RGN Vol 7 Iss 7

Page 1

RESOURCE Volume 7, Issue 7

Mining, renewable energy and oil & gas worldwide







puts forward a selection of mining companies that have thrived during this tumultuous year


Jacob Ambrose Willson Editor

Executive Team Editor Jacob Ambrose Willson Content Director (APAC and Americas) David Hunter Creative Director Hugo Currie ICT Director Stuart Clark Managing Director Simon Curran Contributors John Mulligan (World Gold Council) 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. Disclaimer: The opinions expressed in this publication are not necessarily those of the publishers. Whilst every effort is made to ensure accuracy the publisher and editor cannot be held responsible for any inaccurate information supplied and/or published. Copyright: The copyright for all material published in this magazine is strictly reserved.

Anderson Murray Media Fulham Green, 69-79 Fulham High Street, Main Reception, Bedford House, London SW6 3JW | Tel. +44 (0)207 148 5630

here to start with a year like 2020? The rapid spread of COVID-19 triggered an international public health crisis and decimated the global economy while drastically altering almost every aspect of modern living, from globe-trotting travel to the simplest of social interactions, such as shaking hands.

gold mining sector’s progress towards reducing carbon emissions in line with the Paris Agreement, written by its director of market relations and climate change John Mulligan. The gold industry was of course a major beneficiary of the unprecedented macroeconomic uncertainty brought about by COVID-19, peaking at record highs of US$2,068 per ounce in August, compared to $1,519 at the start of the year.

The resources sector has been in no way spared from the all-encompassing impacts of COVID-19, with mines around the world forced to close during the peak of the pandemic’s first wave in the second quarter.

We have tried to emphasise the strength of this sector in 2020 by republishing five gold miners that have featured in the magazine throughout the year. Each company spotlight reveals a story of rapidly improving fortunes in the high price environment.


Most mining operations soon reopened in the second half of the year after carefully adopting new health and safety protocols centred around ‘social distancing’. Meanwhile, corporate head offices pivoted to WFH (working from home) to reduce transmission of the virus. This neatly brings us to the first feature in our ‘best of 2020’ issue. The pandemic necessitated the cancellation of almost the entire annual calendar of international mining conferences, but Mines and Money quickly recalibrated its service to a purely digital format. RGN subsequently partnered with Mines and Money to provide live online updates from its innovative web-based shows, which connected the mining industry with investors at regular intervals throughout the year. You can read RGN’s review of Online Connect December in this issue. We also include a summary of the World Gold Council’s report on the

Elsewhere in the issue, we return attention to Bushveld Minerals - who are at the forefront of the vanadium-based energy storage industry, Latin Americafocused copper explorer Josemaria Resources and Kogi Iron - who are delivering Nigeria’s first integrated iron ore and steel production facility. Finally, there is Gensource Potash – a company which reminds us of the importance of mineral fertilisers in global food production. We believe the 10 companies featured in our best of issue reflect the dominant themes that emerged in the resources sector during a truly unprecedented year of social, economic and health-related upheaval. I’d like to extend a huge thanks to all our featured companies, contributors and readers over the course of 2020. Season’s greetings and here’s to a safer and more prosperous 2021!

Jacob Ambrose Willson jacob@resourceglobalnetwork.com

a j r




6 Global resources news Our selection of mining, oil & gas and renewable energy stories from the last month 10 2020 in review RGN’s editor reflects on an unprecedented year of wild peaks and deep troughs in the commodities sector

ASSOCIATIONS 14 Mines and Money Mines and Money cements its status as the premier digital conferencing provider for the mining sector



28 John Mulligan (World Gold Council) A new report examines gold mining’s energy transition and climate impacts over the next decade

BEST OF FEATURES 38 Bushveld Minerals At the forefront of the burgeoning vanadium market



50 Superior Gold Strong fundamentals in place for this Western Australian gold producer 64 Gensource Potash A pioneering vision for the future of the global potash market

JOSEMARIA RESOURCES 78 Josemaria Resources The latest large scale resource project to be delivered by the Lundin Group


94 Argonaut Gold North America’s next mid-tier gold producer 106 Hummingbird Resources More significant news flow from one of West Africa’s most exciting gold firms 124 Kogi Iron Maiden iron ore and steel production in Nigeria to accelerate industrial development 136 Kirkland Lake Gold Meet the best performing mining stock on the TSX and TSXV in 2020 150 Wesdome Gold Mines Building Canada’s next midtier gold producer



164 IMPACT Silver Corp Continuous silver production in one of oldest mining districts in the Americas

EVENTS 174 Events Our pick of the top mining, oil & gas and renewable energy events happening around the world in the months to come





Endeavour Mining and Teranga Gold have agreed a merger deal worth US$1.86 billion that will create a global top 10 gold producer with plans to make a secondary listing on the London Stock Exchange. The TSX-listed miners had earlier confirmed talks were taking place on a potential merger, which would consolidate a collection of gold assets across West Africa, including producing mines and development projects. Despite an initial jittery response from investors, the tie-up will provide Endeavour shareholders with 66% of the combined entity, with Teranga’s receiving the remaining 34%.

Teranga will also get three seats on the board to Endeavour’s seven. Endeavour will pay a 5.1% premium for Teranga’s shares. “Teranga had a very strong run over the past 12 months, so we’re not trying to buy cheap – we’re just trying to make the right deal that satisfies both sets of shareholders,” said Endeavour CEO Sébastien de Montessus. The merged company will boast average annual gold production of more than 1.5 million ounces with production costs of around US$850 per ounce. The deal resembles Endeavour’s second major acquisition this year after it bought Semafo in March.



Mining, oil & gas and renewable energy news from around the world IRON ORE PRICE CLOSES IN ON EIGHT-YEAR HIGH, BOOSTING AUSTRALIAN PRODUCERS

The iron ore price has continued its meteoric rise of late, surging by 5.8% during trading on Monday December 7 to US$145 per tonne – its highest level since March 2013. The upward price movement has been driven by two factors; supply side issues out of Brazil following the release of reduced output forecasts by key iron ore producer Vale SA, and strong demand emerging from China. Iron ore port stocks in China – the world’s biggest buyer of the commodity, at roughly 70% of demand – have contracted for three consecutive weeks to December 4, in an indication of growing deficit conditions in China.

And on the supply side, prices have been buoyed by Vale’s recent forecast announcement. The Brazilian mining giant expects to miss a previously lowered 2020 target of at least 310 million tonnes of iron ore. The perfect storm of rising Chinese demand expectations and lower supply from a key global supplier have boosted Australia’s three largest iron ore producers – BHP, Rio Tinto and Fortescue Metals Group (FMG). FMG has made the biggest gains this year, with chairman Andrew Forrest seeing his company’s stock rise by 90% since January. The iron ore price has also increased by 56% to be the best performing commodity of 2020. 7



US President-elect Joe Biden’s pledge to spend $2 trillion on infrastructure is expected to support base and battery metals prices, as the world’s biggest economy embarks on a metalintensive ‘green revolution’. The details of the much-needed green infrastructure plan will be debated in Congress over the coming months on the back of multiyear highs for industrial metals, which have been boosted by an economic rebound in top metals consumer China and optimism around COVID-19 vaccines. “Biden’s $2 trillion proposed green stimulus would undoubtedly be positive for metals demand… (but) the election outcome means our base case view is that Biden will have to rein in his green spending ambitions,” said Jumana Saleheen, chief economist at consultancy CRU Group. Some of the proposals in the plan include providing subsidies for electric vehicle (EV) purchases, adding 500,000 new charging stations and converting 500,000 school buses to zero emissions. The charging stations and that number of battery electric buses would alone require nearly 200,000 tonnes of copper according to Jefferies, while renewable energy requires an estimated five times more copper than conventional sources.



Mining, oil & gas and renewable energy news from around the world CHINA’S TIANQI LITHIUM TO SELL AUSTRALIAN UNIT TO NICKEL FIRM IGO LTD

Chinese mining giant Tianqi Lithium will receive a sorely needed cash boost after agreeing the sale of 49% of its Australian unit to nickel-gold firm IGO Ltd, for a sum of US$1.4 billion. Through the deal, IGO – Australia largest independent nickel producer – will assume a 24.9% interest in the Greenbushes lithium mine in Western Australia and a 49% share in the Kwinana lithium hydroxide plant South of Perth. Greenbushes, which is 49% owned by US-based lithium giant Albermarle, is the world’s largest and lowest cost hard rock lithium mine with an output of 764,000 tonnes of spodumene concentrate in 2019.

The deal comes as a boon to Tianqi after it announced last month that it might not be able to repay $1.9 billion of debt due on December 28. The firm has been plagued with balance sheet issues since it acquired a $4.1 billion stake in Chilean miner SQM in 2018. Lithium carbonate prices have dropped by more than 70% since the acquisition. “This transaction also facilitates a recapitalisation of our balance sheet that will position us strongly for the expected recovery in the lithium sector,” Tianqi founder and chairman Jiang Weiping said.



The year 2020 started with the identification of a flu-like virus emerging out of China. Within months it had escalated into a pandemic, sparking a worldwide public health emergency. By mid-year the global economy was in tatters as entire populations were quarantined for sustained periods to reduce person-toperson transmission of the deadly COVID-19 virus.


In Review

the widespread shutdown of all major business sectors (including mining) around the world in the second quarter. The subsequent injection of huge monetary stimulus to prevent total economic collapse boosted ‘safe haven’ gold investment to record levels.

A truly unp

many precious metals producers delivered record revenues this year while maintaining balance sheet responsibility – a lesson learned from the previous bull market. The near-term future remains bright for firms exposed to gold and silver.

So, how has the commodities sector fared throughout this year of shocking developments that have led to seismic - and probably permanent - changes to the very functioning of societies and the global economy?

The bull run reached a crescendo in August when the gold price hit US$2,068 per ounce, before cooling off in the last quarter of the year. Gold’s little brother silver enjoyed a similar meteoric rise in 2020, nearing $30 per ounce before settling at the $24 mark by year-end.

Another key trend emerging out of the pandemic was an acceleration of the global transition to low carbon energy. Even the oil majors are leading the charge into clean power after crude prices crumpled to historic lows in April, with the long-mooted ‘peak oil demand’ moment already reached in 2019 according to BP.

Well, the gold price was already on a gallop prior to

Thanks to a supportive macroeconomic environment,

This hastening shift away from environmentally degrading

Record gold prices

precedented year produces wild peaks and deep troughs in the commodities sector fossil fuels has placed an even stronger spotlight on the plethora of strategic metals needed to sustain the world’s growing energy demand. US President-elect Joe Biden pledged to kickstart the energy transition with a $2 trillion ‘green infrastructure’ plan, following his election victory over Donald Trump.

Energy metals in focus Copper - perhaps the single most important metal to the world’s hopes for a green future, owing to its extensive usage in a range of clean tech applications from wind farms to solar plants and electric vehicles – made a strong recovery from the COVID-19 crisis to reach a seven-year price high in December. Meanwhile, the lithium market rebounded as EV sales hurtled to a record annual figure. Tesla – whose share price has risen nearly 600% this year – told investors it will enter the lithium mining business during its highly anticipated Battery Day in September. The clean energy giant also lifted the nickel mining sector with its plans to build high nickel

content batteries moving forward.

when employees were deemed safe to return.

Elsewhere in the industry, iron ore made an impressive late dash to become the best performing commodity of 2020, with Australia’s top three producers – BHP, Rio Tinto and Fortescue Metals Group - the major beneficiaries of rising global demand projections.

Our 2020 ‘best of’ issue puts forward 10 companies from across the industry that we believe have excelled in their commitment to all stakeholders in these uncertain times, while also delivering consistent returns to their investors. Thank you to all our featured companies, contributors and readers over the course of the year - stay safe and see you in 2021.

All of the above serves to paint a very rosy picture for the sector going into the new year, especially given the extraordinary levels of disruption faced by all levels of the mining supply chain throughout a tumultuous 2020

A strong COVID-19 response Overall, the mining industry can hold its head high with regards to its reaction to the COVID-19 pandemic. Companies from the junior end of the spectrum right through to the majors moved to protect their people and communities, providing relief packages where they were sorely needed and Jacob Ambrose implementing COVID-19 safety protocols across mine sites

Willson Editor j


Mines and Money cements its status as the premier digital conferencing provider for the mining sector

Mines and Money Online Connect cemented its status as the premier digital conferencing platform for the mining sector after its three-day December event welcomed 3,675 attendees from 119 different countries. After delivering a series of hugely successful online events earlier in the year following the COVID-19 outbreak, Mines and Money attracted a record number of attendees, with 471 active investors among them – a 30% rise on its inaugural global event in September. The latest Online Connect featured 89 expert speakers from across the global mining sector, project updates from 120 mining and energy companies, keynote panel discussions, mining pitch battles and Mines and Money’s ever popular 5@5 video sessions. Each attendee’s own unique portal for interacting with potential business partners was also open 24 hours a day over the duration of the event.




Mining pitch battles Mines and Money’s highly competitive mining pitch battles once again proved to be one of the most entertaining offerings on the agenda, with a series of commodity-based heats taking place throughout the week. The contest pits a selection of executives from junior mining companies against one another in a series of corporate updates presented in front of a ‘dragon’s den’ of investor judges and the live Online Connect audience. On day one, a gold and precious metals heat took place, with four global companies – Cassiar Gold, Cabral Gold, Banyan Gold and Silver Tiger Metals – competing for a hypothetical $1 million investment handed out by the judges.


CEO Alan Carter was voted

Nouveau Monde Graphite and

the winner of the first pitch

Strategic Resources. Nouveau

After each company presenter

battle. Day two brought the

Monde came out on top after

was suitably grilled by the

battery metals round, which

a tight contest. Finally, day

investor panel, Cabral Gold

was contested by FPX Nickel,


three saw White Gold Corp CEO

Keynote sessions

Vice Minister for Mining

David D’Onofrio triumph in

Mines and Money was pleased

Affairs & Mineral Resources

the second gold and precious

to host a keynote session from

Khalid Al-Mudaifer delivered

metals pitch battle.

the Kingdom of Saudi Arabia

a detailed presentation on the

on day one of Online Connect.

Kingdom’s plans to transform the mining sector.


“Saudi Arabia now offers

editor Neils Christensen. The

A number of keynote panels

mining investment

two discussed the current

took place throughout the

opportunities supported

gold market in depth during a

show, with two of the most

by promising geological

20-minute session.

interesting expert discussions taking place on day three.

prospects, enhanced access to


data and robust regulations.

“There are so many reasons

First, a four-person team

Together we can build a world

to buy gold, it’s almost like a

took on the loaded topic of

class mining sector based on

buffet, said Kaplan. “When

geopolitics and its impact on

strategic partnerships and

gold pops and goes over

commodity demand.

a strong mutual benefit,” he

US$2,000 per ounce, that’s


when the big money will

Triple Flag Mining Finance

come in and you’ll see 10-fold

founder and CEO Shaun Usmar

Another keynote ‘fireside

multiplication in some gold

shared his lucid thoughts on

chat’ took place on day two


the influence of geopolitics

between Electrum Group CEO

in the energy metals space:

Dr Thomas Kaplan and Kitco

“Metals are now energy.



And one thing we know is

has dominated for some time.”

that energy is political,” he

even billions of dollars, the principals of the business like

declared. “To control your

Later in the day, another high

to get on the ground and see

energy supply chain is one of

calibre panel considered the

the assets before they buy

the great games nations and

likelihood of an explosion

them. That hasn’t been able to

statehoods play in projecting

of M&A deals in the mining

happen for most of this year.

regional and international

sector next year, following

I’m expecting as things open


a bottleneck caused by

up in 2021, we’ll see some of

COVID-19 in 2020.“I think we

these deals that have been

“In the uncertain and volatile

have seen a real bottleneck

building in the background

environment of 2020, we

this year,” said Denham Capital

start to get launched.”

are seeing governments

Management director Justin

attempting to replicate China’s


model of state capitalism,

5@5 returns Mines and Money has been

particularly in the strategic

“In mining when you invest

running its weekly 5@5

minerals space, which China

hundreds of millions or

sessions – five industry experts at 5pm – since just after the




world went into lockdown in

restrictions on travel and large-

The first 5@5 Online Connect

March, and it would’ve been

scale gatherings throughout

was hosted by RK Equity and

remiss of the organisers not to

2020. In particular, the

featured a range of companies

include the popular webcam-

sessions have proved effective

from the battery metals sector,

based series within the

in providing a platform for

including European Metals


mining firms to communicate

Holdings, Savannah Resources

their latest updates to the

and First Cobalt Corp.

The interactive meetings have

investment sector during the

helped the global mining

current situation.

RK Equity’s Howard Klein

sector stay connected during

struck on optimistic chord

this unprecedented period of

when discussing the global


Nickel. IBK president and companies rerated.” These

CEO Mark White revealed that

sentiments on Europe’s

the investment firm helped

emergence as the new

Canada Nickel go public last

dominant hub for the

year and is helping SPC’s IPO

lithium market were echoed


by Keith Coughlan and David Archer of European Metals

Later in the show, New Age

and Savannah Resources

Metals CEO Harry Barr told the


audience about the company’s 100% owned undeveloped

“Europe is now the largest

primary palladium deposits in

producer of EVs in the

North America and its lithium

world but has no current

division in Manitoba, Canada.

production of battery grade

“Both contain excellent

lithium. With the emphasis

exploration prospects,” said

on developing local supply


chains, we have a lot of catching up to do,” said Coughlan. Meanwhile, Savannah CEO Archer said: “We believe lithium market, which has

this part of the Portugal

suffered with depressed prices

will become a leading lithium

since the giddy highs of early

producing region in Europe.”

2018.” Overall sentiment in

The company is developing a

the lithium sector has greatly

spodumene lithium project in

improved, largely driven by

Northern Portugal.

Europe,” he proclaimed. The next 5@5 was hosted by “Europe is the new China

IBK Capital and featured three

in the sector. Lithium 3.0

of their portfolio companies:

started over the summer,

Canada Nickel Company,

when we had a number of

New Age Metals and SPC

“In the current COVID-19 world, Mines and Money really stepped up to the challenge and delivered a well-organised and functional platform to meet with potential investors – Well done!” - Patrick Donnelly, Trilogy Metals VP corporate communications and development




The final 5@5 on day three

the course of the December

The next Online Connect will

featured another smattering

edition of Online Connect.

take place from January 27-

of exciting company

Away from the presentations

29 and will be the first show

presentations and subsequent

and discussions on the live

to concentrate on a single

analysis by leading mining

feed, 2,539 video meetings

commodity class. Please go

investors, including Synergy

took place over the three days

to the events pages of this

Resource Capital managing

- a 15.5% rise on the preceding

issue to register for Mines

director Paola Rojas. Visit


and Money’s precious metals-

Mines and Money’s YouTube

focused digital event.

page to view all the episodes in

RGN would like to thank


the Mines and Money team

Another great show concludes

for filling the void left by the cancellation of its usual calendar of physical

Once again, Mines and Money

conferences around the world,

delivered a seamless package

not just in December, but

of edifying content over

throughout this most unusual year.




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Gold and climate chang A new report examines gold mining’s energy tran 28

By John Mulligan (W


ge: The energy transition nsition and climate impacts over the next decade

World Gold Council)


To mitigate the potentially catastrophic impacts from climate change, the global economy needs to reduce its CO2 emissions to net zero by 2050, in line with the Paris Agreement. This requires all industries to rapidly reduce their dependency on energy derived from fossil fuels. Climate-conscious investment groups have been particularly vocal in calling for more clarity from all sectors regarding their detailed plans to contribute to emissions reduction and climate stability. The World Gold Council has previously identified that 99% of the greenhouse gas (GHG) emissions from the gold sector are related to gold mining operations. We estimate around 75% of those emissions are associated with the generation and consumption of electricity. The gold mining sector’s ability to reduce its emissions in line with Paris targets will therefore largely depend on its capacity to change how it sources and uses power and fuels.


In our previous research, we outlined a potentially accessible and cost-effective pathway for gold mining to meet climate targets. To achieve a climate target limiting global warming to ‘well below 2ºC’ will require the industry to reduce GHG emissions by 80% by 2050. If a ‘1.5ºC’ target is adopted, it will likely require a GHG reduction of 92% by (or shortly after) 2040. In our new analysis, produced in collaboration with energy and mining specialists at Wood Mackenzie1, we have sought to examine in more detail a key part of that pathway, the decarbonisation of power, and how that might allow the gold mining sector to reduce its emissions at a sufficient scale and speed. Recognising that action is needed over the next decade if net zero carbon targets are to be feasible, the report evaluates the impacts of reducing gold mining’s power emissions against 27% and 46% emissions reduction targets by 2030, which would put the sector roughly on schedule to meet targets consistent

with less than 2 ºC and 1.5 ºC, respectively, by 2050.

The greening of the grid Our analysis shows the significant impact local electricity grids have on gold


John Mulligan John is director of market relations and climate change lead at the World Gold Council, leading its climate change research programme and its associated engagement activity with stakeholder organisations. Additionally, he contributes to the organisation’s wider insight and communication outputs to improve understanding of the whole gold supply chain. John has written extensively and comments regularly on gold market dynamics, investment strategy and sustainability issues. John joined the World Gold Council in early 2005, working initially on investment research and investor outreach. He has worked in or around the financial markets for over 25 years, including senior roles in business development, product management, trading systems and market analysis.

mining’s overall emissions. Of the 158 gold mines we examined, grid-sourced electricity represented 57% of their annual energy consumption. The substantive role of coal-fired power in the grids in some mining regions

results in a high level of emissions intensity passed on to connected mines. But many grids are rapidly transitioning to greener power sources and the mines connected to them will benefit. The average carbon-intensity of grid-

Additionally, John has previously consulted on research, business analysis and knowledge management projects for a range of clients, from SMEs to supranational organisations. John has degrees from the University of Sussex and Birkbeck College, University of London.





sourced power for the mines we examined is expected to fall 20% over the next decade.

The changing ‘asset mix’ Several high-emission mines in our sample are expected to close or experience a substantial reduction in production levels over the next decade. The consequent emissions impacts are significant, resulting in a 19% reduction in emissions intensity across our sample. Of course, the active life of some of these mines may be

extended if reserves allow and the gold price outlook renders them potentially economical. However, we expect the longer-term preference to be for the development of lower emissions intensity mines, supporting the ongoing reduction in sectoral emissions.

Recent announcements Our analysis of recent gold mining company announcements to move to

lower carbon power sources indicates that they are increasingly planning to utilise renewables in a substantive way (often as part of a hybrid power-sourcing arrangement), with solar photovoltaics as the currently preferred renewable energy source. These initiatives will likely reduce mine site power emissions by an average of 20% and, in some cases, by over 50%. Their overall impact on the sector’s power emissions is a reduction of around 6%. If, however,


these early stage actions by those at the forefront of the energy transition are adopted more widely, we estimate it would result in an at least an additional average fall in power emissions of 9%, allowing gold mining emissions to approach the 1.5ºC climate target.


Renewables and climate targets Our analysis of the initial steps by gold mining companies to decarbonise power, and the implications if these actions are duplicated, alongside current trends in the energy landscape, suggest industry

alignment with the ‘well below 2ºC’ climate target is very feasible. Achieving alignment with the 1.5ºC target will likely require further actions, including additional improvements in energy and operational efficiency, but there is considerable flexibility in how different gold mines


might seek to reduce carbonintensive power sources. For example, our analysis suggests that the increased use of renewables to replace the following: • 55% or more of direct fossil fuel generated power, or

• 30% or more of grid supply, or • 20% of both grid and direct fossil fuel-based supply should enable the gold industry to align itself to the 1.5ºC climate target and a net zero carbon future.

1. Wood Mackenzie’s analysis is based on an examination of the power consumption of 158 mines located in 31 countries and owned by 31 major gold mining companies, representing around 55% of global annual LSM gold production. 2020 World Gold Council. All rights reserved. For informational purposes only. Sources: all charts and data – Wood Mackenzie




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At the forefront of the burg


geoning vanadium market

2019 was another busy year for South African vanadium producer Bushveld Minerals. The London-listed company cemented its position as one of the world’s largest vertically integrated primary producers of vanadium – a unique metal with properties that have traditionally fed the steel manufacturing sector, but more recently its applications have been realised in the emerging energy storage sector. Bushveld added a fourth vanadium asset to its diversified resource base in South Africa’s Bushveld Complex with the acquisition of Vanchem in November 2019. Bushveld also undertook a Transformation Programme at its operational Vametco mine which resulted in record production outcomes in 2019. The company also made progress towards its goals in the exciting vanadium-based energy storage industry, in the shape of investments in Original Equipment Manufacturers (OEMs) redT-Avalon and Enerox.


Integrating Vanchem

refurbishment and ramp-up programme at Vanchem which

In November 2019, Bushveld

will eventually boost steady

announced it had completed

state production to 4,200 mtV

the acquisition of Vanchem – a

per annum, supporting the

primary vanadium processing

company’s long-term goal of an

facility with a beneficiation

8,400 mtV annual production

plant capable of producing


various vanadium oxides, ferrovanadium and vanadium

The Vanchem acquisition


serves to diversify Bushveld’s mining and processing

“The acquisition is consistent

footprint in South Africa,

with the company’s long-term

while also creating operational

strategy of acquiring existing,

and business case synergies

low-cost scalable brownfield

between the Vametco, Vanchem

operating assets in South Africa

and Mokopane facilities, all

to expedite the development

of which are located within

of the company’s significant

relative proximity and

and high grade resource base,”

connected by road and rail.

says Bushveld’s CEO Fortune Mojapelo.

Bushveld’s lofty ambitions in the global energy storage

Vanchem adds around 960

space are also well served by

metric tonnes of vanadium

the Vanchem acquisition. The

(mtV) to the group’s current

existing chemical plant at

annual production from the

Vanchem provides additional

Vametco mine, which produced

feedstock options for vanadium

a record 2,833 mtV in 2019.

electrolyte manufacturing, the most expensive component in

In addition, Bushveld has

vanadium redox flow batteries

embarked on a five-year




Plugging in to energy storage

market, on account of their

hours of energy daily and

unique features that give

flexibility that allows for

Through the Bushveld Energy

them an edge in large scale,

capturing the multi-stacked

platform that was launched

stationary and long-duration

values of energy storage in

in 2016, the company aims to

energy storage applications,�

grid applications.

capture a share of the rapidly

explains Mojapelo.

emerging energy storage


While VRFBs not only benefit

market, where VRFBs present

These advantages include:

the burgeoning renewable

a compelling proposition

Long lifespan cycles with the

energy sector, perhaps more

in providing long duration

ability to repeatedly charge/

significantly, the technology

storage solutions.

discharge over 20 years with

helps make existing power

minimal degradation, low

systems more efficient through

“VRFBs are well positioned

cost per kWh when fully used

load balancing and other

to take a significant share of

at least once daily, scalable

forms of grid savings.

the stationary energy storage

capacity to store four to 10


“Research from Navigant

to capture approximately 18%

Bushveld is well positioned

forecasts that the size of the

of the market, which equates

to capitalise on this huge

energy storage market will

to approximately 20GWh of

projected vanadium demand

reach US$50 billion within

demand and nearly $10 billion

from the VRFB sector thanks

the next 10 years, which

in revenue in the coming

to its globally significant

represents a growth rate of


resource base of 550 million

58% a year to exceed 100GWh of capacity by 2027.

tonnes (100% basis) grading “In addition, approximately

1.58-2.0% V205 in magnetite

5.5 tonnes of vanadium is used

and its low cost, flexible and

“While multiple technologies

for per MWh, which means

scalable primary vanadium

are expected to be successful

that in 2027 vanadium use in

processing facilities at

due to their unique technical

VRFBs could be between 50

Vametco and Vanchem.

and cost advantages and

and 80,000 mtV.”

suitability to local conditions,

“Bushveld’s vertical integration

Navigant expects flow batteries

strategy and synergies across


its assets provide flexibility

The platform will allow

for the group to deliver on the

the company to mobilise

entire vanadium value suite by

additional third-party

being able to produce various

financing to support VRFB

vanadium feedstocks that can

manufacturers’ efforts to scale

be converted into electrolytes

up their capacity.

for VRFBs.”

Downstream investments

The first action made by Bushveld under the VRFB Investment Platform was to

Bushveld further underlined

provide a US$5 million loan

its ambitions in the

to support the merger of UK

downstream vanadium-

energy storage provider redT

based energy storage sector

with US VRFB manufacturer

by establishing a VRFB

Avalon Battery Corp.

Investment Platform to lead investments in this space.

“This investment is in line with the company’s strategy of

VRFBs are well positioned to take a significant share of the stationary energy storage market, on account of their unique features that give them an edge in large scale, stationary and longduration energy storage applications” Fortune Mojapelo, CEO Bushveld Minerals


building a leading downstream

In addition to the redT-Avalon

vanadium-based energy

investment, Bushveld joined a

storage platform.”

consortium for the acquisition of another VRFB OEM before

The interim funding creates

the end of 2019, in the shape

an investment into a scaled-up

of Austrian firm Enerox – a

VRFB OEM with the potential

pioneering company with over

to become a leading, global

10 years’ experience in the

battery energy storage systems

production of VRFBs.

supplier, and gives Bushveld preferential supply rights to

“Bushveld’s participation in

the new company for at least

this investment expands our

two years.

VRFB investment platform, demonstrates our belief in VRFB technology, and helps


grow both the VRFB and the

was completed and tendering

Energy aims to address Africa’s

overall vanadium market,� says for its construction is now

greatest obstacle to faster


in process. Bushveld is also

growth and industrialisation:

adding a financial product to

Reliable electricity supply.

In addition, Bushveld is

the electrolyte and rolled out

building a 200MWh vanadium

the first vanadium electrolyte

In 2019, Bushveld Energy

electrolyte production

rental contract in June 2019 in

announced the development

facility in the East London

the US with Avalon.

of a 1MW mini-grid at

Industrial Development Zone, together with the Industrial Development Corporation to supply local and international VRFB projects. In 2019, the EIA for the site

Project development with energy storage

the Vametco mining and processing facility. The mini-grid combines 2.5MW of solar PV generation and 1MWh/4MWh of

With its dedicated project

energy storage using VRFB

development team, Bushveld

technology, co-located at the


Bushveld Minerals’ strategy: Building a sustainable cash-generating, high-grade low-cost platform with a production of 8,400 mtV pa Leveraging its production platform to build a leading stationary energy storage player participating in the vanadium redox flow battery value chain through the supply of electrolyte, project development and ownership of VRFB technology The Group’s vertical integration strategy and synergies across the assets provide flexibility for: Sourcing feedstock, which can mitigate capital requirements in a volatile pricing environment Final products, which can help to maximise sales depending on product demand dynamics Enabling the Group to deliver on the entire vanadium value suite while being in a solid position throughout the vanadium price cycle




US$220 million (as of December 17, 2020)

a j


Vametco mine and processing

The opportunity for energy


storage in South Africa is even more significant. The country’s

The project will demonstrate

Integrated Resource Plan 2019

the technical and commercial

specifically seeks novel ways

capability of hybrid mini-

to improve grid reliability

grids using solar PV and VRFB

and access to power over the

technology, while reducing

long-term, with a dedicated

the mine’s dependence on the

allocation of over 2,000MW for

power grid and cutting its CO2

new energy storage.

emissions. The project could also be scaled up further to

This includes the recently

provide a larger amount of

announced 350MW/1400MWh

energy in future.

Eskom battery programme


that is part of an even larger

in 2019, Bushveld believes

Over the next 12 months,

World Bank Energy Storage

the long-term outlook for the

the company plans to unlock

initiative. On top of that,

market remains strong.

multiple synergies across

significant opportunities

the Vametco, Vanchem and

exist in the soon to be

With its unrivalled asset base

Mokopane assets, and will

restarted Renewable

in South Africa and its rapidly

continue advancing Bushveld

Energy Independent Power

expanding interests in the

Energy’s position in the

Procurement (REIPP)

stationary energy storage

growing VRFB market.


sector, Bushveld finds itself

A bright future

in an excellent position to continue building a fully

Despite vanadium prices

integrated vanadium company

retreating from an

in 2020 and beyond.

astronomical three-year run






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Strong fundamentals in place for this Western Australian gold produ





Superior Gold is a Canadian gold producer that owns the Plutonic Gold operations, comprised of the Plutonic underground mine, central mill and the Hermes open pit projects, in the tier one jurisdiction of Western Australia (WA). The Plutonic mine has been in continuous production since 1990 and has produced over 5.5 million ounces of gold during this time, making it one of WA’s largest historic gold producing mines. TSXVlisted Superior aims to produce 80-90,000 ounces of gold in 2020, which would provide the base for the company to ultimately deliver its stated goal of producing 100,000 ounces per annum through the addition of satellite open pit operations.



Superior made the difficult

Going underground

decision to sacrifice short-

The five-year plan outlines

term results at the Plutonic

a number of ways in which

operations in order to ensure

Superior will optimise the

its long-term success, posting

Plutonic underground mine

a revised annual production

in order to achieve average

target of 80-85,000 ounces

production from underground

following weaker production in

alone of 70-85,000 ounces per

the third quarter.

annum up to 2024.

The company recovered in

Superior will increase

Q4 to meet its revised annual

efficiencies by focusing on

guidance with 83,035 ounces

four mining fronts instead

of gold produced over the 12

of eight under the previous

months ending December 2019,

mode of operation. In order

although by then the focus had

to achieve this, Superior will

shifted to a freshly devised five-

boost development rates from

year plan for the underground

600 metres per month to more

life of mine (LOM) starting in

than 800 metres per month.

In the second half of 2019,


Other parameters outlined “We identified some issues

in the five-year plan include

in the middle of last year but

a stope grade of 3.5-4.5

if you look at our quarterly

grams per tonne, all-in

performance, we’ve gradually

sustaining costs averaging

been working towards

less than US$1,100 per ounce,

overcoming those challenges

and a commitment to spend

and setting ourselves on a path

US$6.5 million per year on

to the profitability that we saw

exploration at Plutonic.

back in 2017,” says Superior’s president and CEO Chris

“The five-year plan is all about


ensuring that the development


in front of us will enable us to maximise grade and enhance flexibility. The ultimate cost reduction is always achieved by maximising grade, because our underground mining costs remain pretty constant, so a reduction in unit cost per ounce is all about improving the grade.” The total underground resource is substantially larger than the quantity of mineralisation included in the LOM, and the expectation is that the ultimate mine life is longer than the five years covered by the LOM.

Corporate reshuffle The company’s five-year plan is a result of detailed analysis and work completed since Superior appointed Keith Boyle as chief operating officer (COO) in April last year. Boyle’s appointment was enacted by Superior in 2019 after determining that the company needed an extra layer of operational expertise and oversight.



“We are in a tier one jurisdiction and we have got one of the biggest gold systems in WA, which is Australia’s biggest gold producing district. We also have infrastructure that allows us the expand rapidly and at low capital” Chris Bradbrook, Superior Gold president and CEO “Keith brings an extra level of operational skill that allows us to focus and keep on track. As part of our new focus, we also added a new general manager last September, Alan Breen. He has got excellent international experience but it was Keith who became the catalyst for the upgrade of the entire operations team.” While bringing in new corporate direction last year, the company has maintained its focus on keeping general and administrative (G&A) costs down. In fact, G&A costs per ounce have remained among the lowest among its peer group since Superior went public in February 2017.


“Everything has a per ounce cost, including management and that has been a mantra of ours since I started the company,” Bradbrook proclaims. “That’s what we wanted to do, so that culture is very much ingrained in Superior.”

The open pit opportunity Alongside the new plan for the underground mine at Plutonic, Superior expects to be able to add ounces to its production through the addition of several open pit deposits. The company started commercial gold production from the Hermes open pit in March 2018 but suspended operations in May 2019 ahead of its new five-year plan. Superior is currently working on the optimisation of its open pit resources, including the Hermes deposit, which will CHRIS BRADBROOK, PRESIDENT AND CEO



potentially be combined with the Hermes South project to create a single operation. A resource update for the open pits is expected towards the end of the first quarter or the beginning of the second quarter. “It’s not just the Hermes pit, there are a number of pits which will be included once we finalise the resource update. We expect to put out a revised plan for the open pits soon which will look at adding around 20-30,000 ounces per annum from open pit resources. Considering our 70-85,000 ounces underground target in the LOM, you can see that those combined could get us over 100,000 ounces sustainably.” Currently, it is anticipated that production from the Plutonic East/Perch pit could commence during the second half of 2020, once final mining permits have been received. Other near-term open pit resources include


It’s about thinking big and making sure that wherever we drill, we find mineralisation. We think this is a large system and there is a good possibility of finding additional resources. We will be targeting the favourable mafic volcanic host rock and the key structural settings.”

the Salmon and Workshop

Superior’s chief is keen for


the company to look for other

Further resource growth

Plutonic-type targets in the area.

Superior is also chasing near

“It’s about thinking big and

surface and underground

making sure that wherever we

reserve and resource

drill, we find mineralisation.

growth this year and is in

“We think this is a large system

the process of creating a

and there is a good possibility

five-year exploration plan to

of finding additional

run alongside the five-year

resources. We will be targeting

underground mining plan.

the favourable mafic volcanic host rock and the key

Most of the easy-to-reach near

structural settings.”

surface resources at Plutonic


have already been identified

Meanwhile, underground

according to Bradbrook, but

resource expansion has been


a key focus for Superior

limited exploration and

results as pleasing and said

since it took over the

development to date.

Superior will continue to

Plutonic operations, and this

release drill results in some of

commitment to underground

In December 2019, the

the other key areas of the LOM

exploration has been

company announced positive

plan, including Timor, Indian

underlined in the company’s

results from this area which

and Baltic, in the near future.

five-year mining plan.

illustrated the potential to extend the LOM plan to well

Filling the mills

Back in October, COO Keith

beyond five years. Highlights

Superior is also undertaking

Boyle revealed that Superior’s

of the drill results included: 1)

a calculation of a new global

immediate underground focus

26.0 g Au/t over 5.55 metres; 2)

resource for the Plutonic

would be on establishing four

210.0 g Au/t over 0.60 metres;

mine, the results of which will

key mining fronts, which

and 3) 13.2 g Au/t over 6.7

ultimately be incorporated into

would make the area between


a longer-term plan. Crucially

the Indian and Baltic zones an

for the company, it has access

area of significant interest, as

Following the announcement,

to a second mill within the

it is a zone which has received

Bradbrook described these

Plutonic premises, which




will allow it to easily ramp

company, Bradbrook appears

up should extra resources be

enthusiastic about Superior’s



The second mill has a capacity

“We are in a tier one

of 1.2 million tonnes per

jurisdiction and we have got

annum and is currently on

one of the biggest gold systems

care and maintenance but

in WA, which is Australia’s

can be brought back online

biggest gold producing district.

with minimal capex spend,

We also have infrastructure

according to the company.

that allows us the expand

Bradbrook believes the

rapidly and at low capital. I

possession of an additional

think we are extremely well

mill is a key differential for

placed in the current gold

Superior in the gold space.


“The gold price is very impressive right now. If we are in a prolonged period of high gold prices, you want to be able to deliver the maximum amount of gold into that. Most other companies don’t


have the capacity to do that, whereas we do. We can add more ounces into a strong gold market very quickly and with minimal capex.” STOCK TICKER Considering the strong fundamentals – such as a high gold price and operating in a strong mining jurisdiction


MARKET CAPITALISATION US$30 million (as of March 24, 2020)


– underpinning the



Bushveld Minerals’ vision is to grow into a significant, low cost and vertically integrated company comprising of primary vanadium production, electrolyte manufacturing, development and deployment of Vanadium Redox Flow Batteries in the energy markets. Our value proposition includes: •

Compelling commodity market anchored to steel with burgeoning demand from energy storage market

Largest primary vanadium resource base of ~550Mt with a grade 1.58-2.02% V₂O₅ in magnetite

Post the completion of the Vanchem acquisition Bushveld Minerals will own 2 of the 4 operating primary vanadium production

Bushveld Minerals will offer a diversfied product offering for the steel, chemical industry and energy storage market

Bushveld Minerals vertical integration strategy into energy storage provides a natural hedge to vanadium price volatility as well as a

processing facilities, with capacity to scale up production significantly

diversified revenue stream

5 Harries Road, Illovo Edge Office Park 2nd Floor, Johannesburg, Gauteng 2196 | info@bushveldminerals.com | www.bushveldminerals.com @BushveldMin_Ltd

Bushveld Minerals


A pioneering vision for the futu 64



ure of the global potash market


Gensource Potash is an innovative pre-production company in the potash industry with a plan to operate in a markedly different manner to the incumbents of the global fertiliser market. The TSXV-listed firm’s business model rests on two core ‘pillars’ – the first is to be a small, efficient and environmentally sustainable potash producer and the second is to be vertically integrated from mine to farm. Gensource’s vision is to ‘achieve food security by supplying the world with a key macronutrient at an affordable cost within an open, transparent and sustainable environment’. “We think our vision represents the way potash will be done in the future,” says Gensource’s president and CEO Mike Ferguson. “Our method is clean, efficient and we have the end-user, the farmer, in mind. It’s focused on what the market needs rather than what’s best for the producers of the product.”



Gensource aims to ultimately

K+S subsequently brought the

create a series of small-

large-scale solution potash

scale and environmentally

mine into production in May

sustainable potash production

2017 and the US$4.5 billion

facilities referred to as

project (later renamed the

‘modules’, with the Tugaske

Bethune mine) is expected to

Potash Project in Saskatchewan,

produce 2.86 million tonnes

Canada being the first module

(Mt) of potash per year by 2023

to be developed by the

and that could still be ramped


up further to 4 Mt per year.

Skin in the potash game

“It was a conventional solution

The Gensource team has

large potash project that

worked in potash production

required a lot of money and

for several decades and

time to develop and construct.

developed a collective

The global potash industry has

insight into the workings

been, at times, a true cartel,

of the industry, focusing

but nowadays is more properly

particularly on market-focused

described as an oligopoly.

mining method and a typically


“For this reason, it’s been very In fact, the core team at

difficult for outside players to

Gensource is the same one

enter the fray, regardless of

that led a company called

whether they can afford to pay

Potash One from 2007 to

the billions of dollars required

2011. This Canadian firm

to develop the large tonnage

developed the Legacy potash


project in Saskatchewan until it was acquired by German

“While we were still

fertiliser manufacturer K+S

developing the Legacy project


at Potash One, we started to develop these ideas of small-


scale, efficient production. After selling the project, we reconvened within Gensource to implement those ideas around entering on a small scale with environmentally friendly mining practices. That’s the story of how we formed Gensource.� While new participants continue to find it difficult to break into the established oligopoly of potash producers, Gensource has also identified other weaknesses in the potash market, including inefficient and environmentally damaging production methods, and a lack of integration among supply chains. Gensource’s pillared approach aims to address these issues. First, the production of small modules will allow the company to start small and ramp up into additional modules as the market develops. Second, its production method is remarkably more efficient and environmentally friendly



than conventional potash mines. And third, a vertically integrated mine-to-farm structure will directly unite the potash supply chain all the way to end user.

Right sizing production Gensource’s first module from the Tugaske project will produce 250,000 tonnes per year of potash – a significantly smaller operation when compared with the Legacy project developed by the team in their former roles. The Tugaske project will use a selective solution mining method along with industry-standard cooling crystallisation processing, both of which are driving the project’s unprecedented levels of efficiency and environmental sustainability. In contrast to traditional solution mining, which uses fresh water to dissolve potash and salt underground,




selective solution mining uses

product become insignificant

need for surface brine ponds,

brine to only dissolve potash

and subsequently, it ends up in

for either tailings or cooling.

from underground caverns.

large tailings piles next to the

Selective solution mining also

The result is a significantly


uses about a quarter of the

more efficient extraction,

water per tonne of product

lower capex and opex, no salt

“These huge piles of salt

compared to normal solution

tailings and no brine ponds.

then need to be encircled

mining activity.

with control dykes or ponds, A typical potash operation

which represents a significant

“Overall selective solution

produces almost two tonnes of

environmental issue because

mining lets us be small and

excess salt for each tonne of

over time ponds leak, and you

it puts us at the forefront of

product produced, according

have brine migration down

the whole industry from an

to Ferguson. This is such a

to groundwater sources. But

environmental perspective.�

large volume that the minor

with our method, we leave

secondary uses of the by-

no salt tailings and have no


Full environmental approval

At the local community level,

In fact, having demonstrated

its smaller scale compared

the Tugaske’s negligible

to the 10 existing potash

environmental impact to

operations in Saskatchewan.

the local regulator, the

All of these mines are much


Saskatchewan Ministry of

larger, often employing more


the Environment, the project

than 2,000 construction

was granted full government

workers over a period of up to

approval without the need

five years and hundreds more

for Gensource to produce

long term at the project site

an Environmental Impact

during operations.



US$25.5 million (as of April 22, 2020)


Assessment (EIA) – an unprecedented feat in the global potash sector.


the Tugaske project has also been warmly received due to


“The local communities in

period of less than two years,

Saskatchewan are made up

with only 42 people employed

A direct link with the market

of small towns that can have

permanently at the site.

Gensource’s most recent

as few as 50 people in them.

project milestone was

If you show up with 2,500

“Our size and the

the capture of German

construction workers for five

environmentally sustainable

conglomerate HELM AG as

years and 500 more people

aspect of our project have

offtake partner for 100% of

working there permanently,

been enthusiastically

the production from Tugaske.

you can imagine it almost

embraced by local towns

Following the announcement

obliterates the community.”

and local governments as

in January, HELM is also

something that really fits in

expected to become an equity

However, in the case of

to the community, instead

partner in the project.

Gensource’s Tugaske project

of dominating it,” Ferguson

there will be only 200

proudly asserts.

construction workers over a

“They plan to be a future owner of their own supply


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chain, which is a key business

begin as early as Q2 this year.

tenet to Gensource – to create

The company estimates a two-

that streamlined supply chain

year construction period, with

in the potash world. We are

plant start up and first potash

working with HELM and one

production slated for mid-

other financial partner and we


are in the middle of the debt

“We think our vision represents the way potash will be done in the future. Our method is clean, efficient and we have the market in mind” Mike Ferguson, Gensource Potash president and CEO

The lead bank that Gensource

The start of something bigger

has mandated for the senior

The Tugaske project resembles

can grow to suit the market.

debt financing is KfW IPEX-

just the tip of the iceberg for

It allows us to grow in small

Bank out of Germany – a world

Gensource and its radical plans increments to meet the

class lender according to the

for the global potash market.

requirements of the market,

company. Ferguson reveals

“The bigger business plan is

rather than what happens

that Gensource expects to

all about becoming a new and

now with large multi-billion

announce project financing

independent producer in the

dollar investments that bring

milestones by late second

potash industry and doing so

multi-million tonnages to

quarter of this year.

by starting small.

the market, which negatively

finance due diligence process.”

impact supply chains and With all environmental

“We are starting with one


approvals in place and a

module, but we plan to expand

bankable feasibility completed

this with a second module that

Herein lies Gensource’s novel

back in 2017, the Tugaske

would bring our production to

proposal for the future of the

project is essentially ‘shovel-

500,000 tonnes per year. At the

global potash industry – small,

ready’, and the fulfilment of

same time, we could start an

expandable production, more

project financing is the last

entirely new project under a

like manufacturing than

hurdle that Gensource must

new JV company, operating in

mining, using environmentally

overcome before construction

the same project area and of a

sustainable methods

can begin.

similar small scale.

while establishing a direct connection between the

This means that construction

“The idea is that these things

production facility and the

of the Tugaske project could

can start out very small and

global fertiliser market.


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• Pursuing Custom Milling opportunities in Abitibi region commercial production and bulk sampling agreements

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Quebec, Canada





JOSEMARIA RESOURCES The latest large scale resource project to be delivered by the Lundin Group


The Lundin Group was founded by Swedish oil and mining entrepeneur Adolf H. Lundin over 40 years ago and is today comprised of 13 publicly traded companies dotted around the global resources sector. In the beginning, the Group was driven forward by Adolf’s passion for natural resources and his desire to supply the world with key commodities. In order to do this, he quickly learned that you need to find large, high quality resources and bring them into production wherever they are to be found in the world and no matter how unfavourable the jurisdiction might appear to be.

“The Lundin Group modus

the business, the Lundin Group

operandi is to find tier 1 assets

has production out of Norway,

that benefit local communities.

Canada, Nigeria, France,

We’re not scared to go to any

Malaysia and Iraqi Kurdistan.

jurisdiction, as long as the local country wants to do it

“In Argentina, we’ve had ups

together. This belief has taken

and downs but my father went

us across the world,” says

there in the early 90s and

Adolf’s grandson and current

found success and we never

president and CEO of Josemaria

left. Overall, it’s a Group where

Resources, Adam Lundin.

a lot of people came together

A truly global resources group

who were passionate about making the world a better place and doing that through

The poster child of the

the extraction of natural

Group’s success in the mining


sector is Lundin Gold, after it brought into production the

The Lundin Group’s early

multi-million ounce Fruta del

success in Argentina goes back

Norte gold mine in Ecuador

to the discovery of the Veladero

– a jurisdiction that precious

gold deposit in San Juan

few Western companies had

Province. The project was soon

explored in prior to Lundin’s

acquired by Homestake Mining


after fighting off a hostile bid by Barrick, who ultimately bought

Elsewhere, the Lundin

Homestake to get their hands

Group has been involved in

on the prized deposit. Veladero

developing one of the largest

has remained one of the largest

copper-cobalt mines in the

gold mines in the world over

Democratic Republic of Congo

the last two decades.

through Lundin Mining, which



currently operates mines in

On the back of this divestment,

Brazil, the US, Portugal, Chile

the same Lundin Group

and Sweden. On the oil side of

exploration team decided to



stake some ground on the Chile-Argentina border, not far from the Veladero deposit, at the turn of the century. The subsequent exploration campaigns yielded three grassroots discoveries – one being the Josemaría coppergold deposit in 2004. The three discoveries are in the same land package and are located within 15 km of each other, but have since been spun into three separate companies within the Lundin Group. “Josemaría is currently the most defined project. We feel we’ve found the boundary of the resource, so the view now is to get something into production and maybe we can later tie in the other two deposits to form a district that will allow us to be mining here for 50+ years,” says Lundin.

Faith in Argentina In years gone by, international mining companies have been wary of investing in




an emerging market like Argentina, especially while some of its provinces receive low rankings for attractiveness as a mining jurisdiction. However, it has never been the remit of the Lundin Group to be put off by warnings of this nature. As we have already learned, if a project is large and of a high quality, the group will commit to its development. In the case of San Juan Province, where Josemaría is located in the shade of the resplendent Andes mountains snaking through Northern Argentina, mining is entrenched in the political and economic fibres of the region. “San Juan is where we made the Veladero discovery, so it has producing mines and they understand mining and how it can help benefit the local economy. Before Veladero came into production, San Juan was one of the top five FERNÁNDEZ (MIDDLE), JAN 2020

poorest provinces in Argentina


and now it’s one of the top five

At the federal level, Lundin

wealthiest, because of those

and his father Lukas managed

royalties and benefits attached

to arrange a meeting with

to the Veladero mine.”

President Alberto Fernández during a visit to Buenos Aires

In addition, Josemaria’s

in mid-January. “To be able

experience working with the

to meet the president at short

different layers of government

notice and get in front of key

in Argentina thus far has been

government officials shows

overwhelmingly positive.

their willingness and their

On the provincial level, the

want to get mining going.

company has been in close contact with the minister of

“This is their resource. We

mines for San Juan Province,

are happy to help put it into

who was recently appointed

production but they will be

federal minister of mines,

biggest benefiters, followed

reporting directly to the

by our shareholders,” Lundin




Entering a new era


Following the publishing of a robust pre-feasibility study (PFS) at the end of 2018, Josemaria made the decision to plough on with the bankable and full feasibility studies. And so, last year became a




US$87.2 million (as of April 2, 2020)



transformational year in the development of the company and the project. The company’s name was changed from NGEx Resources





(the original entity that made the three discoveries) to Josemaria Resources and Adam was brought in to head up the refreshed organisation, along with several other additions to the board and management team. “We strengthened the board by bringing in Paul Conibear, the previous Lundin Mining CEO. We have Ashley Heppenstall, who is former Lundin Petroleum CEO. We also brought in Ron Hochstein who’s currently running Lundin Gold.” Adam’s father Lukas is also on the board of directors alongside Jack – Adam’s brother and Lukas’ son. Alongside the familial connections, the board retained the services of renowned geoscientist Wojtek Wodzicki - who made the initial Josemaría discovery. “I think it’s important to keep that continuity,” Lundin adds. Christina Batruch rounds off Josemaria’s experienced board

Spotlight on

Adam Lundin

Adam Lundin was appointed president and CEO of Josemaria Resources in September 2019, succeeding Dr. Wojtek Wodzicki, who had been at the helm of the company for over 10 years. Adam is the grandson of Adolf Lundin, the man who founded the Lundin Group over forty years ago. Following in the footsteps of his grandfather and father, Adam chose a career in natural resources and has accumulated several years of experience in capital markets and public company management across the sector. Working across the Lundin Group, Adam is also CEO and a director of Filo Mining Corp and a director of NGEx Minerals and Africa Energy Corp.


“We have big camaraderie in the Lundin Group. All the companies are independent from one another, but we learn from each other and we’re always there to support each other”- Adam Lundin, Josemaria Resources president and CEO


team and is responsible for

Going back to the 2018 PFS,

helping guide the company’s

Lundin was pleased with

sustainability strategy.

the anticipated economic metrics for the Josemaría

On the management side,

project, particularly the capital

Ian Gibbs was brought in as

expenditure (capex) estimate

chief financial officer owing

of US$2.75 billion. This may

to his previous project finance

seem like a large figure in

experience from the oil side

comparison to Josemaria’s

of the Lundin Group and

market cap, but this is a large

with Lundin Gold. With an

scale project that requires

extensive history across global

large scale investment.

engineering companies, Arndt Brettschneider, VP Projects,

Furthermore, Josemaría’s

was also recruited to lead the

production profile is also

feasibility study.

attractive. The operation will


produce 125,000 tonnes per

Lundin Mining agreed when it

field programme that included

annum of its main commodity

bought the Candelaria mine in

condemnation, geotechnical

copper over a 20-year mine

Chile, as a way of financing the

and water drilling.

life, along with 230,000 ounces

capex for Josemaría.”

of gold and 790,000 ounces of silver per annum over the same period.

Ploughing ahead in 2020

Josemaria is blessed with a supply of groundwater just 1.5 km away from the project – a

The first quarter of 2020

considerable benefit given that

“The gold production is

has been about polishing

just across the border, Chilean

significant and accounts for

elements of the PFS ahead of

authorities insist on miners

around 25% of our revenue

the publish of a full feasibility

building desalination plants

of the mine life. That gives us

study and building towards

for their water supply.

flexibility when it comes to

applying for environmental

project finance. Maybe we will

and social permits. The

After proving its main source

look to the streaming deal that

company conducted a large

of water supply, the company


was about to test another basin

times. We’ve collected a lot of

Josemaria has also been

as a future supply source until

our baseline studies, so we’ll

monitoring the local

Argentina was placed in full

be in a good position to apply

environment in tandem with

lockdown to quell the spread

for permits in Q4.”

BGC Engineering over the last

of COVID-19 (coronavirus), so the work was cut short.


five years, specifically focusing On the social side, Josemaria

on minimising any potential

has engaged with the Lundin

impact on a glacier around

“The original plan before

Foundation and started to run

seven km away in the Andes.

COVID-19 was to finish the

social programmes within

feasibility and publish it in

the community. One aim is

Q3. I think it’s better to start

to eventually assist water

guiding the market towards

treatment facilities in the local

A standout company and project

the second half of the year,

city of San Juan.

The Lundin Group is bullish

just to give us some flexibility

about copper and a believer

as we adapt to these changing

in the forthcoming electrical


revolution as the world looks

of experience in different

Despite the global

to shift away from fossil fuels,

geographical contexts and

resources sector facing an

and Josemaría is a large scale

economic cycles.

unprecedented squeeze from

mine that is going to stand

the coronavirus pandemic,

out in an environment where

“Lundin Gold was one of

Lundin is quietly confident

not many copper projects of

the first projects we built by

that Josemaria can emerge

an appropriate scale for the

ourselves and we are hoping

stronger. “Downturns is when

projected demand increase are

Josemaria is the next one.

we benefit the most as a

coming to market.

We have big camaraderie in

Group. We can push projects

the Lundin Group. All the

forward and retain key talent

Josemaria the company also

companies are independent

where other companies are

stands out in the junior space,

from one another, but we

sitting idle.”

as its part of a much larger

learn from each other and

family of natural resource

we’re always there to support

companies with decades

each other,” Lundin exclaims.


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North America’s next m



mid-tier gold producer


Over the last decade, Canadian gold explorer and producer Argonaut Gold has built a reputation for operating a cluster of simple, low risk gold assets across North America. The recent acquisition of NYSElisted Alio Gold at the end of March has been a long time in the offing and adds a couple more attractive pearls to Argonaut’s ‘necklace’ of assets, to borrow a metaphor used by president and CEO Peter Dougherty.

“Consolidation is healthy for

natural synergies. Firstly,

the sector because we’ll get

Florida Canyon is an open pit

better capitalisation, we’ll

heap leach mine – the type

be able to coalesce the best

of operation that Argonaut

talent in the industry and

has excelled in previously,

hopefully produce more vibrant

particularly at low grades.

Talking to RGN, Argonaut’s chief describes the deal as typical of the current gold space, with momentum released from M&A activity among the majors gradually trickling down to the mid-tier and below during the last 18 months. Consolidation has been the name of the game in the gold sector and this is only likely to continue as the global economy prepares for a brutal downturn in the midst of the ongoing COVID-19 crisis.

companies that can survive challenging conditions,” says

Dougherty describes Florida


Canyon as a low grade, 0.4 g/t operation, but notes that

“For Argonaut in particular,

Argonaut has run 0.3 g/t

the Alio deal allows us to

orebodies and made money on

have another producing asset

them. “There are similarities

in a great jurisdiction,” he

between the two companies in


the processes that we deploy

Natural synergies

and the way that we execute those, and we think we can add

Alio’s only current producing

to and enhance those things at

gold asset is the Florida Canyon

Florida Canyon.”

Mine in Nevada, which is located 200 km from Argonaut’s

Secondly, Argonaut will use

corporate office in Reno – a 1.5

the acquisition to restructure

hours’ drive on a good day. In

its corporate departments.

comparison to the company’s

There will be a natural

other producing mines in

reduction in overall general

Mexico, La Colorada is half a

and administrative (G&A)

day of travel from Reno and the

costs following the closure

operations in Durango are four

of the company’s Vancouver

hours on top of La Colorada.

office. Instead Argonaut will pool its key talent in Reno,


Besides Florida Canyon being

with the existing team in

right in Argonaut’s backyard,

Mexico remaining in place and

the deal was also attractive to

overseeing the integration of

both parties based on several

the Ana Paula development



project in Guerrero from Alio’s

things all bode well and really

Turning Florida Canyon from


set this project up to bloom

a cash consumer to a cash

from where it is now.”

producer will be a significant

From an operational adds immediate long-life

Distinctly North American

growth to the portfolio and

Argonaut’s portfolio is now

memory, as the world slowly

will effectively replace the El

comprised of four producing

emerges out of lockdown

Castillo mine in Durango when

assets in Mexico and the

to contain the spread of

it reaches maturity in 2022.

US and three development


However, the asset will require

projects in Canada and

some TLC from Argonaut in

Mexico. Dougherty describes

Indeed, having diversified

the short to mid-term.

the company’s model as

sources of gold production

North American-centric and

could provide unyielding

“Florida Canyon has been

is resolute in his belief of the

value during a period of

starved of the proper cash

world class nature of all three

unprecedented government

investment and we think that


stimulus packages aimed

perspective, Florida Canyon

because of the strength of the

of perhaps the steepest decline to the global economy in living

at propping up groaning

balance sheet we have, we can

“We like to play in playgrounds

economies. The addition of

really bring to the forefront

where we think we can

more debt load will only have

that ability. The first thing we

win. We think Mexico has

a positive impact on the gold

will do is unlock the Sprott

an attractive profile for

market in the longer term,

debt and replace it with our

investors, but we were looking

according to Dougherty.

revolving credit facility which

for diversification. The US

is carrying a 2.25% rate.

happens to be one of the best

“I expect to see gold rise over

jurisdictions in the world after

the next several years and

“Secondly, we will look to

you get your permits in and it’s

also bring along with it the

make a further investment in

the same in Canada. Once you

gold equities. It’s a matter of

the crushing circuits of less

overcome the infrastructure

economics. If we continue to

than $10 million, something

hurdle you have access to one

turn on the debt and printing

we can do out of the cash flows

of the best jurisdictions in the

presses as we have, at some

that we are generating as a


point in time we are going to

strong company today. Those


result for the company ahead

need that back-end commodity


Peter Dougherty, Argonaut Gold president and CEO to shore up that currency we

Argonaut quickly complied

are printing. As we look over

with the mandate and ceased

the long term, I am quite

mining, crushing and stacking

bullish about what this is going

activities at its operations, but

to do for gold.�

given that it operates heap

Coping with COVID-19


leach mines, the company has been able to continue metal production and metal

Following the outbreak of

sales during the temporary

COVID-19 in Mexico earlier

suspension of mining

this year, mining was deemed


a non-essential business by the Mexican federal government

In fact, the impact on actual

on March 31st and all

metal production during the

operations were suspended

first 30 days of the suspension

at the beginning of April to

order was non-consequential,



US$233 million (as of May 11, 2020)


prevent the spread of the virus.


says Dougherty. “When we

Colorada and El Castillo on

The company has gone above

think about it over the next

May 18th.

and beyond in its efforts to

30-60 days, I would expect us to recover 80% of what we

At the time of writing, the

community surrounding La

normally would’ve seen.”

region that hosts La Colorada

Colorada, offering sanitation

has had 0 cases recorded in

services to 253 local homes

Fortunately, the areas in which

that small community, and in

and providing face masks and

Argonaut operates in Mexico

the state of Durango – where

personal sanitiser to grateful

have received only very small

the El Castillo Complex is


outbreaks of COVID-19 and

found - there have been

on May 12th the government

two cases identified in the

“We also took it one step

reclassified mining as an

municipality of San Juan del

further and have acquired

essential business, paving


COVID-19 test kits for

the way for Argonaut to recommence operations at La


tackle coronavirus in the

our people. We’ve done


this because we think it’s

The Magino project in Ontario,

now deploy the assets of the

important. If it turns out

Canada is envisioned to be

company in two different

that we didn’t need the tests,

built by an EPC contractor


then so be it. We decided to

at a fixed construction cost

get out in front of this in our

expected to be close to the

Following the acquisition of

communities and whilst this

$320 million outlined in the

Alio, Argonaut’s total gold

doesn’t preclude you from

Magino feasibility study, with

production rate would be

having a case show up, we are

the financing strategy set

around 235-250,000 ounces

now more prepared for when

to be put in place by Q3 this

(oz) per year at full capacity.

it does.”

year. Meanwhile, Argonaut

While achieving this rate in

is progressing through the

2020 may be difficult following

final stages of securing an

the COVID-19 outbreak, clearly

operating permit for Magino,

this is no longer a small fry

Despite the incredibly difficult

having already received

gold firm.

conditions that Argonaut

environmental permits.

A packed pipeline (and the world) is navigating

In fact, Argonaut has the

through, Dougherty remains

“I think the unique thing

makings of a dynamic mid-tier

content with the position the

about the EPC approach is that

North American producer and

company currently finds itself

somebody else is building the

has set itself a transformation

in, chiefly due to the presence

car for you. They’re carrying

strategy with the goal of 300-

of three exploration projects in

out all those activities so we

500,000 oz per year, which

the portfolio.

can leverage our team to work on more than one project. We

“As a matter of fact, now is an

are not overburdening our

amazing time for the company

team and we’ve transferred

given we are still a relatively

the risk for overruns to the

small junior with three


development assets that are all poised by the end of the year

“While overseeing the EPC

to be in a decision-making

contract at Magino in Canada,

process as to how we advance

our team can also be working

them,” he proclaims.

on Cerro del Gallo or Ana Paula in Mexico. We can

We like to play in playgrounds where we think we can win. Mexico has an attractive profile for investors, but we were looking for diversification and The US happens to be one of the best jurisdictions in the world” Peter Dougherty, Argonaut Gold president and CEO


10 2


“We add to it Florida Canyon. Here’s another mine that is going to be operating for at least the next eight to 10 years, one of our longest life operating mines. Then the big pendant in the Argonaut scenario is Magino. We’ve already identified 5 million oz and started underground exploration last year to expand the resource. “Magino currently has a 17year mine life based on the first two million oz, but it’s probably going to have a 30year life. Then at Cerro del Gallo we have also identified a 14-year life that likely will PETER DOUGHERTY, ARGONAUT GOLD PRESIDENT AND CEO

extend to 20 years with further exploration. These longer life assets also have significantly

will involve upgrades to both

individual pearls (the smaller

lower operating costs and

the production rate and cost

operations in Mexico) that are

they are the pendants we are


unique and unto themselves

transitioning towards.”

Polishing the Argonaut necklace “When I formed the company

able generate some cash. “But they’re relatively short life, with smaller production profiles and relatively high cost profiles.

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More s

1 06



significant news flow from one of West Africa’s most exciting gold firms

1 07

Regular readers of RGN will be very familiar with AIM-listed gold explorer and producer Hummingbird Resources by now. This publication has been following the company’s West African story since 2016, when it had only then completed a definitive feasibility study (DFS) for the Yanfolila gold project in Mali, having pivoted away from its original exploration asset in Liberia. Over the last four years, Hummingbird has delivered the Yanfolila mine on-time and on-budget, transforming itself from an explorer to a producer in the process. After reaching nameplate capacity in early 2018, the highly flexible team skilfully navigated operational challenges at the mine in 2019 and boosted throughput through the addition of a second ball mill, all while maintaining a prominent position in the local Sikasso region through a series of generous community development programmes. 2020 has been another year of significant news flow for Hummingbird, despite the worrying emergence of a global pandemic that has posed a challenge not just to the company’s finances but more importantly to its stakeholders.

“There’s no doubt it’s been very challenging,” says managing director Dan Betts. “We operate a remote mine in a remote jurisdiction and Mali’s borders have been closed for some time, which has given us a lot of supply chain and logistics issues. “We’ve had to increase our inventory of spares, fuel and supplies so we can sustain unforeseen events, but when things do go wrong it’s hard to get parts to site and this has a cost implication for the company.” However, Betts believes that by far the biggest challenge posed by COVID-19 has been maintaining morale and managing fatigue on-site at Yanfolila. The pandemic has dictated a stricter focus on employee health and safety, which has meant changing shift patterns from normal with time off to an intense 15-week spell on-site for many staff.

10 8



of the Kouroussa Gold Project

going so well, but it’s been

Going into Guinea

a tough ask for our team.

Despite these significant

Cassidy Gold Corp in June,

Another challenge has been

impediments to

moving into a third West

not knowing. You can’t really

Hummingbird’s regular

African jurisdiction in the

plan in this time, so it’s been

operational and corporate


a case of reactive planning

rhythms, the company has

depending on what rules

remained active in the market

governments have thrown at

and announced the acquisition development asset in Guinea’s

“It’s amazing they’ve kept



in Guinea from junior explorer

The deal for this near-term prolific Siguiri Basin perfectly


aligns with Hummingbird’s

per year. This bracket sounds

little gem in that respect.”

strategy of building a high

great on a spreadsheet but it’s

grade, high margin gold

actually very hard to find this

Kouroussa has a mineral

producer in West Africa and

type of project which is slightly

resource of 1.18 million oz of

it complements the Yanfolila

sub-scale for the majors and

gold, which Hummingbird has

mine in more ways than one.

the mid-tiers, but big enough

applied significant dilution

to be a substantial employer

to, but is still returning head

“We were aiming for a project

and revenue generator for us.

grades at over 3 g/t gold

with a production profile of

The Kouroussa project was a

according to Betts. “There

around 100-150,000 ounces (oz)



were some absolutely knock

flowsheets and process plant


out drill holes there and I

design and even service

think the exploration potential

providers as they are in the

is huge as well,” he says. First

same broad geographic region

gold is expected in under two

in West Africa.


years, when the mine will



£101.5 million (as of June 24, 2020)


produce around 100,000 oz per

“We can take a lot of synergy


from everything we have done at Yanfolila and transport it

In addition, there exist

across to Kouroussa, which

several similarities between

should help us build the mine

Kouroussa and Yanfolila, in

very effectively. We have kept

terms of the scale of both

the same project team together

projects, the metallurgical

from Yanfolila and after the second ball mill, this is the

11 2



1 14


third build that project team

it hosts plenty of major mining

there is no need to cross land

will work on.”

companies as a result.

borders to get on-site.

A mature mining sector

For Hummingbird, Guinea

“In terms of physical security,

represents a new political

Guinea is slightly more stable

While not as mature as Mali’s

environment – which always

than Burkina and Mali at the

gold sector, Guinea is by no

takes time to acclimatise

moment. I think it’s a good

means a fledgling mining

to. However, Betts believes

time to enter, certainly in

jurisdiction. Thanks to its

this adaption comes with

terms of gold exploration

world class bauxite and bulk

no significant risk. In fact,

around the Siguiri gold

commodities industries,

working in Guinea may

belt. There have been some

the country has established

actually be smoother as the

amazing drill holes come out

infrastructure, a strong

country has its own port and

recently from the Australian

understanding of mining and

juniors and I think there is



1 16


going to be a lot of activity in this part of Guinea over the next 10 years.” Hummingbird is already busying itself at the Kouroussa project crossing Ts and dotting Is in terms of permitting and government approval for the change of hands. The company is in dialogue with the government and is pleased to have received early support from the authorities. “They [the government] seem very supportive of Hummingbird’s involvement and I don’t foresee any problems, so the team is now working on refining the detail and the scope of the plant.” Throughout the remainder of the year, the company plans to refine the Kouroussa feasibility study and enlarge the scope of the plant, making it more comparable to the Yanfolila operation. “We’re imagining a circa 1-1.2 million tonnes per year plant,

1 17

Dan Betts, Hummingbird Resources managing director

two-stage crushing, CIL gravity

presented problems due to its

while funding all other costs

circuit producing in the region

vast scale.

during the two-year period,

of 100,000 oz per year,” Betts

earning a 49% interest in the

envisions. “Hopefully we will

“It’s going to be a huge

be ready to start construction

project. Remember the first

at the beginning of next year.”

164 drill holes we did all hit

The agreement should also

mineralisation. There is so

unlock a huge amount of value

much gold there to be found,

for Hummingbird’s investors,

but we felt it needed someone

according to Betts. “When

with a longer-term mindset

ARX lists in Canada it will

Also in June, Hummingbird

to do more exploration and

be a separate entity with a

sealed an earn-in agreement

expand the project. That’s what direct look-through value for

with ARX Resources for the

ARX is doing.”

Sharing the workload in Liberia

Dugbe project (its original


Hummingbird’s shareholders. And then at the end of it all,

West African asset). Liberia

Under the terms of the deal,

Hummingbird converts its

has been a tough nut to crack

ARX will spend US$10 million

51% in the project into 51% of

for the company over the past

on further exploration and

the company and maintains

five years and the project itself

commit to completing a DFS

control of the asset. I think it’s a fantastic deal.”

11 8



In a third major piece of news

to find ways to promote the

community and healthcare. “I

flow in June, Hummingbird

industry and all the good work

think that is something to be

confirmed its membership

it does. That’s the bit of the

immensely proud of and I’m

with the World Gold Council

relationship I am most looking

looking forward to being a part

– a point of real pride for

forward to; looking at how we

of that with the World Gold

the company’s managing

can promote and be proud of


director. “I see the Council as

the gold mining industry.” Betts is quick to highlight the

Assisting the COVID-19 effort

admirable work that the gold

In a particularly fraught

“It has many capable and

sector does around the world

time for all of its people,

respected people looking

in terms of R&D, environment,

Hummingbird has gone

the highest body in the gold industry.



health education, including

resource expansion at

bringing in an additional

Yanfolila as one of its key

site doctor who has provided

annual targets. This has

valuable assistance to our

not changed even after the

medical team in supporting

outbreak of COVID-19 and

Hummingbird’s COVID-19

all of its implications on the



“In addition, we have made

In early June, the company

donations to the Malian

announced some encouraging

government and local

drill holes from underground

health authorities, offering

drilling at Komana East, and

direct support to our local

there are hopes this could

communities with initiatives

prove up the underground

such as soap manufacturing.

mining concept at Yanfolila

We have been buying

and add long-term oz to the

soap from the community

base load feed for the mine.

soap factories previously

above and beyond in its commitments to the local

established by Hummingbird

“We’re hitting mineralisation

and supplying the local

where we were expecting and

communities to help combat

are also targeting some new

COVID-19 with greater

deposits. Nobody has done any

handwashing and hygiene.

communities in Mali, bringing

greenfields exploration here for seven or eight years, and

in additional public health

“We also continue to supply

we’ve had a couple of good hits

education initiatives while

medical equipment and are

in the early drill holes. It’s a bit

continuing to support existing

in the process of buying some

early to say but I’m optimistic

programmes, including the

testing equipment with the

we will come up with more

hugely successful market

support of the government of

good results,” Betts concludes.

garden and water projects.


“We have put a huge amount of

At the start of the year,

effort into driving community

Hummingbird earmarked



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to accelerate Nigeria’s industria





al development


The wheels of full-scale industrialisation in Nigeria have been in motion for several decades following independence in 1960 and the establishment of a large-scale oil sector in the 1970s. However, achieving economic development through rapid industrialisation has remained a major challenge in Africa’s most populous nation and largest economy, which was still reliant on oil and gas for 65% of government revenues in 2018. Industrial development in Nigeria is generally constrained by high cost of supply and this is glaringly apparent in the raw materials market. Nigeria does not produce any domestic steel, which means its existing fabrication facilities are dependent on the import of all steel raw materials - most of which is scrap metal - to produce low quality items such as rebar and hot/cold rolled steel and wire coils. The high cost of importing scrap to produce low quality steel is an equation that has stunted industrial growth in Nigeria for too long and changing this requires a trailblazer. Step forward ASX-listed Kogi Iron. The company plans to deliver the country’s first fully integrated cast steel project on the Agbaja iron ore plateau in Kogi State, central Nigeria.



“Ours is a pioneer project,”

pivoted towards the idea of

Kogi’s managing director David developing a fully integrated Turvey proclaims. “There isn’t

steel production facility, a

any other steel production in

move that Turvey describes as

Nigeria so we have first mover

‘a real paradigm shift’.

advantage, but that comes with good and bad sides to it.

“The Nigerian domestic steel

There isn’t much policy with it

market has both current

because nobody else produces,

demand and significant

so we’re pioneering policy as

latent demand. If you can

well as producing steel.”

produce domestically than you are likely to benefit from

Kogi spent the best part of a

that latent demand. At the

decade exploring, discovering

moment, they are importing

and defining an iron ore

scrap steel at a very high price.

resource at the Agbaja Project, located approximately 200 km

“If we can match that price

South of capital city Abuja.

and over time lower it, then

The JORC-compliant mineral

we’re supporting the growth

resource on the plateau

of the local industry. I see it

has been estimated at 586

as a unique opportunity to be

million tonnes (Mt) with an

the first, but also to work with

in-situ grade of 41.3% Fe. The

the country in developing the

project is Nigeria’s only JORC-

policy for their first successful

classified iron ore resource.

integrated steel plant.”

The company’s original plan

In order to build a low-cost

for the project was to develop

steel producing facility, you

the mine and become an

need a few fundamental

iron ore export play, but

components, firstly a source of

after evaluating the difficult

suitable quality and quantity

logistics and escalating costs

iron ore. Tick. Reliable power

of exporting the ore, Kogi

supply is also a necessity.


1 28


Fortunately for Kogi, running quite nearby the iron ore deposit is a large gas pipeline, ideally suited to supply a gasfired power plant. Tick. “These are two very significant fundamental competitive advantages that are very rare in the rest of the world,” Turvey explains. Coal and limestone are the other ingredients required for steel making, and the company has noted that both can be drawn from local sources. Tick.

Feasibility study work The company completed a substantial amount of prefeasibility level work for the fully integrated project between 2014 and 2018, including the manufacturing of a sample steel product using iron ore mined from the Agbaja plateau and local coal. “We took bulk samples of our iron ore and local coal down to South Africa and Mintek produced internationally


marketable steel billet. Steel billet is a traded intermediate product, and that’s what we’re aiming at. We’re not looking at being a fabricator of rebar or the finished steel products, we’re looking at selling to the pre-existing steel fabricators.” In 2018 Kogi hired Fast Markets to conduct a market feasibility survey, taking in all aspects of the contemporary steel industry in Nigeria and West Africa. The survey concluded that Kogi would be able to sell 1.5 million tonnes





US$22.32 million (as of August 29, 2020)


13 0

per year of billet steel in

from existing Nigerian

Nigeria and into neighbouring

steel fabricators which will


be progressed into offtake discussions, although Turvey

Following the publication

stresses this will take time and

of the survey, Kogi received

the company must arrange a

several expressions of interest

strategy with the government


for the eventual replacement

production and it’s a mutual

Many of these components

of imports.

process. There has been quite

will not take long to update

a bit of time and effort spent

to a bankable level, such as

“As a pioneer, we have an

on pre-feasibility studies

the upgrading of the iron

obligation to listen to what the

on the steel side, including

ore resource to reserve

government wants because

environmental work. We’re

classification (at a cost of

there is no current steel

currently converting these to

approximately US$1 million)

bankable feasibility level.” 1 31

“Ours is a pioneer project. There isn’t any other steel production in Nigeria so we have first mover advantage” – David Turvey, Kogi Iron managing director


and the Fast Markets study,

off on the process guarantee

which should be a relatively

from a world expert.

straightforward task according to Turvey.

Critical path value drivers

Process flowsheet refining

These elements, along

tests are another important

with confirmation of a gas

aspect of the bankable

supply contract, comprise

feasibility work, particularly

the company’s ‘critical path

the chosen steel refining

six-month value drivers’ – a

technique to remove

plan formulated by the board

phosphorous – a well-known

to essentially de-risk and

contaminant. This refining

expedite key parts of the study

stage is not a big capital item,

following the onset of the

but it’s crucial to receive sign

COVID-19 pandemic.


RGN editor Jacob Ambrose Willson interviews Kogi Iron managing director David Turvey, August 17, 2020

“The bankable feasibility

supply contract, if not slightly

“We’ve received positive

will take up to 18 months to


feedback and progressed

complete and we will need

relationships with the UK ECA

to raise US$8 million to fund

The design engineering will

and with other banks on the

it. But we will probably only

be the longest lead item on

debt side of project financing.

need $1-2 million for our key

the BFS because it is reliant

It relates to the unique

value drivers over the next six

on the refining process and

advantages of the Agbaja steel


power supply being in place.

project and the quality of

Once design engineering is

the investment opportunity

“The steel test work in Sweden

complete, a six-month timeline

destined in the bankable

is expected to cost less than

is expected before equity and

feasibility study,” says Turvey.

$500,000 and will probably

debt financing is secured, in

take three months. Then the

Q2 2022 at the earliest.

market entry is likely to be

As a result of the impact of the COVID-19 pandemic on equity

hand in glove with the gas

1 33

markets, and the subsequent

front end of the project can

aspects, and it has been

economic challenges that

be fast-tracked and de-risked,

no different for Kogi, who

have emerged in Nigeria this

while easing the short-term

finalised an early CDA back in

year, Kogi has decided to take

funding conundrum the


a phased approach to the

company would have faced

development of the project,

under the original plan.

which involves construction of a lower risk, smaller-scale steel billet plant.

1 34

Community support

The CDA details Kogi’s support for the local communities across four key areas: Education, health,

In Nigeria, mining companies

infrastructure (power

The plant’s design will allow

are obliged to draft community

and water supply) and

for expansion to larger scale

development agreements

employment. Recently, the

production capacity relative

(CDAs) for their projects

company has overseen the

to market demand, but the

far in advance of work on

installation of a water bore

phased approach means the

all technical and financial

and storage tank at one of


the remotest villages near

sustainability practices for all

the project, it has provided

water and wastes, and are in

education bursaries and

addition to the project itself

contributed to maintenance

supporting Nigeria’s ongoing

work on a key access road

path to industrialisation by

leading to the plateau.

providing a maiden source of domestic billet steel, after

“This has been rewarding for

years of reliance on expensive

me to watch and report. The

imported scrap for steel

sooner we can raise money


to fund the feasibility study, the sooner we can plough

As the country’s first domestic

more into our community

steel producer, Kogi is also

development commitments.

working closely with the

I’m an explorer, I drive from

government to formulate an

the bottom up and unless I

appropriate policy framework,

have that community support,

thus opening the door for

it is not worthwhile.”

others to follow in Kogi’s

““We’ve received positive feedback and progressed relationships with the UK ECA and with other banks on the debt side of project financing. It relates to the unique advantages of the Agbaja steel project and the quality of the investment opportunity destined in the bankable feasibility study”

footsteps. When the fully integrated

“Nigeria has a lot of the

Agbaja project is operational,

Clearly, Nigeria has a lot to

ingredients that can make

Kogi expects to directly

gain from Kogi’s pioneer

this thing work – the iron ore

employ over 2,000 people and

project, but Turvey is keen

resource, potential low-cost

substantially more indirectly

to stress the mutually

gas and power supply, British

in related local businesses,

advantageous nature of the

law, improved sovereign risk

and the creation of a modern

relationship. “Now is the right

- and that is what attracted

mining and steel-making

time in a macro sense, because

me.” Now it is full steam

hub will bring innumerable

Nigeria is a big economy

ahead towards the trailblazer

benefits to the local

in Africa and it has highly

company’s six-month and two-


intelligent, highly skilled

year timelines to bankable

people with a drive to succeed.

feasibility and beyond.

These local ‘spin-off’ businesses will be based on

1 35






Building Canada’s next mid-tier gold

KIRKLAN LAKE GOLD Meet the best performing mining stock on the TSX in 2020

1 36




d producer





1 38

On September 15, 2020, Kirkland Lake Gold was deemed the best performing mining stock on the Toronto Stock Exchange (TSX) with incredible share price growth of 363% over the last three years. Kirkland Lake Gold’s President and CEO Tony Makuch tells RGN that the company’s inclusion on the TMX Group’s annual TSX30 ranking of the best performing stocks across all sectors on Canada’s main market primarily comes down to rapid growth in profitable, cash-flow generating production over the three-year timeframe. In 2017, the company produced 0.5 million ounces (Moz) of gold. This year, it is targeting over 1.35 Moz, thanks to a sustained period of growth via timely acquisitions and investments in exploration at its three gold mines; in Ontario, Canada (Macassa, Detour Lake) and in Victoria, Australia (Fosterville).

Kirkland Lake Gold entered

unwelcome emergence of the

2020 by completing the

COVID-19 pandemic this year.

transformational acquisition

The company acted quickly

of Detour Gold for $3.7 billion

to protect is people and

in January. The all-stock deal,

communities at all sites during

which was first announced

the height of the first wave in

in November 2019, gave the


“At the same time, we’ve been very competitive with our unit cost performance, generated industry leading financial performance and increased our balance sheet strength,” says Makuch. “Really that’s the true measure of production growth that creates value.” The sustained free cash flow generated by Kirkland Lake Gold has allowed it to return significant capital to shareholders from share buybacks and dividends. “We introduced both in 2017 and have increased the dividend over seven times since then. So far in 2020, we’ve returned over US$640 million to shareholders. There aren’t many companies that can say they return that much value.”

“Detour Lake has generated

Many new on-site protocols

over 40% of our free cash flow

revolve around a tight

in the first nine months of the

adherence to social distancing

year and we see great potential

guidelines, changing how

here to grow production, lower

employees are transported to

unit costs and unlock increased

and from the workplace and


the proximity in which they

company ownership of Detour Lake, located within the

“In Canada, a lot of our

Northernmost section of the

employees live in remote

renowned Abitibi Greenstone

regions in James Bay. We sent


people home, we gave people 14 days salary continuation

The open pit gold mine has

and reduced operations at

already made significant

Macassa and Detour. Since

contributions towards the

then, strict protocols have

operational and financial

become the new norm across

success of Kirkland Lake Gold

our sites.”

this year, according to Makuch.

COVID-19 response Kirkland Lake has also had to

can work in certain spaces, such as the cages that take workers to the underground Macassa mine.

demonstrate an unparalleled level of flexibility and

“It’s taken a bit of time to get

responsiveness following the

used to the changes, but our


1 39

people have really taken on the challenge and worked things through. Everyone has adhered to the standards put in place and come up with new ideas which we have subsequently adopted.” One by-product of the COVID-19 pandemic has been a flurry of ‘safe haven’ investment in gold throughout the year, which has boosted the price to record highs and brightened the horizons of gold mining companies around the world. Lo and behold, Kirkland Lake Gold’s net earnings were up around 41% in the first nine months of the year on an adjusted basis, and it generated close to $700 million of free cash flow, excluding non-recurring items. While Makuch acknowledges that the high gold price has certainly benefited the industry this year, he is quick to highlight the strong performance of the company’s people in extraordinarily trying circumstances.



1 41

1 42


“We have tried to focus on

three of the flagship assets,

Likewise, at the Macassa mine

keeping our costs down, which

each of which hold significant

in Kirkland Lake, Ontario, the

is a key success driver for our

upside potential in their own

company has grown reserves

business. Our operating cash


from just under 1 Moz at 20

costs so far this year are just

g/t in 2016 to 2 Moz at over 22

over $400 per ounce, with AISC

At Fosterville, in the Australian

g/t, with plenty of additional

of around $800 per ounce.

state of Victoria, Kirkland Lake

exploration opportunities

Those are very strong numbers

Gold has achieved year-on-

available, including continuing

in our industry and support

year exploration success since

to grow the high-grade South

significant earnings and cash

acquiring the underground

Mine Complex (SMC) and

flow generation at much lower

mine in 2016. In particular, the

identifying new areas of high-

gold prices than we have today.

discovery of the Swan Zone has grade mineralisation along the been a key value driver and

Amalgamated Break and the

“The price of gold has gone up

has helped boost production to

historic Main/’04 Break.

and that has been beneficial

over 600,000 ounces this year.

for the company, and we feel

Recent drilling has intersected

very confident that the gold

In addition, the company has

price is going to continue to

grown the Fosterville reserve

be strong, but we build our

from around 240,000 ounces

business around keeping

at just under 7 g/t in 2016 to

ourselves profitable and

2 Moz at over 22 g/t this year.

sustainable in a low gold price

“Ounces have gone up, grades


have gone up and the costs

Growing from the drill bit

exceptionally high grades


have gone down, which has created significant value,” Makuch explains.

The crux of Kirkland Lake


Gold’s strategy is to secure

“We think that there are


long-term growth and value

more high-grade zones at

creation through success

Fosterville and we continue to


with the drill bit, and the

drill there. We could be one

company has been doing just

drill intersection away from

that this year with exploration

a whole new level of success

campaigns taking place at all


US$12.79 billion (as of October 26, 2020)


1 43

“We incre we’ve m



introduced share buybacks and dividends in 2017 and have eased the dividend over nine times since then. So far in 2020, e returned over US$640 million to shareholders. There aren’t many companies that can say they return that much value.” – Tony Makuch, Kirkland Lake Gold president and CEO

1 45


in an area where the SMC

Break. In addition, a new

term exploration across the

approaches the Amalgamated

high-grade corridor of

vast Kirkland Lake gold camp,

“The price of gold has gone up and that has been beneficial for the company, and we feel very confident that the gold price is going to continue to be strong, but we build our business around keeping ourselves profitable and sustainable in a low gold price environment”


mineralisation has been

most of which the company

identified along the Main

now owns.

Break, near the location of a new shaft that Kirkland Lake

“It is a century-old camp, but

Gold is sinking.

there is a lot of gold left to be found and we are sinking a

The #4 Shaft, which is slated

new shaft at Macassa because

for completion in late 2022,

of the size of our current

will result in significantly

reserves and the tremendous

higher production at better

potential to add more through

unit costs, and will also

continued exploration

improve working conditions


in the mine and support long-



But Makuch is perhaps most excited by the growth potential at Detour Lake, which is already one of largest openpit gold deposits in the world with mineral reserves of 14.8 Moz at 0.97 g/t. Kirkland Lake Gold is drilling a number of inmine exploration targets after recent drilling revealed that mineralisation is open down dip of the Main Pit and in areas between the Main and West pits. “We’ve had significant exploration success in the Saddle Zone between the West Pit and the Main Pit. With that success, and the mineral inventory we have right now, we believe it is possible to double the reserves at Detour Lake. That’s a forward-looking statement, but we feel pretty confident that the opportunity is there.” And to give an idea of the broader exploration potential in the region, Kirkland Lake Gold’s land position at Detour Lake covers over 1,000 km2



along the Abitibi Greenstone

in the communities where our

Makuch points out that, at the

Belt, which is the largest

people live.

end of the day, success comes

mineral-rich belt of its kind in the world.

down to people, and Kirkland “We are focused on working

Lake Gold is blessed to have a

with the traditional

team possessing unsurpassed

landowners in our area and

knowledge of how to build and

don’t look at it from a business

grow profitable, value-creating

While the company’s

perspective, but a relationship

gold mines.

exploration prospects have

perspective. We are one big

Responsible and sustainable

certainly appealed to investors, family and we treat everyone

“We have a strong track record

Makuch also credits Kirkland

in terms of operational and

with respect.

Lake Gold’s focus on ESG in

financial performance and

the last few years for its high-

“We also treat the land with

that, more than anything else,

ranking position on the TSX30

respect and understand

speaks to the quality of our

this year.

the importance of natural

assets and the quality of our

resources like water in the

people. With the progress

However, he makes it very

regions where we operate.

we, as a team, have achieved,

clear that the company’s

If we can focus on these

we have generated industry-

emphasis on sustainable

[aforementioned] areas, then

leading earnings, cash flow

and responsible mining is

the results will speak for

and balance sheet strength

not simply to accommodate


and delivered superior returns

modern investor demands, but

for our shareholders, without

because caring for its people,

Clearly, Kirkland Lake Gold

whom we would not be in

its communities and the

views ESG, like exploration,


environment is inherently the

as a core component of its

right way to run a business.

business, and one that is critical for success. “As a gold

“The health, safety and

miner producing in two of

wellness of our people is

the world’s greatest mining

paramount. After this, we

jurisdictions, ESG is central to

try to build our supply chain

everything we do; it impacts

in the region and give back

every aspect of our business

through investments in social

and it is the key to maintaining

and recreational programmes

social licence.”

1 49







Building Canada’s next mid-tier gold




d producer




Wesdome Gold Mines is an established player in the worldleading Canadian mining sector with over 30 years of continuous gold production in the country. The next big target for the TSX-listed company is to break into the mid-tier rank of producers in Canada with a total annual output figure exceeding 200,000 ounces of gold. Wesdome’s current portfolio is arguably located in the most fertile geological region in the world and contains three assets along a 1,000 km stretch between Thunder Bay in Northwestern Ontario and Val d’Or in Northwestern Québec. The company’s president and CEO Duncan Middlemiss reveals to RGN that Wesdome was constrained to only minimal growth in the last downturn of the mining cycle, but since 2015 it has been able to optimise the performance of its Eagle River mine in Wawa, Ontario while investing heavily in exploration across the portfolio. The crowning glory of Wesdome’s resurgence was achieved last year when it was included in the inaugural TSX30 list of top performing stocks across the entire exchange. Wesdome was even able to retain its place on this year’s TSX30 ranking after averaging share price growth of 285% over the last three years. “[Our success is down to] everybody coming together to understand the geological potential of the properties we have. To define that potential, you have to invest in exploration and our recent efforts have gone very well at Eagle River in Ontario and Kiena in Québec.”

Wesdome’s current incarnation is a product of three decades of evolution from its early days under the name Western Québec Mines, when it owned several properties that were eventually amalgamated into the current Kiena Complex.

A storied history In 1994, Western Québec acquired a property in Ontario and spun out the assets – including Wesdome’s current Eagle River and Moss Lake assets – to a company called River Gold Mines, and in 1999 Wesdome Gold Mines was created in order to develop a portfolio of properties in Val d’Or. “Wesdome bought the Kiena mine from the Québec government in 2005 and it was probably the deal of the century,” Middlemiss claims. “It cost only $5 million and now we are looking at the very positive future Kiena has with us.” By 2007, River Gold and Wesdome completed a merger

15 2



and this is the point in the

thought when it first started

highs of 2011-12) and a lack of

company’s history that you


subsequent drilling to sustain

see the current assets come together under one portfolio

Meanwhile, the Kiena mine


was in production under

However, a bull run has been

Wesdome from 2006 to 2013,

gathering pace in the gold

“Eagle River has been in

but has been in care and

market since around 2016,

commercial production since

maintenance ever since,

and the price reached new

1996, so it’s been operating

with Middlemiss citing

highs earlier this year in

now for 25 years and has had

a suppressed gold price

response to the major financial

a great mine life compared to

environment (following the

uncertainty triggered by the

what people may have initially

1 54

activity at the property.


COVID-19 pandemic. This

Complex, despite the troubling

in camp to allow for social

brighter environment for gold

emergence of COVID-19 and

distancing. Unfortunately, we

miners over the last four years

the wide-ranging impact of the

had to suspend all diamond

has allowed Wesdome to re-

virus on mining operations

drilling, which is something

instigate drilling programmes

and the wider mineral

we definitely didn’t want to do

at Kiena, with encouraging

resources supply chain.

because we were quite excited

results thus far.

about that programme.” “Eagle River in Wawa,

Meanwhile, the company

Ontario is a camp situation,”

Other large-scale projects

expects to produce between

Middlemiss explains. “So what

were also deferred to the

90-100,000 ounces of gold

we had to do back in March

latter stages of the year in the

this year at the Eagle River

was reduce the numbers

aftermath of the deadly first


“Wesdome bought the Kiena mine from the Québec government in 2005 and it was probably the deal of the century. It cost only $5 million and now we are looking at the very positive future Kiena has with us” Duncan Middlemiss, Wesdome Gold Mines president and CEO

1 56

wave from around March to

Wesdome has since managed

June. Projects completed in

to bring back online four

Q3 included upgrades to the

drills (three underground, one

hoist and ventilation systems

near-surface) with a focus on

and work to increase tailings

follow-up delineation of the

capacity. These projects are

Falcon Zone – a new section to

expected to bring underground the West of the mine. production to 600 tonnes per day in 2021.

Return of the drill rigs

“This is something we discovered from our surface drilling programme of 2019. It’s a very high grade shoot that

There had been up to seven

links with the mineralisation

exploration drills turning at

at the 7 Zone within the

Eagle River pre-pandemic, but

existing mine. We are now in


RGN editor Jacob Ambrose Willson interviews interviews Wesdome Gold Mines CEO and president Duncan Middlemiss, October 22, 2020

a process of exploring from

exploration work can add

“In terms of our drilling, we

appropriate underground

further years to the life of the

didn’t catch stride again until


mine, which is already into its

around June or July. But we

26th year of production.

now have seven drills turning

“We’re also doing surface exploration, which involves a

underground and one onOver in Val d’Or, Wesdome

surface at the Kiena property.

lot of delineation of the various had to comply with a Québec

The goal for us this year is to

shoots we have. Essentially,

government mandate to close

convert a lot of our inferred

we would like to continue the

all mining operations at the

resources into indicated so we

growth of our resource there.”

peak of the pandemic, which

can then do a pre-feasibility

contributed to around eight

study in support of a restart

Last year, Wesdome grew the

weeks of lost work that it

decision for the Kiena mine.”

total reserve at Eagle River

had dedicated to exploration

from 400,000 ounces to 550,000

drilling at the Kiena mine.

A preliminary economic

ounces and the company is

assessment (PEA) of the

confident that its current

project was completed in


May and provides strong supporting evidence towards a restart, which will be considered by the board during the first half of 2021. The PEA indicated just US$35 million will be required in pre-production capital expenditure, a figure that Middlemiss ensures will be fully funded by the company. The study also estimated that Kiena will provide an after-tax IRR of 102% and will generate gross revenue of $1.4 billion, alongside other attractive economic metrics.





US$1.4 billion (as of October 28, 2020)


1 58



within the company that the

The rise of ESG investing

time is fast approaching to

Away from the exploration

– in August. Miller will help

ramp up mineral development

side of the business, Wesdome

lead community engagement

at the Moss Lake property

– like a multitude of resources

programmes at Eagle River

near the city of Thunder Bay in

firms in recent years – has

and Kiena while managing


heightened the spotlight on

the firm’s environmental and

its commitment to sustainable

social pledges.

There is also a mounting belief

for sustainability and environment - Joanna Miller

Moss Lake is in fact Wesdome’s

and responsible mining, in

largest mineral resource

response to a new wave of

One could deduce that

with indicated resources of

ESG-driven investors.

Wesdome’s focus on ESG

40 million tonnes at 1.1 g/t

programmes over the last

of gold, totalling 1.4 million

“ESG has really come to the

few years has been suitably

ounces. Previous drilling in

forefront and is something I

recognised by the investment

2017 extended the strike length

think we did in the past, but

community, especially

mineralisation from 2.5 km

perhaps didn’t talk about when

considering the company’s

to 8 km and the geophysical

we were a junior company.

inclusion on the TSX30 for the

expression (IP) extends over

We were a small group and

second consecutive year.

the entire strike length, with

didn’t have the capacity to do

potential to significantly add to

comprehensive reporting. But

Middlemiss believes that the

existing resources.

now you see the investment

expansion of Wesdome’s ESG

community is very focused on

focus has occurred in tandem

“Moss Lake is envisioned to

ESG and we are definitely here

with the overall growth of

be a large resource, low grade

to do the right thing across all

the company, which goes

operation. In order to develop

facets of our operations and

to show just how entwined

this mine, we have to get the

the reporting of our progress

sustainability is with success

drills back there and do a

on these fronts.”

for the modern-day mining

substantial programme in


order to further upgrade the

The company has begun to


‘staff-up’ to better manage

“I would say that we are on

the growing expectations of

the right track, people are

the investment community,

recognising that we are trying

hiring a new director

to do the right thing and we have received credit for it.”

1 60


1 61

16 2


Pushing for mid-tier status Wesdome’s primary aim over the next few years is to become a mid-tier gold producer. Reaching this level would see it churning out at least 200,000 ounces per annum, Middlemiss is confident that this goal is within reach given the company’s recent success

“Eagle River has been in commercial production since 1996, so it’s been operating now for 25 years and has had a great mine life compared to what people may have initially thought when it first started producing”

in adding resources at Eagle River through exploration,

maintain our commitment to

which is ongoing at the


sprawling complex in Ontario. In addition to the exploration Since 2016, Wesdome

opportunities in Wawa and

has doubled annual gold

Val d’Or, Wesdome could

production to 100,000 ounces

also benefit from a bolt-on

at Eagle River and it has the

situation at the 2,000 tonnes

Kiena mine waiting in the

per day mill within the Kiena

wings, which will add another


100,000 ounces per year according to the PEA.

“Northwestern Québec is a very prospective area,

“Once we give the go ahead

particularly Val d’Or and

for the restart, it would be

Rouyn-Noranda. It’s got a great

two years until Kiena is back

history and is very active right

up and running. At that point

now in terms of exploration,

I would say we have a soft

so we’re definitely monitoring

base of 200,000 ounces, but

the situation there to see if

I would speculate that Eagle

we can augment the mill with

River and Kiena can together

additional feed.”

produce 250,000 ounces if we

1 63






s silver production in one of the oldest mining districts in the Americas

1 65

TSXV-listed IMPACT Silver is now well into its 15th year of continuous production in the Royal Mines of Zacualpan district in South-central Mexico. The region has a long and rich history of mining activity going back to the 15th century when indigenous peoples mined silver and built temples in the current location of Zacualpan town, before the Spanish conquistadors arrived and extracted gold and silver for several centuries, leaving thousands of historical mine workings. IMPACT Silver took up the mantle of silver production in 2006 and has produced over 10 million ounces (Moz) in the last decade and a half from multiple mines within its 211 km² land package encompassing two contiguous mining districts.The properties are comprised of a series of epithermal veins which range from very high-grade sections to lower grade, intermediate mineralisation. In recent years, the firm happened to be working on lower grade sections which – along with depressed silver prices – contributed to a marginally profitable operation. However, a new production strategy for the district and positive developments in the silver price this year are set to add new shine to IMPACT’s horizons. “First of all, we’ve had some discoveries that suggest there’s a lot more happening in this district than previously we could say,” president and CEO Fred Davidson tells RGN. “Secondly, our leverage to the silver price is dramatic. When silver goes from $13-14 [per ounce] to $26-27, that virtually goes straight to the bottom line.


“What makes us somewhat

at C$0.95 per unit. Each unit

unique is that we are a

is comprised of one common

dedicated primary silver

share and one-half warrant.

producer, over 90% of

One warrant is exercisable to

our revenue is from silver

acquire one share at $1.30 for a

production,” Davidson

24-month period. We intend to

continues. “Recently we have

use a significant portion of the

been marginal in terms of

proceeds to accelerate current

profitability, but we’ve got a

exploration and development of

district-wide programme that’s

numerous targets.

going forward after a recent financing.

“That programme is going to explore not just the potential

“In August, we completed

for higher grade silver veins

a C$9.5 million financing

themselves, but an underlying

from the issuance of about 10

gold-copper district that hasn’t

million units of the company

been seriously exploited in the past 500 years.”


Coping with COVID-19

up and running again by

we were cash positive for the

June, however the shutdown


While major global economic

period knocked the company’s

uncertainty stemming from

quarterly and annual

As regional, national and

the COVID-19 pandemic has

production targets back, along

international authorities

significantly boosted precious

with revenues.

continue to battle the ongoing

metals prices this year, the

threat of COVID-19, IMPACT’s

worldwide health emergency

“We lost probably 25-30% for

boss is relieved that Mexico

precipitated the closure of all

the quarter in terms of total

moved to reclassify mining

mines in Mexico back in April,

sales,” Davidson concedes.

and points to the country’s

as the Latin American nation

“In retrospect, I think our

long-lasting appreciation of

emerged as one of the worst

loss for the quarter was about

the sector.

affected by the pandemic.

$200,000, but our EBITDA was extremely positive. That

“Every Mexican is convinced

The Mexican government

$200,000 encompassed things

he is a miner, so there is a

soon reclassified mining

like deferred income taxes,

real sympathy for mining in

as an essential business,

amortisation and depreciation,

Mexico. They understand

allowing IMPACT to get back

so on a cash generating basis

it. To give an example, the

1 67

1 68


church in the local town has a

the district and closed down

which has been on care and

statue of a miner out in front,

a handful of underground

maintenance since 2014, when

so mining is part of the culture

mines with low margins. This

margins slipped below the


resulted in declining operating

profitability line.

costs and improving average “They are one of the countries

grades across the board.

that has been hit badly and

The facility is comprised of a 4.5 Moz open pit silver mine

therefore they need revenue

“Our emphasis during the

(with lead and zinc by-credits)

and employment. We can

last couple years has been on

and a 200 tonnes per day (tpd)

offer both while the district

positive cash flow. It may not

pilot plant. Restarting Capire

continues to have a very low

be as pretty, or have the same

could add 150,000-250,000

incidence of COVID-19. We

total of ounces coming out,

ounces of silver to IMPACT’s

shut down the district for

but the bottom line is better

annual output, according to

outsiders and it was only until

and people tend to forget that


about a month ago that we

mining is more than counting

had our first case in the whole

ounces,” Davidson stresses.


Furthermore, IMPACT is evaluating the possibility

“Now that silver prices have

of lowering costs at Capire

improved, we will look to

through the incorporation of

reopen these marginal mines

DMS technology. A 2019 study

After silver production

which have become profitable

on a low-grade sample found

peaked across the Zacualpan

again. It will take time to go

that in a DMS set-up, over 42%

operations in 2015-17, IMPACT

back and open up an area, but

of the sample mass could be

decided to shift its strategy

we are planning to increase

rejected while retaining 93% of

towards lower cost, higher

overall production by early

silver and lead and 79-92% of

grade production in late 2018

spring next year.”

copper, gold and zinc.

prices would not recover, in

In addition, the company is

“Using DMS we can probably

the near term at least.

assessing the possibility of

run about 400-450 tpd and get

re-starting another operation

it down to 200 tpd through the

Under the new approach,

in the region. The Capire

mill. This equates to higher

IMPACT undertook a strategic

project is a VMS mine located

productivity and dramatically

review of its properties in

Southwest of Zacualpan

Boosting the bottom line

on the assumption that silver

1 69

through the lab with bench

Significant exploration upside

scale testing and it works

The Royal Mines of Zacualpan

exceptionally well.

silver district is one of the

lower mining costs. We’ve



run some heavy samples

oldest mined areas in the



US$89.47 million (as of October 07, 2020)


“Now we are working on

Americas, and over the last

scaling up. Even at the current

two decades IMPACT has

price of silver we can just

identified well over 5,000

mine Capire as it is. We are

historic mine workings which

confident that silver over the

provide ample avenues for

next year is going to remain

near-mine and district-scale

in the $25-30 range,” predicts


IMPACT’s boss. “When we first entered the district, we started a deep

17 0


“Our emphasis during the last couple years has been on positive cash flow. It may not be as pretty, or have the same total of ounces coming out, but the bottom line is better and people tend to forget that mining is more than counting ounces” – Fred Davidson, IMPACT Silver president and CEO


RGN editor Jacob Ambrose Willson interviews IMPACT Silver Corp CEO and president Fred Davidson, September 22, 2020

study on the potential of

four key areas, including a

be several gold-copper veins.

the property. That meant

prospective district-scale gold-

We are just starting to explore

going back into some of

copper zone in the centre of


the historical records some

the Zacualpan property.

200, 300, 400 years. We’ve


When asked if IMPACT would

accumulated that data now,

“In the last few years, we’ve

prefer to remain more of a

along with our predecessor’s

had sniffs of this underlying

pure-play silver producer,

drilling work, and it’s given us

gold-copper district and

Davidson quips that he’ll never

a good idea of the structures

have proven it exists. The

complain if he’s got too much

involved. It’s a massive area.”

Northern Mill is located on a

gold, particularly considering

steep canyon with about 2,000

the positive movement in the

Armed with this new

metres elevation. 500 metres

gold price this year.

geological understanding,

below that we’ve found a very

IMPACT has identified several

large high mag anomaly and

“We’re doing soils, rock chip

exploration targets across

radiating out of that appears to

sampling, sediments and one


of the outcrops we sampled

historic workings across the

“What we are really looking

ran 76 g/t gold and 76 g/t silver,


for is elephants,” Davidson

so we know it’s there, It’s just

concludes. “As we learn

about putting it all together in

Lots of life left

economic terms.”

Although the Royal Mines

district, including things like

of Zacualpan district has

the high mag in the bottom

IMPACT’s exploration team

witnessed over five centuries

of the valley, it allows us to

is also targeting brownfields

of silver production,

have a better grasp of what’s

exploration for silver veins

IMPACT’s near and long-term

occurring. After 500 years

within trucking distance

exploration programmes will

of mining in the district I’m

to its Guadalupe plant and

ensure that millions more

confident somebody will

early stage exploration for

ounces of silver will flow

be mining here for at least

Zacualpan Southeast extension

out of the region, along with

another 100-200 years.”

silver veins, while continuing

significant quantities of copper

to evaluate the thousands of

and gold.

the structure of the whole


EVENTS Mines and Money Online Connect - Precious Metals Mines and Money’s first commodity-specialised digital event January 27-29, 2021 After successfully delivering a series of online shows in 2020, Mines and Money will host its first ever commodityspecialised event in January. The precious metals Online Connect will link institutional investors with senior management from gold, silver, platinum and palladium mining companies, including the likes of Ausgold,

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Investing in African Mining Indaba Virtual The 27th Mining Indaba moves to 2022 February 02-03, 2021  After much deliberation and consultation with health officials and stakeholders in South Africa, the organisers of the Investing in African Mining Indaba have cancelled the 2021 event and announced new dates for the 2022 Indaba. However, Hyve Group also announced it will be taking

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Mining, oil & gas and renewable energy events from around the world Future of Mining Australia 2021 Australia’s mining sector to reconvene February 02-03, 2020, Sydney, Australia While the COVID-19 situation is being continually monitored by authorities in Australia, the Future of Mining Australia conference is currently scheduled to take place in Sydney in February. The conference brings together over 400 senior mining industry executives and attendees can expect over 80 speakers representing mining companies, mining, equip-

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PDAC Virtual Convention PDAC 2021 goes virtual March 07-10, 2021 Another victim of COVID-19 from the events industry is the annual Prospectors & Developers Association of Canada (PDAC) Convention, which has been cancelled due to health and safety concerns associated with the pandemic. But, the 2021 convention will still take place from an entirely virtual platform for the first time

in its 89-year history. “The decision to move forward with a virtual event offers a safe and innovative solution for the industry to access our outstanding programming, investment and networking opportunities,” said PDAC in a statement. The event’s organisers will share further updates as soon they become available.

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Gold royalty and streaming companies focus

PLUS: Middle Eastern Mining and lithium spotlights And coverage of: • Mines and Money Online Connect Precious Metals • Mining Indaba Virtual • PDAC Virtual Convention

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