
Prospect Resources is the brainchild of experienced mining executives Hugh Warner and Harry Greaves. The pair formulated a vision to list an Africa-focused mining company on the ASX that would utilise Warner’s vast previous experience as a director of many publicly listed companies along with the localised knowledge of Greaves and his team of Zimbabwean miners involved in various mining assets. It was soon decided that Prospect would initially focus on Zimbabwe, a country with many strong potential mining projects and bags of untapped skills according to Greaves, yet its mineral resources sector has invariably suffered in the past due to a lack of access to capital markets and political instability. However, under the co-guidance of executive chairman Warner, Prospect was listed on the ASX, and the first step of his and Greaves’ plan was realised. In the first couple of years after its listing, Prospect began building a portfolio of gold assets in Zimbabwe but didn’t establish a flagship asset until lithium started to become an increasingly compelling mineral across the investment market.
Resource Global Network At this point the firm began to evaluate a number of potential lithium assets before determining that the Arcadia Lithium Project, a hard rock deposit comprised of spodumene and petalite ore located on the outskirts of Harare, held the most potential. When Prospect acquired the project in mid-2016, it gained access to historical information relating to previous activity at the site, which revealed that the UK Atomic Energy Association completed limited mining of part of the resource dating back to the 1950s and 60s. From this material, the company formulated an initial resource target of 15-18 million tonnes at 3% lithium, ahead of a scoping study at the end of 2016 and pre-feasibility study in June 2017. To say that initial expectations were exceeded by the results of these studies is an understatement.
A globally significant resource “When we started rolling out the drilling programme we discovered what we call the lower main pegmatite, which does not appear to have been previously known about or explored,” says Greaves. “That has pushed us up to a total resource of 72 million tonnes, making Arcadia the sixth biggest lithium hard rock project in the world.” Blowing initial expectations out of the water would be a more appropriate way to describe the results of Prospect’s phased drilling programme.
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MINING | Prospect Resources
After continued updates were made to the
Prospect, none more so than its location just
mineral resource estimate over 2017, the
38 km East of the capital Harare.
current estimate for the Arcadia project makes it Africa’s 2nd largest JORC compliant
“We’ve got bitumen roads within 15 km of
lithium resource and one of the most globally
the project. We have abundant water and
significant lithium assets.
power on site and we’ve got a large welltrained and educated labour force in close
In addition to the sheer size of the resource,
proximity. In terms of location we are very
there are a number of other key elements
well suited to getting into production quickly
of the project that are working in favour of
and profitably.”
Resource Global Network
In addition, the project economics are also
Operating in Zimbabwe is a prospect
looking increasingly attractive for Prospect.
that would raise the eyebrows of many
There is no need to construct a big mining
experienced heads in the mining industry,
village or build any major roads and the only
bearing in mind the Southern African nation’s
planned infrastructural work is the repair of
increasingly beleaguered-looking economy
around 16 km of gravel road for the haulage
of late and the significant shift in the political
of concentrate through Goromonzi district
landscape that took place late last year.Â
towards the main arterial road leading to the Beira port in Mozambique.Â
However, in a stark contrast to many reports of business dealings in Zimbabwe, Greaves
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MINING | Prospect Resources happily reveals that from the very first
to Greaves. “We are currently witnessing
moment Prospect signed the deal for the
extraordinary levels of cooperation,” he
Arcadia project, the authorities have been
reveals.
nothing short of fantastic in helping the company advance its asset.
“In all my experience of mining in Zimbabwe for 20 years, I’ve never seen a situation where
“We secured the project at the end of May
the entire hierarchy of the ministry of mines
2016 and had drills turning within 30 days.
are available at any time to take a call and
We also declared our MRE (mineral resource
their question
to us is always: How
estimation) within four months and all
can we assist
you to expedite this
regulatory approvals were handled very
project into
production?”
professionally and very quickly.”
‘Extraordinary levels of cooperation’ Moreover, since the change of government in Zimbabwe in November 2017, the operating environment has further improved, according
He goes on
to explain how
the ministry
expedited the
process of
changing claims
into a mining
lease, is assisting
ResourceGlobal GlobalNetwork Network 125 Resource the company with bringing in a bigger power
Zimbabwe’s Minister for Mines and Mining
line to the project and is working very closely
Development Winston Chitando to see first-
with Prospect to get the site designated as
hand how Prospect is delivering battery
a Special Economic Zone, for to the second
grade lithium carbonate.
phase of the project which will deliver a lithium chemical plant adjacent to the
The key reasons behind Prospect building a
existing site.
lithium carbonate pilot are two-fold. One is to demonstrate its commitment to providing
In February 2018, Prospect commissioned a
greater beneficiation to the government
lithium carbonate pilot plant located in the
of Zimbabwe. Two is to provide greater
city of Kwekwe, which was recently visited by
profitability margins for the company. “We will initially be exporting 240,000 tonnes of concentrate primarily to China and a lot of that is just rocks going on holiday,” Greaves quips. “With a chemical plant we gain the ability to turn that concentrate into lithium carbonate in-country,
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MINING | Prospect Resources
which it is much more profitable and an
to be available right through the construction
important beneficiation process.”
and will then roll some of those people into
Better returns for country and company
the production phase too. “We can also pull in some of the skilled
The pilot plant was designed and built locally,
people out of the city as we are in such close
which is a strong indicator of Prospect’s faith
proximity to Harare,” Greaves adds.
in the skills and expertise of Zimbabweans and also shows the potential for economic
So far, the pilot plant has successfully
benefits to be shared within the country
processed petalite concentrates into 99.5%
when it comes to building a full-scale
lithium carbonate, which is a significant
carbonate plant.
result for Prospect particularly as it looks to secure future customers for its battery-grade
In the long term, Prospect will create
lithium.
between 250 and 300 direct jobs within the local community in Phase 1 of the project
“We are working on some additional steps in
and around the same in Phase 2, while in
the process now which makes us believe we
the short term a significant amount of heavy
can get much higher grades than 99.5%, and
labour jobs will be available as the project
that is the benefit of having a pilot plant.”
moves into construction.
Arcadia’s first customer
“We are working very closely with our local
Prospect has already secured an exciting
communities to make sure that where the
seven-year offtake agreement with Chinese
skills are appropriate, the communities will
company Sinomine, who have a strong
benefit. We will be training a lot of those folk
footprint across Southern Africa with stakes
Resource Global Network
in mining ventures in Zambia and the DRC, as
for the official opening of the mine, with first
well as having access to a lithium carbonate
production slated for Q2 of 2019.
facility in China. Looking beyond the near-term, Prospect has “They have a lot of skills themselves which we
a pipeline of gold projects in Zimbabwe that
will be leveraging off and they have agreed
pre-date the Arcadia project, which are set to
to buy 70% of our product for the next seven
be revisited by the company in the coming
years.
months.
“We are in advanced discussions with three
In addition, the company is exploring various
other potential offtake partners and are very
opportunities across Southern Africa for
confident that we will close out the remaining
several high demand commodities, including
offtake very shortly. There is strong interest
copper-cobalt deposits in the DRC as well
in our spodumene and petalite concentrates,
as various opportunities in Zambia and
as well as the very keen interest in our
Mozambique.
carbonate plans too.” “At the moment our geological team is Prospect has commenced the construction
extremely busy with additional projects
phase of its flagship Arcadia Lithium
across the continent. We would like to keep
Project and is waiting to hear back from the
the company growing very rapidly in the next
President of Zimbabwe with regards to a date
five to 10 years,” concludes Greaves.
ASX:PSC
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MINING | McEwen Mining
MCEWEN Asset rich leverage to gold, silver and copper
Resource Global Network
MINING
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MINING | McEwen Mining
Rob McEwen is one of Canada’s most successful mine developers after taking Goldcorp’s market capitalisation from US$50 million to over $8 billion during his time at the helm of the company, which is now a giant in the gold mining space. Not resting on his laurels, McEwen sought about replicating the success he brought to Goldcorp and established a new company that would focus on multi-asset gold and silver production across the Americas. McEwen Mining’s principal goal is to qualify for inclusion in the S&P 500 – the US stock market index with a combined market capitalisation of $23.7 trillion. The US market is the largest in the world for gold shares, but only one gold stock currently qualifies for the S&P 500, and that is Newmont Mining. However, Newmont represents only a tiny fraction of the index’s total value – 7/100ths of 1% to be precise. “When the market decides to change its sentiment and embraces gold, there will be a wholesale movement into the indices and into the stocks that are in the largest markets,” says McEwen. “Therefore, McEwen aims to capitalise on the current under-valuation of the gold market to continue building its gold resources and production and drive to our goal of qualifying for the S&P 500.
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MINING | McEwen Mining
“Since I am the largest shareholder in McEwen, we will not follow the path that most other mining companies have taken of diluting their shareholders to gain size. “The cost of my investment in McEwen is $161 million, my salary is $1 a year and I have asked for no bonus or options for doing deals that make us bigger. I will only make money the same way my fellow share owners will, that is with a higher share price.”
A multi-jurisdictional gold portfolio
McEwen has established a gold-based portfolio that stretches across four locations in the Americas, with mines producing in Canada, Mexico and Argentina and one under construction in the US, while exploration campaigns are afoot in all jurisdictions.
Resource Global Network
“When I was building Goldcorp we were only in Canada and the US, which meant we operated in one language and two sets of laws. Today we operate in two languages and four different legal systems,” explains McEwen. “Each jurisdiction has its own unique culture and government policies and objectives. We have to spend more time focusing on regional issues which at times can be more challenging.” McEwen attributes the company’s successful overseeing of the multi-jurisdictional portfolio to the structure of the management teams, which are divided into regional units along with key areas of business such as projects, exploration and innovation.
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MINING | McEwen Mining
“In Nevada, we have benefited from hiring a number of senior personnel who are very experienced exploring and operating at some of the largest mines in the state. “We also bought in Timmins, Canada last October and made some changes in management, adding people who have very specific expertise in this part of the world. They’ve been successful at cutting costs there.”
The Black Fox Complex
McEwen marked its presence in the worldclass Timmins gold district in Ontario with the acquisition of the Black Fox Complex last year. The asset is comprised of a fully operational underground gold mine, the Black Fox-Stock mill and the Froome and Grey Fox deposits.
“I get paid $1 a year with no bonus fo I don’t have company options eithe build the s Rob McEwen, chief owner an The Black Fox deal was preceded by McEwen’s friendly acquisition of Ontariobased gold explorer Lexam VG Gold in February 2017. Lexam’s assets included a number of former producing properties in the Timmins district, but didn’t come with a mill to process ore. “Right away the Black Fox opportunity became obvious. It was in economic trucking distance and it had a mill with excess capacity. Secondly, Timmins is one
ResourceGlobal GlobalNetwork Network 135 Resource
or doing deals that make us bigger and er. My incentive is to see how we can share price” nd chairman, McEwen Mining
of the great gold districts in the world, and the Black Fox properties appeared to be underexplored. “Our purchase price for Black Fox was just $35 million. The price was attractive given the previous owner’s purchase price and investment in the property totalled $560 million. I should also highlight that the property came with $180 million in tax pools that will shelter future profits.”
Although the complex came with over 1.2 million ounces (Moz) of gold in the indicated resource category, the previous owner appeared to lack a good understanding of the mine geology and its potential, according to McEwen. The asset also came with a short mine life and annual production of 50,000 oz, but McEwen aims to extend Black Fox’s life with an aggressive exploration programme. “We believe there is excellent potential for the mineralisation to go much deeper because the average depth of the mines in the region is 1.5 km while the deepest working level at Black Fox is 800 metres. “Recently, we encountered some very encouraging grades 200 metres below our deepest workings. At a depth of 1,050 metres
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MINING | McEwen Mining
our deepest drill assay returned 55 grams over 1.2 metres. This result supports our optimism that the Black Fox mine may have similar roots to other mines in the area,” reveals McEwen.
Gold Bar
McEwen’s next mining operation will be the Gold Bar project, located along the famous Cortez trend in the prolific gold producing state of Nevada in the US. The company completed a feasibility study for the project in 2015, which was based on a measured and indicated resource of 611,000 oz. However, that was three years ago and today, the M&I resource number has increased by 31% to 822,000 oz through the purchase of Gold Bar South, further exploration success and model optimisation. “By year end, we will be releasing a new life
of mine plan that should have the mine life extended by eight to nine years,” reveals McEwen. Construction of the Gold Bar project is expected to be completed by the end of the year, with first commercial gold production scheduled for the first quarter of 2019. McEwen aims to produce 55,000 oz of gold during its first year of operation and average 60,000 oz per year over the life of the mine with an all-in-sustaining cost of $850 per oz. The company is focusing on innovative ore processing techniques in Nevada and is trialling the use of sensors in its heap leach pad to measure moisture levels and compaction. The technology has been previously used in Mexico where it was proven to optimise the performance of the operation.
Resource Global Network
“We’ve also partnered with a company that is creating a digital twin of our operations to further optimise what we are doing there. You can very quickly run various scenarios in order to decide how to best improve the operation,” says McEwen.
The unique aspect of the Fenix project design is the use of an in-pit tailings storage facility. “From an environmental and capital perspective, this is a very elegant solution much less environmental disturbance, less water usage and less capital,” McEwen claims.
The Fenix project
Perhaps one of McEwen’s most exciting assets is the massive Los Azules copper project in Argentina. A 2017 preliminary economic assessment (PEA) outlined a great deal of compelling financials and a globally significant production of 186,000 tonnes of copper per year.
In Mexico, McEwen’s already producing El Gallo mine is on track to deliver its 2018 production guidance of 32,000 oz of gold equivalent, with heap leaching of residual gold continuing into 2020. The Fenix project will source ore from four satellite deposits and rather than developing a new standalone mine site to process this ore, it will utilise the existing El Gallo site with certain capital additions that are projected to extend mining operations by 12 years.
“If you take the projected annual copper production rate and put it on a gold equivalent basis, you’d be looking at annual production of 1,000,000 ounces of gold at a cash cost of around $569 an ounce. In addition, the total indicated and inferred resource would be roughly equivalent to 74.15 Moz of gold.
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MINING | McEwen Mining “Los Azules has a projected 36 years life and using $3 per lb copper the payback is 3.6 years. If it were in production today, it would be the 26th largest copper mine in the world and production costs per lb in the lowest cost quartile of the industry.� While working on negotiating a few access and power supply challenges, the company is also pushing to get a permit completed in order to begin developing the project in the first quarter of next year.
Glittering prospects for gold
Recently inducted into the Canadian Mining Hall of Fame for his achievements in the gold industry over the last four decades, Rob McEwen believes now is an excellent time to be investing in the gold market, and his company provides asset rich leverage. Judging by the depth of the most recent bear market in the gold industry and the bottomto-top gains made in the most recent bull markets, he postulates that when the next bull market emerges there is a strong chance of making a return up to three times the investment.
Resource Global Network “I think the gold market offers an unusually attractive risk-reward situation right now, where the upside is significant, and the downside is low. On top of that, gold stocks are very under-owned, as evidenced by Newmont’s market cap being a tiny fraction of the entire S&P 500.” For McEwen to qualify for inclusion in the S&P 500 and gain a strategic advantage of the industry ahead of an emerging bull market for gold, the company must continue to deliver outstanding exploration results across its Americas portfolio while also seeking accretive M&A deals.
TSX:MUX NYSE:MUX
“I think the gold market offers an unusually attractive risk-reward situation right now, where the upside is significant, and the downside is low” Rob McEwen, chief owner and chairman, McEwen Mining
ar j
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MINING | Ironbark Zinc
Applying the finishing touches on a large-scale zinc project over a decade
e in the making
Resource Global Network
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MINING | Ironbark Zinc
Patience has been the name of the game for ASX-listed Ironbark Zinc at its 100% owned Citronen base metals project in Greenland. The project contains one of the largest undeveloped zinc-lead deposits in the world, and since acquiring it in 2007, the firm has completed a feasibility study, most recently updating the study on a costs basis in 2017. The company also worked tirelessly over five years to secure a 30-year mining licence, which resembled a major breakthrough. “Large scale projects do tend to take quite a while to get through to the full production phase, but when we purchased the project in 2007 it was a deposit that had not been fully drilled out and it still hasn’t been fully drilled out,” says managing director Jonathan Downes.
zinc (Zn) + lead (Pb) JORC 2012 resource
“It remains open to further mineralisation
Ironbark remains in discussions with
in every direction. We’ve now spent about
other highly regarded groups and hopes
US$50 million on the project, completed
to announce additional operational and
65 km of diamond drilling and made the
financial partnerships for the Citronen
resource four times larger than when we
project in due course. The company also
first purchased it.”
recently took a team to the project with the
A tier one base metals project Citronen consists of simple, flat and contiguous ore zones that form a giant
of 132 million tonnes (Mt) at 4.4% Zn + Pb, equivalent to 12.8 billion pounds of Zn, making it a genuine tier one base metals project. In addition, the resource also contains a higher grade portion of 71Mt at 5.7% Zn + Pb, which will be the target for initial mining. In 2018, Ironbark has been able to move into the final preparatory stages of the project, making real progress from a financial and operational point of view. In August, the company welcomed a host of visitors to the site, including potential investors, bankers, private equity groups, equipment suppliers and mining operators. In the aftermath of the site visits, the company announced it had entered into a mining services agreement with Byrnecut Offshore – an internationally recognised mining contractor with an exceptional depth of experience in underground mining, according to Downes. “They are one of Australia’s biggest mining service suppliers,” he adds.
intention to commence site activities. “We started the box-cut to the decline, which was more than anything to prove that we
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Resource Global Network were in a position to start breaking ground at
put tenders out for long lead items at the
“Citronen is a significant mine that will produce approximately 200,000 tonnes of zinc metal each year, which is nearly 10 times larger than the average zinc mine around the world” Jonathan Downes, managing director
beginning of 2019.
“Citronen is a significant mine that will
the site. “We also took a cargo ship up to the site, primarily to prove the shipping route and the concept and get a good handle on the logistics that we will be looking at when we are in steady state production.” The company also appointed Londonbased Cutfield Freeman to manage the overall financing process and is hoping to
produce approximately 200,000 tonnes of While 2018 has been a year of significant
zinc metal each year, which is nearly 10 times
progress at the Citronen project, with
larger than the average zinc mine around the
site works commencing and financing
world.
arrangements beginning to take shape, the groundwork for these developments were
“It’s a large-scale operation with an
laid by the company over the course of 2016-
exploration target resource of between
17.
302-357Mt at a 4.4-5% Zn + Pb grading. The potential of having 3.3Mt resource makes it
In late 2016, Ironbark was awarded a 30-
an obvious contender to be a significant long-
year mining permit for Citronen by the
life zinc producer.”
government of Greenland after signing an impact benefit agreement, before publishing
Citronen is one of most recently discovered
a renewed feasibility study with updated
large-scale zinc deposits in the world and is
costs in the following year.
comprised of an open pit portion with a low
Compelling economic metrics
strip ratio of 2:1 for 10Mt of reserves, along with a higher grade underground mining scenario.
The updated feasibility further reinforced the compelling economic metrics of the project,
“We have a very open-ended deposit both
with a post-tax net present value (NPV) of
at depth and laterally in every direction, the
$909 million and annual profit estimated
orebody just continues. The most Southern
at up to $270 million, against capital costs
drill hole is still grading 12% zinc and we are
of $514 million at an assumed zinc price of
getting rock outcrops of zinc in situ at 18% on
$3,044 per tonne.
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MINING | Ironbark Zinc
surface to the Northwest, so this system is
An icebreaker
massively open.”
The only real challenge in this project is its location in Greenland, one of the most
The underground mine is very shallow,
remote regions in the world. “The location
starting at 40 metres deep and is incredibly
is the key point of difference, so to de-risk
continuous being a sedimentary style
the project we took a ship up to the site this
deposit, with Downes likening it to a coal
year.”
seam. Overall this makes for a simple mining method and large tonnage production.
At the end of August, the company report that the icebreaking ‘Nunavik’ – a 189 metre
Resource Global Network year, after proving up logistical access to the remote location. The project economics have been further sweetened by recent upward price movement in the zinc market, which is being shaped by a combination of growing global demand and depleting supply, with several large-scale deposits around the world reaching depletion - such as the 500,000 tonnes per annum Century mine in Queensland, Australia. “That has been a very welcome turnaround,” says Downes. “The current price of zinc is fantastic and does offer some great returns for investors once we are in production. The overall dynamics in the zinc market look like they are going to stay with us for some time too.”
China’s zinc market The managing director refers to tightening rules and regulations in the Chinese zinc market as a key factor influencing the current global zinc market. China is the world’s largest producer of zinc, but production has been falling as the global superpower attempts to align its environmental standards long polar class cargo ship successfully
with the Western world.
proved shipping access to the Citronen site, marking the first time a large commercial
In several Chinese mining provinces zinc,
ship has travelled so far North on the Eastern
lead and other dangerous elements such
coast of Greenland.
as cadmium have been released into the environment from the mining process,
This milestone feat adds another layer of
causing hazardous pollution while also
achievement to Ironbark’s stellar 2018 and
impacting resources, soils, vegetables, and
puts the company in a great position to
crops.
move into full construction at the site next
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MINING | Ironbark Zinc
Resource Global Network However, with an increased awareness of the harmful legacy of its zinc mining industry, China has instigated strict environmental inspections which pushed year-on-year production down by 6.3% to 476,000 tonnes in the month of July. “For the first time we are seeing that China is not delivering a big supply response into a rising zinc price, which is great for everyone else,” says Downes. “In addition, the Chinese use about 25% of the world’s zinc per unit of steel. Now, as some of their cars start to get galvanised, and issues such as rusting are addressed with other equipment, we are going to see a much higher level of zinc consumption from China as the country modernises. “There would have to be a lot more zinc mined and put into production to meet that ultimate demand, if they were to meet the standards of the Western world.” This is why Downes believes that the current supplydemand dynamics in the zinc sector are set to persist long into the future.
Full steam ahead Turning to recent news, Ironbark has very recently entered into a Memorandum of Understanding (MoU) with industrial giant Metso Sweden, which will provide a framework for the two to negotiate a commercial agreement for services and equipment supply to the Citronen project.
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Resource Global Network
One of the world’s largest equipment
all the pieces are finally coming together for
suppliers, Metso has already worked closely
Ironbark in Greenland.
with Ironbark on the feasibility study and have maintained close communication since
“We are very pleased with our recent
the study was completed.
progress and from a timing perspective it has worked out when the world really needs us.
“Metso are the group that we are working
Zinc stockpiles are now at critically low levels,
with mostly on building the project plant.
and I don’t think that is going to be resolved
We will be attempting to keep the content
until some big mines, like Citronen, get up
mostly European where possible in order to
and running.”
have access to European Credit Authority financing.” To conclude, over a decade after first acquiring the Citronen project, Downes declares that at the end of 2018 it feels like
ASX:IBG
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151
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RENEWABLE ENERGY | Lake Turkana Wind Power
Asset rich leverage to gold, silver and copper
LAKE TURKANA Africa’s largest wind farm connects to Kenya’s national grid
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RENEWABLE ENERGY | Lake Turkana Wind Power
At the end of October, the last of 365 turbines at the Lake Turkana Wind Power (LTWP) Project was fully commissioned and plugged into the national grid, marking the completion of this enormous project that remains Kenya’s largest ever single private investment. Full construction of the 310MW capacity wind farm was completed by mid-July 2017, however the company had been unable to generate and evacuate power due to ongoing delays to the construction of a 428 km transmission line connecting the project to the grid. The transmission line was finally energised on September 24th, providing the greenlight for LTWP to begin connecting the turbines to the grid. This moment, long in the waiting, resembled a major milestone in the life of this project that is now officially Africa’s largest operational wind farm.
A challenging period
Nonetheless, the delayed construction of the transmission line created a difficult situation between the company on one hand and the national distribution utility Kenya Power and Lighting Company (KPLC) and the Government of Kenya (GoK) on the other. The difficulties concerned the ‘take-or-pay’ principles contained in the 20-year power
Resource Global Network
“If you take the period from September 24th – October 27th, we recorded an average capacity factor of 80%. That is phenomenal when you compare it to other wind farms around Africa and the world” - Rizwan Fazal, Director
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RENEWABLE ENERGY | Lake Turkana Wind Power purchase agreement (PPA) whereby all risks pertaining to a transmission interconnector (TI) delay were not to be borne by LTWP. Consequently, LTWP lodged its claim to some GoK TI Delay Deemed Generated Energy (DGE) payments in order to meet its repayment obligations under the complex project financing arrangements. Amendments were eventually made to the PPA whereby a partial sum (€46 million) of the payment was paid in order for LTWP to repay its September 2017 and March 2018 semi-annual debt instalments, which amounted to just over €74 million in total – a significant sum by any estimation. The balance of €81 million was deferred for repayment over 6-years by way of a minor tariff increase of €0.00845 euros per kWh. LTWP’s project finance advisor and director Rizwan Fazal describes the period between July 2017 and September as a very awkward and antagonistic time from a government relations, lenders and general population perspective. LTWP’s claim to GoK TI Delay DGE Payments – even though it was a negotiated settlement, was seen and perceived negatively by the electricity consumers who were grappling with increased power bills and would eventually be shouldering the cost of the TI delay. The GoK was a stellar party and clearly understood the need for and importance of honouring the payment obligation. Eventually, it was a win-win for all parties. The GoK set itself apart as a most credible counterpart, says Fazal. “It has been difficult for the shareholders
Resource Global Network of the company, who have lost nearly 18 months’ worth of revenues. But from every perspective there is now great relief that the transmission line has been built, hot commissioning has taken place and power is being fed into the grid. It feels great.” During the long hiatus, the company had to enter into service agreements with its turbine supplier, which essentially acted as preservation contracts up until the point when the transmission line was in place and hot commissioning could occur – meaning tests that require a live connection. In addition, when it was finally able to feed power into the grid, LTWP was confronted with moving goalposts in Kenya’s energy network; several new generating plants had come online since January 2014 – when the company first undertook load and system studies. In addition, some transmission infrastructure that was anticipated had not materialised. These changing parameters contributed to system challenges both to and from LTWP. “However, one pleasant surprise has been the ability of the plant to surpass our expectations in terms of output. We have had capacity factors that are North of 90% on a fair number of occasions already,” Fazal reports.
Beating capacity expectations
The company previously anticipated that the wind farm would operate at an average of 62% of its total 310MW installed capacity, so to be achieving an average of over 70%
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“Lake Turkana Wind Power demonstrated that from a logistical perspective, large-scale projects can be implemented in remote parts of Africa.�
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RENEWABLE ENERGY | Lake Turkana Wind Power
Resource Global Network
consistently so far is a great result for LTWP. It has always been known that the location of the wind farm, nestled between two vast mountain ranges in Kenya’s far North, would provide some of the best conditions in the world for generating wind energy. Detailed mast measurements consistently indicated that this was an area of constant, uni-directional wind at high velocities. But much of this understanding was purely theoretical, so to see the wind farm outperforming its target capacity on a regular basis is a very welcome return for LTWP. “If you take the period from September 24th – October 27th, we recorded an average capacity factor of 80%. This corresponds to around 14.5 metres per second average on the power curve. That is phenomenal when you compare it to other wind farms around Africa and across the world.”
Staying in Kenya, the wind farms located in the Ngong hills near the capital city of Nairobi perform at around 37% capacity, according to Fazal. In South Africa, wind farms hover between 45-50% on average, and the UK’s entire wind sector performs at 28-35% of its total capacity. “Lake Turkana is blessed with quite a phenomenal resource and it will come into play quite nicely as the energy is baseload and very predictable,” Fazal believes. While the distinctive configuration of the land in the area makes it highly conducive for generating wind energy, LTWP and its construction partners can be forgiven for highlighting the major challenges posed by the project’s remote location. The project sits at the Southern tip of Lake Turkana in Loiyangalani sub-County, Marsabit County region, and is far removed from Kenya’s bustling urban centres –
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RENEWABLE ENERGY | Lake Turkana Wind Power
Resource Global Network approximately 750 km away from capital city Nairobi and just under 1,200 km from major port city Mombasa.
The cradle of mankind
The Lake Turkana region, which is best known for being ‘the cradle of mankind’ – after a number of important archaeological finds - is sparsely populated and home to only a small nomadic population. As such, the area had virtually nothing in the way of infrastructural development prior to LTWP commencing work on the project. Therefore, the first task of the construction phase was to build 208 km of public road just to provide access to the site. Next, 130 km of road was laid within the wind farm, along with 180 km of overhead lines within the 33KV network. The 365 turbines had five different foundation designs each with around 57 cubic metres of casting and were spaced across 40,000 acres at the project site,
which was an 18-hour truck drive away from Mombasa - where the turbines and a large number of equipment had to be transported from. However, LTWP and its partners worked miraculously over the 30-month construction period to overcome these obstacles, creating a highly efficient supply and logistics chain that allowed the project to be completed on time and on budget. “We had anticipated completing on January 26th, 2017 and we were ready with the first unit group of 119 turbines on January 27th. We were absolutely on budget, not a penny above during the entire construction period, which in itself was quite a miracle for a project of this scale. “It all comes down to people, teams, the partners and efficient project management. Across the board, the teamwork between LTWP and the EPC contractors – Vestas, Siemens, RXPE of China, Civicon and Southern Engineering Company of Kenya (Seco) was miraculous.”
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SIEMENS SAS EM Siemens France
*L’ingéniosité au service de la vie
siemens.fr
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Despite facing initial challenges around seeking labour during the construction phase (primarily due to the inhospitable nature of the location) there was a big push towards local employment by LTWP, who ensured that the contractors were flexible with regards to incorporating local labour into their teams. Behind this local employment push was the company’s ambition to develop the local area by enhancing skills and transferring knowledge, in the hope that this would have a domino effect post-construction in terms of developing vocational businesses and industries. “At the peak we had 1,254 employees in the company, of which approximately 800 were local from the area. Most of the balance were from Kenya with around 10% being foreigners or expatriates. There was a lot of knowledge transfer, and today LTWP has employed a lot of those workers who were
trained by the contractors, including Vestas, Siemens and Seco, into full time roles at LTWP.”
Winds of Change
This community-driven mindset at LTWP has been further crystalized through the formation of the Winds of Change Foundation (WoC). Established in 2015, WoC is a 100% LTWP-owned subsidiary that implements LTWP’s CSR programmes and aims to improve local livelihoods within the 20,000 km² catchment area of the wind farm. The foundation focuses on enhancing employability and improving access to healthcare and water, with a key feature of its work so far being the ability to deploy the services of former LTWP employees in community projects.
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“When we wish to build a water facility or any other project, we are finding that lots of those previous employees of project partners are being awarded those contracts and are able to now supplement their income through our outreach projects.” The projects started with fairly simple bore hole exercises for water storage, but WoC’s scope of work has gone on to include constructing dispensaries, schools, laboratories, IT centres and vocational training centres. One of the standout projects has been the conversion of a youth centre to an IT centre in the town of Korr, Marsabit County. Prior to the conversion, residents would have to travel 300 km just to complete exercises as simple as sending or printing electric documents. “Now, residents can access an IT facility from the heart of their community. This IT centre also demonstrates the public-private partnership nature and the coming together
of multiple parties including WoC and investors, working in close cooperation with Marsabit County Government. “Even in its infancy, WoC has been successful in being a catalyst towards sustainable development. This is something we want to continue as we now start to generate power and have put aside a substantial allocation of revenues towards the CSR programmes undertaken by WoC.”
A litmus test
The LTWP project can be viewed as a litmus test for whether Kenya and other subSaharan African countries are ready for clean energy infrastructure projects of a comparable scale. For Fazal, the proof is in the pudding at Lake Turkana. “Lake Turkana was able to rely on all of its contractual obligations, including the rule of law. It demonstrated that from a logistical perspective, large-scale projects can be implemented in remote parts of Africa.
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The fact that it was done on time and on budget is proof that well-structured, wellimplemented projects are key. “Kenya has proven it is not an island and is part of this wider financial and global market. People can look to Kenya with confidence that their investments will be protected and that contracts will be honoured, even under the most strenuous circumstances. “But there are lessons to be learned. Lake Turkana’s implementation has been by no means easy. We have had our fair share of pain, but on the whole the success of Lake Turkana will be replicated and will inspire others to develop projects in the country and in the region.”
Kenya, believing that renewable energy projects should be introduced in a tapered manner to prevent energy supply rapidly outstripping demand, which would send energy prices higher for consumers. Secondly, the wholesale adoption of intermittent renewable energy would need to be accompanied by upgrades to the network to prevent voltage instability, which has already occurred after the introduction of power from LTWP. “I think for investors the focus is going to move towards the technical and regulatory aspects of these projects and those areas need a lot more planning and a coordinated approach.”
However, Fazal makes a stark warning against the wholesale adoption of renewables in
a b
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RENEWABLE ENERGY | Gemini Wind Park
GEMINI wind park
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A watershed project for the Dutch offshore wind industry
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Gemini Wind Park was officially opened in May 2017 at a public ceremony in Eemshaven, the seaport town located in the North of the Netherlands which served as the onshore base from which the major offshore project was delivered. The inauguration resembled the bookend of eight years of exhaustive work by the team and its partners, however Gemini’s CEO Matthias Haag is quick to highlight that while it was a joyous occasion for the team, the real satisfaction was taken when the park first began operations back in October 2016. “The wind park was already running at that time so it was a nice external milestone, but for the team the more important thing was having the wind park running,” says Haag.
Resource Global Network
“Nonetheless, its important that we had
The sheer magnitude of this project is
everything formalised with all the t’s crossed
revealed by the fact that it became the
and the i’s dotted, making sure that all the
world’s largest offshore wind project when
documentation is there. We also combined
it came online, and it has only been topped
the official opening with a restructuring of
this year by the arrival of the 630MW London
the financing as well, which was very positive
Array project, found in waters near the
for the shareholders and the banks.”
United Kingdom.
Gemini is located in the North Sea around 85
Collaboration is key
km North of the Dutch coast, boasting a total
Haag reveals that collaboration among
capacity of 600MW delivered by 150 turbines
the team and its partners was absolutely
across two sites – hence the name Gemini,
essential to the successful delivery of this era-
meaning ‘twins’.
defining project. “It was a big challenge to get
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RENEWABLE ENERGY | Gemini Wind Park it over the line, but we had a very good team and good partners. “Van Oord and Siemens were the main contractors, but we also shared good relations with all the other parties involved, be it the operators, or the banks who were financing the whole contract. “This working together of all parties was the main reason why the project was successful and delivered on time,” says the CEO. During the construction period, Gemini and its partners employed best in-class technologies to optimise safety and efficiency at the site, for example an automatic identification transponder system (AIS) was used to track the position of each installation and maintenance vessel. Each ship’s AIS transmitted its position, heading, speed and registered maritime identification number every two to 10 seconds, and this data was received by ships in the vicinity in case of incident. “Realistically, on a big project like this one you have to admit that things can happen. The question is; are you prepared for that and able to react in the right way? “We had an in-house team that dealt with HSE safety but also environmental guidelines, health issues and other things. We had a HSE manager and a number of people going offshore in the vessels to work with the contractors in more detail and we had
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ResourceGlobal GlobalNetwork Network 177 Resource
a lot of discussions with the contractors to
certainly an example of how things can work
make sure that all the requirements were
like that and the government was happy to
understood and going ahead the way they
see that things can progress on time and
were supposed to.”
on budget. Their strategy for the renewable change in energy provision is slowly coming
Gemini’s size and energy production capacity instantly set a new benchmark for offshore
to fruition.”
wind projects globally, but it was also the
Global winds of change
delivery of the project on time and on budget
Since the landmark Paris climate accord,
which stretched the industry’s perception of
nearly all recognised governments (bar the
what was possible for an offshore project.
US) around the world have agreed to limit the amount of damaging CO2 emissions
“In terms of the execution and the finance,
released into the atmosphere and increase
this was by a distance the biggest project
the generation of renewable energy sources
finance of an offshore wind park that took
to replace polluting carbon-based energy
place at the time in 2014,” Haag claims.
sources.
“With €2.8 billion secured in funding it was
Like many European nations, the Dutch
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RENEWABLE ENERGY | Gemini Wind Park
Resource Global Network government set an individual renewable
offshore projects, the Gemini project
energy target in the wake of the Paris
has also contributed to warming public
agreement, however it is struggling to meet
sentiments towards renewable energy in the
its 2020 target of having 14% of its total
Netherlands and this was encapsulated by
energy mix supplied by renewables.
the public reaction to the development in the local Eemshaven region.
This target was agreed with the European Union back in 2007, and was soon followed
“All interaction we had with the public was
by an even more ambitious target of 27%
very positive,” reveals Haag. “People were
renewable energy by 2030. Most recently,
very positive about Gemini and the fact that it
this 2030 target was further increased to 32%
happened.
in June this year. “On the other hand, you have to understand Therefore, the Dutch government has a
that the entire wind park is beyond the
mountain to climb if it wants to meet these
horizon so for the general public it is not
ambitious targets and will need many more
visible at all. All they could see was the
onshore and offshore wind projects of the
onshore activity with the preparation at the
same magnitude as Gemini, which reduces
harbour.”
reducing CO2 emissions by 1.25 million tonnes per year.
The Gemini team held an open day in Eemshaven where members of the public
“Gemini alone provides enough power for
were given a tour of the onshore facilities
the energy needs of the three Northern
and were also taken in small vessels to see
provinces of the Netherlands. These big
the turbines onsite. The day was deemed a
projects do make a difference and you can
big success, with attendance far exceeding
see that the Dutch government is planning
expectations prior to the event.
multiple large MW projects to be added in the coming years.”
A key reason for the successful reception of the project by the public was the fact that it
In fact, the government recently announced
provided significant short-term and long-term
plans to build three offshore wind farms
economic opportunities in the local area.
by 2030, in addition to five offshore sites
“Siemens made sure they employed people
which will be delivered before 2023. The
from the region in their ship which is now
government hopes that these large-scale
24/7 in the field, operating and maintaining
projects will produce 40% of the country’s
the wind turbines.”
electricity needs by 2030. This lasting positive economic impact While acting as a stimulus for these future
of the project, along with the Gemini
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team’s proactive approach to stakeholder
resembles a significant long-term source of
management, has gone a long way to
renewable energy for the Dutch government,
ensuring the legacy of the wind park remains as the country looks to diversify its energy protected over the next 20 years.
supply and align with EU green energy goals.
A strong start to life
The wind park will continue operating
During its first 12 months of operation,
profitably beyond the current 15-year subsidy
Gemini consistently delivered on its capacity
tariff it has agreed with the government, an
despite it being a ‘bad wind year’, according
idea that was deemed impossible by the wind
to Haag. “But in terms of availability and
industry not long ago.
functionality of the wind park, we are very happy and are having higher than agreed
This reflects the pace of change currently
availability, which is being achieved on a
afoot in the wind industry, as zero
consistent basis.”
subsidy projects become more prevalent, costs continue to fall and technological
With a current lifetime of 20 years, Gemini
improvements drive the industry forward.
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“I think it’s an extremely important time for
“Looking around the world, offshore wind
offshore. We have seen so much growth
is taking off everywhere and if you look at
recently, but I think we are still at the start
a recent forecast from Bloomberg, they
the real growth is still to come.
have predicted six-fold growth by 2030 which is hugely exciting and there is a lot of
“If you look at what is happening in Taiwan,
happening. We have only seen the start of
India, China, Turkey, the French have
offshore wind and the big industrial change
finally decided they are going ahead with
or revolution is just beginning.”
something, the Belgians are building, the UK and Germany still have big plans. Even the US has started planning some offshore farms.
ar j
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RENEWABLE ENERGY | juwi Renewable Energies
JUWI
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A new focus on hybrid energy solutions across sub-Saharan Africa
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RENEWABLE ENERGY | juwi Renewable Energies
juwi Renewable Energies South Africa is part of the international juwi group, one of the world’s leading companies in the renewable energy industry. The South African business is one of 15 subsidiaries in countries worldwide, after the original juwi group decided to expand out of its German roots into new international markets. Since adopting this strategy, the group has become adept at observing the ebb and flow of renewable energy sentiments in different jurisdictions and identifying the opportune moment to move into or out of a particular market. juwi registered in South Africa in 2010, when the stars were beginning to align in the then nascent renewable energy sector, with the announcement of the government’s inaugural renewable energy independent power purchase programme (REIPP). juwi’s arrival into the South African renewable energy market in 2010 allowed the subsidiary time to build its workforce over the course of 2011 ahead of its participation in the first round of solar projects under REIPPP in 2012 and 2013. Managing director Greg Austin joined juwi
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RENEWABLE ENERGY | juwi Renewable Energies
South Africa at the end of 2012 after it had
until financial close, at which point a financial
signed four engineering, procurement and
investor would step in.
construction (EPC) contracts for four solar projects comprising 35MW in Round 1 of
More recently the company has added solar
REIPPP.
project development to its business. This has allowed juwi to develop project rights
“When I joined we executed those projects,
alongside being able to build and operate
predominantly over the course of 2013,” he
a solar project together with the right
says. “Subsequent to that, a few things have
investment partner.
happened; we have diversified our business models, grown our business and been
“In parallel with that we’ve grown from a
successful in following rounds of the REIPPP.”
handful of people in 2012 to over 50 staff and we have further diversified the business
juwi’s initial strategy was to follow two core
to include commercial and industrial solar
business models in South Africa, the first of
power systems.
which was to provide EPC services to utilityscale solar plants. Meanwhile, juwi would also
“More recently our Cape Town office forms
act as a project developer for wind farms,
the hub for linking with off takers particularly
where it would effectively own projects up
in the mining sector for our cutting edge
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hybrid power solutions. Both of these
boom, building five utility scale solar plants
latter business models are B2B in nature
totalling 121MW to date, along with an
as opposed to the public procurement
extensive portfolio of both of wind and
programme represented by REIPP in South
solar projects in South Africa that are fully
Africa.”
developed and ready for bidding in the next
Reaping the benefits
REIPP procurement round.
The introduction of REIPPP was a genuine
After focusing most of its early efforts on
watershed moment in South Africa’s
securing projects in the first round of REIPPP,
renewable energy industry. In the six years
juwi secured an 86MW solar project in the
since the first round of the programme, over
third round, which was commissioned in mid-
6.1GW of renewable energy projects have
2016 and has been in operation for two years
been allocated over four rounds of bids,
now.
which has generated investment of around R194 billion (US$16 billion), none of which
“We have been successful in selling one
has come with any form of government
of our early wind farm projects that we
subsidy.
developed back in 2012,” says Austin. “It was awarded as a project in Round 4 of REIPPP
juwi has played a key role in this investment
which has been the round where we have had all the signing delays.”
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RENEWABLE ENERGY | juwi Renewable Energies
“We have diversified our business models, grown our business and been suc After three successful rounds of
and secure PPA signatures for three solar
procurement, the fourth programme was
projects totalling 250MW in Round 4. juwi’s
effectively put on hold back in 2015 despite
strong position in the local market has been
significant capital investment and job
further underlined as a result.
creation within the South African renewables industry.
Hybrid energy solutions juwi has also developed its strategy around
Therefore, the last three years have proven
renewables in the wider sub-Saharan African
to be a frustrating period for juwi and many
region, providing ‘hybrid’ energy solutions to
renewable energy industry stakeholders
the mining industry under a B2B model as
who have had to wait patiently for the
part of a global focus for the juwi group.
final signatures on the Power Purchase Agreements (PPAs).
“Our global hybrid business initiative combines solar, wind, any thermal generator
However, the wait finally ended in April when
and storage, and we are focusing our efforts
South Africa’s energy minister Jeff Radebe
in this regard.”
signed the agreements for 27 PPAs worth a total of R56 billion, in a fresh sign of the
Austin reveals that the company is currently
government’s commitment to the renewables
working on a number of significant mining
industry.
projects in Africa, building on its experiences on an award-winning reference project. In
As a result, juwi has been able to reach
2016, juwi commissioned a 10.6MW solar
financial close on the wind farm project sale,
PV plus diesel plus battery storage hybrid
ResourceGlobal GlobalNetwork Network 189 Resource
ccessful in following rounds of the REIPPP.” Greg Austin, managing director system at the DeGrussa Mine, located around energy? For Austin, the key consideration is 900 km Northeast of Perth in Western
ultimately cost. “If you look at mines, they can
Australia.
either be grid-connected, entirely off-grid or they can be on a weak-grid.
The US$40 million project remains two years later as the largest integrated off-grid solar
“Typically, you would see that most mines,
and battery storage facility globally, and fully
even if they are connected to the grid, have
integrates with the existing 19MW diesel-
substantial thermal power plants on site
fired power station at the site, providing
which will typically be diesel or heavy fuel oil-
an additional source of power and energy
based. The cost of that energy is really high
storage with related cost and carbon
compared to solar. From a price perspective
emissions reductions.
solar is a no-brainer, assuming that a suitably long-term PPA can be agreed between the
Having received extremely positive
involved parties.
feedback from the mine’s operator Sandfire Resources throughout the two years since
“When you put these things side-by-side
its installation, juwi believes that solar hybrid
there are price offerings under a PPA
facilities are fast becoming the benchmark
environment that a thermal power plant
for reliable and sustainable energy supply to
simply cannot complete with.”
remotely located mines. In addition to low costs, the reliability and But why exactly are these hybrid plants so
quality of the energy supplied are another
valuable in terms of providing reliable off-grid key draw for mining companies considering
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RENEWABLE ENERGY | juwi Renewable Energies
Resource Global Network hybrid systems for remote mines. This is something that juwi is attempting to promote via the success of the DeGrussa mine. “The reliability and the quality of the hybrid system is as good, if not better than that from the standalone diesel system,” according to Peter Gordon the electrical superintendent at Sandfire Resources. “Those are the first points we are trying to hit. Once you achieve that and reference it, that’s when it makes a mark in everybody’s minds,” says Austin. “Whenever you talk to miners about power and its relative costs and reliability, everyone is looking at solar, so that’s quite an exciting place for us to be in right now.” Hybrid facilities are particularly compelling for many mining operators across subSaharan Africa because of the increased number of off-grid large-scale mines. Typically, off-grid connections are much more expensive than grid-connected mines in Africa and are often a much poorer quality. Not only that, but according to Austin: “We anticipate the introduction of our hybrid solutions as a key enabler of new investments into proven mining resources that otherwise would not be bankable with the costs of providing a pure thermal power solution in some locations.” Therefore, the continent is presenting fertile ground for juwi’s low cost, high quality and
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RENEWABLE ENERGY | juwi Renewable Energies
“Whenever you talk to miners abou everyone is looking at solar, so that’s q
reliable hybrid energy systems, as off-grid
Having said that there is still a robust
mine operators look for reductions in and
industry which has had to really sharpen its
alternatives to their current electricity tariffs.
pencils and find a way to deliver value for its
South Africa’s resurgent renewables sector
customers.” Now it seems that brighter days are on the
Returning to the current state of play in
horizon once again with the announcement
South Africa’s renewable energy industry,
of the fifth round of REIPPP, which will
Austin admits that the sector has weathered
be launched this year for over 1.8GW of
a storm in recent years because of the delays
renewable energy projects.
in the final project sign off in Round 4 of the REIPPP.
This programme will provide a major investment boost to the renewables industry,
“The entire fabric of the market has had
which is already benefitting from rapidly
a massive setback because of the delays.
falling costs across the board, particularly in
Resource Global Network
ut power and its relative costs and reliability, quite an exciting place for us to be in right now.”
the commercial and industrial solar sector.
has grown from having the capacity to build 35MW in around a year and a half, to being
In addition, business conditions in South
able to build 250MW in that same timeframe.
Africa have also improved as a result of political changes earlier this year, which
“Looking back over the last five years juwi has
is further contributing to a better outlook
realised or secured 500MW of solar and wind
for juwi and its fellow renewable energy
projects in South Africa. In terms of the sub-
developers.
Saharan business, we are bullish about the hybrid prospects and are aiming to achieve
Reflecting on juwi’s development in South
deployment of around 100MW by 2021.”
Africa, Austin tells RGN that the company
ab j
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OIL & GAS | Otto Energy
OTTO ENERGY
Part of an exploration renaissance in the Gulf of Mexico basin
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OIL & GAS | Otto Energy
Until around four years ago, ASX-listed Otto Energy’s portfolio was centred around its oil and gas assets in Philippines. During this first phase of the company, the focus had been on maximising the value of the core production asset in Philippines, and this culminated in 2013 with the successful completion of the Galoc Phase 2 development. However, by late 2014 Otto had completed the sale of the Galoc field, giving the company balance sheet strength at a crucial moment when oil prices were in freefall and the sector was retracting from some of the more high-risk regions that were invested in at the height of the boom. Otto’s managing director and CEO Matthew Allen explains how the lower oil price environment of 2014 opened up a market of higher quality assets that previously had not been accessible for a company of Otto’s size. “When we exited our assets in Philippines, we spent a lot of time looking for the right opportunity in a low oil price environment. The sector had very dramatically cut capital expenditure and investment all around the globe. “We observed a number of operators, particularly in the Gulf of Mexico, in balance sheet distress and a lot of them had
Resource Global Network exploration commitments ahead of them that they couldn’t fund. “As a result, capital was being diverted into production related enhancements and plug and abandon obligations with the government, and very little was going into exploration expenditure.” Upon seeing this trend in the sector, Otto went about positioning itself as a wellcapitalised non-operator for exploration projects with high quality partners in prolific hydrocarbon basins, such as the Gulf of Mexico. “That’s what we’ve been doing for the last three years, building our exposure in the Gulf of Mexico play and very quickly accelerating into production, which we think is the key to capture the opportunities that wouldn’t normally be available in a higher price environment.”
An exploration renaissance The Gulf of Mexico is a mature oil basin that is undergoing a period of renaissance in terms of new discoveries and increased operator activity. For Allen, the basin has all the ingredients that Otto is looking for: A working petroleum system, relatively low sovereign risk, excellent margins and short cycle times from drilling to cash flow. “The advent of 3D seismic surveying back in the 1990s really transformed what people thought was a mature area and finds like
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Resource Global Network the South Marsh Island 71 (SM 71) have
Timing is key
proved that new technology is helping to
“To be able to sell near the peak in 2014, then
uncover more discoveries. It’s a well-proven
invest during the low points of 2015-17 and
basin that, if you have good ideas and good
then have production come onstream right in
technology, is one of the best places to look
the recovery phase, for us we have had a very
for oil.”
fortunate last four years with timing working well for us. We have a significant long reserve
Production commenced at SM 71 in March
life ahead of us in SM 71, it ranks now as one
2018, just two years after it was first
of the top Gulf of Mexico shelf oil producers.”
discovered. Now, the project delivers over US$3 million a month in free cash flow, net
In 2015, Otto partnered with fellow ASX-listed
of royalties and operating costs, and with
oil and gas producer Byron Energy at SM 71
a significant field life, SM 71 is set to be the
in a deal which saw Otto take a 50% working
critical mass on which Otto will grow its
interest in the project and Byron retain
business.
responsibility as operator.
“Our aspiration is to deliver in the first phase
The joint venture (JV) has been mutually
of our business growth in the Gulf a net
beneficial for both parties according to
production target of about 5,000 barrels
Allen, who acknowledges Byron’s depth of
per day (bpd) and we are well on the way to
experience in the Gulf of Mexico and their
delivering on that target in the next three
proven capability in delivering and executing
years.
projects in the region.
“It has been a very significant discovery for us
“We have assembled an excellent team
as a company, and we are looking to build on
here in Houston and are building out our
that initial success in the drilling programme
capability in the area. I rate very highly the
that we now have ahead of us for the next
team that we have here and look forward to
two years.”
building our own capability to operate and develop projects in the future,” he says.
Evaluating his company’s work at the SM 71 project, Allen stresses that timing is perhaps
However, for the foreseeable future Otto
the most important element in the oil and
will continue to focus on working with good
gas industry, and this has been validated by
quality operators like Byron and Hilcorp
the successful fast-tracking of the project into
Energy. The company recently secured an
production.
eight-well Gulf Coast package with tier 1 operator Hilcorp, one of the largest privately held oil and gas companies in North America.
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“Our aspiration is to grow in the first phase of our business growth in the Gulf of Mexico with a net production target of about 5,000 barrels per day� Matthew Allen, managing director and CEO
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Hilcorp is a highly experienced Gulf Coast
Alaskan ambitions
operator and the deal, over 12 months in
Nonetheless, Otto’s chairman John Jetter
the making, represents a significant coup for
said the news was only a short-term setback
Otto. “To have put together eight high quality
with a further eight wells to be drilled in the
drilling opportunities like we have with
Gulf of Mexico and attention is now turning
Hilcorp, that provides some very significant
towards the company’s upcoming drilling
activity and upside in our portfolio.”
programme in the Alaska North Slope. Otto’s technical team has been active in this
At the time of writing, Otto was in the middle
emerging play since late 2017, maturing the
of drilling the first well within the Hilcorp
large-scale Nanushuk prospect.
package, with the company expecting to have that well down to target before the end of
“It’s a really exciting well and a large target,
October. The Hilcorp package provides the
as most targets in Alaska are. It’s elephant
bulk of Otto’s 10 well exploration pipeline.
hunting territory, or so it’s called, and the other end of the spectrum to the Gulf where
Of the two remaining wells, Otto partnered
a few million barrels can be very economic.
with Byron once again at Bivouac Peak in the Gulf of Mexico, but after a disappointing
“But in the North Slope its very much about
drilling campaign the company labelled the
aggregating large volumes, large capital
Bivouac Peak East prospect non-commercial.
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investments and infrastructure. We’d like
Allen believes that it has been known for
to have a balance of portfolio depth and
quite some time that the Nanushuk sequence
exposure so it’s a good opportunity for us
contains oil, but it has been overlooked
to participate in and put a little bit of capital
as a development region because of its
towards.”
stratigraphic nature, until recently.
Resource Global Network too complicated to resolve on seismic and even more complicated to develop, but with the likes of Conoco-Phillips, Oil Search and Repsol-Armstrong making big discoveries there in recent years, it has certainly got a lot more attention now. “For the JV consortium that we are involved in with relatively small companies [88 Energy, Red Emperor and Great Bear Petroleum], we’re operating right in the heartland of some of the largest oil companies in the world. Overall, the Nanushuk oil play is an exciting prospect for Otto, with drilling of the first well planned for the first quarter of 2019, once the winter season opens up in Alaska. To conclude, with several exploration wells in the pipeline across the Gulf of Mexico and Alaska, there is a growing belief that Otto is close to achieving its core goal of developing into a premier mid-tier independent oil and gas company, as it executes its current drilling programmes and continues to grow incrementally.
“The Nanushuk sequence is a strong testament to new thinking that’s evolving new discoveries. Previously, it was much
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OIL & GAS | Leigh Creek Energy
Asset rich leverage to gold, silver and copper
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Producing first syngas
at the Leigh Creek Ener
gy Project
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OIL & GAS | Leigh Creek Energy
Leigh Creek Energy began eight years ago as a private company with the specific goal of establishing an underground coal gasification (UCG) project in Australia. After careful evaluation of the viability of such a project in each state, the company’s board unanimously decided that South Australia (SA) would be the best location for an UCG site. In SA, this type of process is called in situ gasification (ISG) and essentially converts coal, often deep lying and difficult to obtain, from its solid state into a gaseous form, which can then be utilised in several industries. After beginning the search for a suitable ISG site in SA, the company discovered a disused coal mine in the town of Leigh Creek, 550 kilometres North of Adelaide. The company listed the project in 2015 through a reverse takeover of the then Marathon Resources Limited. Since going public, the firm has been focused on building the share price, growing a highly-skilled team, and preparing the Leigh Creek site for an ISG facility that has been christened the Leigh Creek Energy Project.
World-leading expertise Speaking to RGN, Leigh Creek’s executive chairman Justyn Peters says: “I have
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“Overall, ISG is cleaner, easier and much cheaper than traditional coal mining. One of the great things about the process is it economically unlocks coal that is unviable� Justyn Peters, executive chairman Leigh Creek Energy
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absolutely no doubt the company has expertise in this type of process. There are very few people in the world that have expertise in this [ISG] and we have probably the best in the world working with us at the moment.” Justin Haines is the company’s manager of technology, having previously worked in Queensland with Carbon Energy Limited – an ISG technology developer that successfully operated a demonstration facility under the state government’s UCG policy. Haines has now successfully managed two ISG operations in two different locations and more importantly, two different geologies. “We have a very experienced managing director in Phil Staveley, who used to be CFO and then CEO of another listed company in Australia, and I’ve had about seven years’
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experience in Queensland’s UCG industry. I am also an environmental and commercial lawyer,” Peters reveals. From an environmental perspective, the type of energy produced at Leigh Creek will carry a carbon footprint when the end product is utilised, as it is derived from deep coal resources. However, its carbon footprint will be significantly less than that of a typical open cut coal mine. Coal mining, and the subsequent heating of coal to provide energy for industries such as electricity and heating produces greenhouse gases, but the process of ISG and the subsequent usage of synthesis gas (syngas) as energy produces far fewer harmful emissions. “Overall, ISG is cleaner, easier and much cheaper than traditional coal mining. One
of the great things about the process is it economically unlocks coal that is stranded and unviable. For instance, at the moment you will find that thermal coal around the world is not viable unless it is open cut or has a low strip ratio. “Deep coal is really not viable via longwall or underground mining, so the only way you can unlock value there is through this particular process of ISG, which has been around for a long time.” Today, there are several ISG operations running across Asia, according to Peters.
An ideal location
After the former Leigh Creek coal field was quickly identified as a favourable location for an ISG project by the company, the SA government had a group of independent experts conduct a report on the viability
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of the site. This report strongly concurred with Leigh Creek’s convictions that the area was one of very best in the world for an ISG project. There are several contributing factors to this conclusion. Firstly, the Leigh Creek coal field is in a very remote region of SA, 550 km North of capital city Adelaide and not near any cropping land, thus mitigating any risks associated with competing land uses. “Another point is that this is an old coal mining town, that was set up purely to serve the Leigh Creek mine. That mine closed down a couple of years ago, which saw the population decrease from 2,000 people down to about 100 at the moment. We saw the opportunity to have people live here and help grow the town, rather than looking at fly-in fly-out.”
Plus, high quality infrastructure remains in place from the days of the coal mine, including a commercial airport, road and rail networks, as well as ample water and power supply. “We looked at all the different boxes that need to be ticked in order for a project to work and Leigh Creek trumped just about anywhere else in Australia.” Despite the strengths of the location, the company’s progress with a demonstration plant was checked by a recent attempted legal injunction from a local traditional owners group. Representatives from the Adnyamathanha people opposed the development on grounds that the area is culturally significant, before submitting an injunction case to the Supreme Court of SA. However, this injunction bid was rejected by the Supreme Court in September after the
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level of consultation between Leigh Creek and the traditional owners regarding the pilot plant was deemed sufficient by the court
High level consultation
Outlining the consultation process that took place with representatives of the traditional owners in the lead up to the demonstration plant, Peters says that the company had between 30 and 40 meetings with them over the last few years and met with the board of the traditional owners on two occasions. Leigh Creek hosted workshops with the traditional owners, which outlined the major processes that would take place at the site, stressing how the company would work with the traditional owners. “Finally, we signed a cultural heritage agreement with the traditional owners.
Under the agreement we were required to have the demonstration plant passed for cultural heritage issues. The elders of the traditional owners and their anthropologist walked the site and gave it a cultural heritage clearance. “We had to provide that consultation information to the government and in addition to that, the government also consulted with the traditional owners.� On October 10th, the company reported to the ASX that it had produced first syngas from the project, a major milestone by any account. Building a demonstration facility brings a whole range of benefits to Leigh Creek, not least demonstrating to regulators and the government that the process can be
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conducted in an environmentally sound way. In order to do this, Leigh Creek conducted comprehensive baseline studies of the water, air and soil before committing to any construction of the demonstration plant. After monitoring the results from each of the studies, the company shared the data with the government to maintain full transparency from a regulatory point of view. Also, from an investors point of view the demonstration facility proves the company has the technical capability to produce gas from the remaining coal resources at Leigh Creek. “It gives our investors comfort,” Peters asserts. “If we are going to progress to a large commercial project with a significant capex, then the investors need to be comfortable that first gas can be made and second the
quality of that gas is such that it can be used in whatever product option we go to.”
Regional and international impact
The impact of seeing the project through to a full-scale commercial model would be widereaching, not just in the local community but for the state of SA and on the international energy stage. The project is likely to have an immense regenerative effect on the town of Leigh Creek, which has been in a state of decline since the closure of the coal mine. With the population steadily declining in the wake of the mine closure, a critical mass problem has taken shape in Leigh Creek where there is simply not enough people to sustain key community pillars such as service stations, supermarkets and even schools. “The advantage of us being there is we are
Resource Global Network
already the biggest employer in Leigh Creek. We are already renting more houses in the town than any other employer, and that’s only the demonstration phase. “Once we go to the construction phase and then the commercial phase, we are looking at anything between 300-400 people moving back into the town, and then you get the flow on effect from that.” From a regional perspective, the impact of this project could also be dramatic. It would provide a new source of energy to a state that has well documented struggles with power supply, which incidentally is strange given Australia is the world’s largest exporter of uranium, gas and coal. Finally, from an international point of view, the Leigh Creek Energy Project could become the blueprint for unlocking energy that
cannot currently be put to good use. “There is deep coal that has previously been unviable, in interesting locations all around the world India, Bangladesh, China, Canada, Indonesia and Philippines. “We are contacted on a regular basis from international companies keeping a close eye on our success. We have spoken to around 10 companies about developing this process overseas for them,” reveals Peters.
A versatile form of energy
Furthermore, one of the biggest advantages of producing syngas is its versatility. It’s not just used to generate electricity, but also in petroleum and ammonia products and pipeline gas. However, it is the amount of hydrogen that can be produced at Leigh Creek that is currently generating the most excitement from potential end markets.
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Peters reveals that interest from the hydrogen economy in the Leigh Creek Energy Project has been bubbling for the last two years, before making a bold claim that the company can produce hydrogen cheaper than anyone else in the industry. “We have this lovely opportunity to use our process to produce hydrogen. It’s a bit ironic that we are using a fossil fuel to make hydrogen - one of the cleanest forms of energy there is. Between 20-50% of our gas could be hydrogen. “Hydrogen itself wasn’t the driving factor two
or three years ago, but the level of interest in us purely as a hydrogen producer has actually become quite interesting.” As Leigh Creek Energy prepares to begin work on the full-scale plant at Leigh Creek, Peters notes how the company has primarily used companies in SA throughout its work on the demonstration facility, including Silver City Drilling, who had a large camp set up for several weeks at the site. “The guys at Silver City have been wonderful,” he says. Other notable partners on the project were Ottoway Engineering, who completed
Resource Global Network
fabricating at the plant, before Ferretti International came in to complete the work. ABB also took over work on electrics and Geoconsult were used for JORCs. “We’ve spent 90% of our money in SA which is what we always wanted to do.” After achieving first syngas at the demonstration plant, Leigh Creek is commencing the approvals process for the
full-scale plant, which could take anywhere between 12 months and two years to come back. Therefore, Peters puts a maximum time frame of four years on commercial production at the full-scale plant, but with a product as good as Leigh Creek’s, the wait will be undoubtedly worthwhile.
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APPOINTMENTS & EVENTS
APPOINTMENTS
Glencore in management shake-up as copper chief axed
Mining and commodities trader Glencore is letting go of its head of copper trading Telis Mistakidis after facing increasing scrutiny from ongoing investigations in the DRC. The 56-year old helped build Glencore’s reputation as a global copper force, and owns a 3.2% stake in the company, but will now be replaced by former Katanga Mining CFO Nico Paraskevas. The move is part of a wider leadership shake-up which will see Glencore’s current coal chief Peter Freyberg become head of industrial mining assets – a newly created role.
Kirkland Lake Gold makes two executive appointments Kirkland Lake Gold has announced the appointments of David Soares as chief financial officer and Eric Kallio as senior vice president, exploration. Soares boasts over 15 years of finance and management experiences with multinational mining companies, while Kallio is a geologist of 30 years working in Canada and abroad. “We are very pleased to welcome David and Eric,” said president and CEO Tony Makuch. “They are both highly seasoned professionals that we expect will make significant contributions to our progress.”
Jason Folsom becomes MHI Vestas’ first US appointment
MHI Vestas has hired US offshore wind veteran Jason Folsom as the company builds its presence in the emerging North American offshore sector. Folsom joins MHI Vestas from Siemens Gamesa, where he led US offshore wind operations for 10 years. “With the appointment of Jason Folsom, we are pleased to welcome one of the most experienced US offshore wind veterans in our team,” said chief executive Phillippe Kavafyan. “We believe US offshore wind is about to start a very exciting journey.”
Navin Mahajan named Chevron vice president and treasurer
Chevron has appointed Navin Mahajan as its vice president and treasurer, effective February 1 2019. Mahajan succeeds Randy Richards, who gave 40 years of distinguished service to Chevron. Mahajan is currently vice president, finance downstream and chemicals, but will oversee banking, cash management, insurance and other financial matters in the new role. “Navin’s broad experience and financial acumen make him well qualified to guide our financing and cash management strategies,” said chairman of the board and CEO Michael Wirth.
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EVENTS
Our pick of the top mining, oil & gas and renewable energy events happening around the world in the months to come
Investing in African Mining Indaba February 4-7 Cape Town South Africa Oil and Gas IP Summit February 26-27 London United Kingdom PDAC 2019 Convention March 3-6 Toronto Canada International Renewable Energy Congress (IREC) March 26-28 Sousse Tunisia AWEA Wind Power May 20-23 Houston US
Want to promote your resources event? Email the editor at editorial@resourceglobalnetwork.com
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