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mines & money london 2013
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HERE’S WHY ONTARIO, CANADA
IS YOUR NEXT
BIG IDEA Opportunities for mineral exploration in Ontario abound. Powered by global leaders in innovation and safety standards, our mining practices are among the safest and most sustainable in the world. With business costs lower here than in most G7 countries, Ontario suppliers are more competitive – so you can depend on quality goods and services, delivered on time, on spec and on budget. Innovation is at our core. Make Ontario your next big idea.
YourNextBigIdea.ca/Mining
$2.9B
in non-metallic minerals, including diamonds, was produced in Ontario in 2012
$2.6B in gold
$1.5B in copper
$1.4B in nickel
$787M
in other metals such as platinum and silver
Paid for by the Government of Ontario.
business excellence
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event showcase: mines & Money london 2013 6 investment
Opportunities on the horizon With 2013 fraught with uncertainty, several recent developments provide cause for optimism about what 2014 may bring.
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10 event preview
mines & money london 2013 Join over 3,000 investors, financiers, brokers and mining developers.
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14 Potash Ridge Growing green
Potash Ridge’s Blawn Mountain deposit is being pushed forward by the market and an enthusiastic team in a supportive jurisdiction.
24 Coastal Gold Grade is king
Coastal Gold’s Hope Brook property located in Newfoundland is rapidly developing towards becoming a very significant producer.
34 Mariana Resources
Leading South American exploration
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The work of Mariana Resources’ highly experienced team is allowing it to transform its developing discoveries into robust projects.
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36 21st North
The prospect of partnership Greenland is a territory long on interest but short on experience – experience is exactly what this company brings to the party.
46 standard bank
setting the standard How Standard Bank plays a key role within Africa’s emerging markets and its ongoing commitment to the continent.
56 Base Resources
The path to production
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Base Resources’ Kwale mineral sands operation is a game changer for both the company and the Republic of Kenya.
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Opportunities
Over the last twelve months the min turbulence and uncertainty. However, cause for optimism abou Words by
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Wil
Investment
s on the horizon
ning industry has been fraught with r, several recent developments provide ut what 2014 may bring
ll Daynes
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ith more than 3,000 investors, financiers, brokers and developers set to gather at London’s Business Design Centre for Mines and Money London 2013, Europe’s leading mining investment and capital raising conference and exhibition, never will there be a better time to reflect on the state of the industry at present. More importantly how is the state of mining influencing investment in one of the world’s biggest and most economically influential sectors? Few would argue against the view that the global mining industry has softened in recent times, an even perhaps best evidenced by Caterpillar’s recent announcement of redundancies at its Wisconsin based mining equipment factories. The truth is of course that it is just one of a number of mining companies to announce job losses in recent months. To many, what we are witnessing are the results of the comedown from the global boom in metals and energy prices driven by the growth of emerging markets such as China. With high prices comes investment and sure enough the commodities boom brought with it the trend for companies to spend millions of dollars on opening new mines, expand old assets and upgrade equipment in
order to increase production. With such a whirlwind of activity occurring in a relatively short space of time it was inevitable that production would overshoot demand before long, the effects of which are now evident in the price of metals. On the face of things there appears to be little to relish when it comes to the immediate future of the mining sector. Indeed, for some the outlook for the mining industry in 2014 is one of limited activity. Nevertheless, there is evidence emerging that gives cause for optimism. Effective cost-cutting policies being implemented by large multinationals across their project portfolios are starting to bear fruit by producing stronger balance sheets. Perhaps most significant was the recent announcement by Anglo-Australian mining giant BHP Billiton that it had raised its iron ore production forecast in the wake of achieving record output in Western Australia between July and September of this year. BHP’s statement came after that of its rival Rio Tinto, which posted better than expected third-quarter production across its commodities, with strong growth in energy coal and copper and record output at its flagship Australian iron ore operations.
“With such a whirlwind of activity occurring in a relatively short space of time it was inevitable that production would overshoot demand before long, the effects of which are now evident in the price of metals” 8 |
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African Barrick Gold’s Bulyanhulu mine
“Most significant was the recent announcement by Anglo-Australian mining giant BHP Billiton that it had raised its iron ore production forecast in the wake of achieving record output in Western Australia between July and September” Similar good news in the last month has come from African Barrick Gold, whose shares surged by more than ten percent after the company announced that gold output rose eleven percent year on year to 164,719 ounces in the September quarter. The company’s chief executive, Brad Gordon, added to the positivity by proclaiming that it now expects to exceed the upper end of a production guidance
range of 600,000 ounces for 2013. The contrasting fortunes of Caterpillar and the aforementioned mining giants perfectly capture the state of the mining industry today. That of 2013 is one of volume and costs, but that is not to say that future investment opportunities do not exist, particularly for the right company, in the right place, at the right time and with the right business model.
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events
Mines and Mon
Join over 3,000 investors, financier Mines and Money London 2013 1-5 December 2013 Business Design Centre, London Mines and Money London is Europe’s leading mining investment and capital raising conference and exhibition, bringing together over 3,000 investors, financiers, brokers and mining developers, for up to five days of business matching, knowledge sharing and deal-making. With 260 mining companies on display, some of the world’s largest natural resources fund managers in attendance, and a
packed programme of keynotes, market analysis, company presentations, panels and workshops, Mines and Money London 2013 is designed to reinvigorate the industry, with fresh investment and capital raising ideas and opportunities. In 2013, the conference and exhibition expands to a 3-day (Mon-Wed) format, with a specialty investor day on Sunday (Canada & Australia Day) and optional workshop on Thursday (Practical strategies for cost cutting and efficiency). The newlook format provides attendees with more time to meet with industry colleagues and more chances to identify capital raising and mining investment opportunities. New for 2013 … • Exhibition extended by an extra half day to allow for additional vital networking time • Three day conference programme with a new ‘Commodities Summit’ on Monday • Enlarged exhibition with 260+ mining companies on display • Enhanced online meeting planner with a range of meeting spaces to meet your 1-on-1 meeting requirements • Structured networking with investor roundtable sessions and breakfast briefings
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ney London 2013
ers, brokers and mining developers
As always, Mines and Money London 2013 will provide: • Keynote presentations from mining’s leading investors, financiers and entrepreneurs • Dedicated investor invitation and vetting team to ensure maximum attendance from high quality mining investors • 100+ company spotlight presentations over four days
• In-depth panels and analysis sessions providing high-value market intelligence helping you find -growth opportunities in today’s volatile market • Great networking opportunities with drinks receptions hosted every night, plus the black-tie Mining Journal Outstanding Achievement Awards Dinner on 4 December 2013 Event Showcase
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events
KEYNOTE SPEAKERS James G. Rickards
Managing Director, Tangent Capital James Rickards is the author of the national bestseller, Currency Wars: The Making of the Next Global Crisis and a Partner in Tangent Capital Partners, a merchant bank based in New York. He is a counselor and investment advisor and has held senior positions at Citibank, LongTerm Capital Management and Caxton Associates. In 1998, he was the principal negotiator of the rescue of LTCM sponsored by the Federal Reserve. His clients include institutional investors and government directorates. He has been interviewed in The Wall Street Journal and has appeared on CNBC, Bloomberg, Fox, CNN, BBC and NPR and is an Op-Ed contributor to the Financial Times, New York Times and Washington Post. Mr. Rickards is a visiting lecturer at Johns Hopkins University and the School of Advanced International Studies, has delivered papers on risk at Singularity University, the Applied Physics Laboratory and the Los Alamos National Laboratory and has written numerous articles on risk management. He is an advisor on capital markets to the Director of National Intelligence and the Office of the Secretary of Defense. Mr. Rickards holds an LL.M. (Taxation) from the NYU School of Law; a J.D. from the University of Pennsylvania Law School; an M.A. in economics from SAIS and a B.A. from Johns Hopkins.
John Hathaway
Senior Managing Director, and Co-Portfolio Manager, Tocqueville Asset Management Mr. Hathaway is a co-portfolio manager of the Tocqueville Gold Fund, as well as other investment vehicles in the Gold Equity Strategy.
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Mr. Hathaway also manages separately managed accounts for individual and institutional clients. He is a member of the Investment Committee and a limited partner of Tocqueville Asset Management (www.tocqueville.com). Mr. Hathaway began his career in 1970 as an Equity Analyst with Spencer Trask & Co. In 1976, he joined investment advisory firm David J. Greene & Co., where he became a partner. In 1986, he founded Hudson Capital Advisors and in 1988 became Chief Investment Officer of Oak Hall Advisors. He joined Tocqueville as a Senior Partner in 1998. Mr. Hathaway has a BA degree from Harvard College and an MBA from the University of Virginia.
Michael Belkin Author, The Belkin Report Michael Belkin is President of Belkin Limited, a financial and economic forecasting firm, which counsels prominent hedge funds, pension funds, investment banks, mutual funds, institutional money managers and highnet-worth investors throughout North America, Europe and Asia. Mr. Belkin’s institutional advisory services are furnished via the weekly Belkin Report, which provides strategic forecasts for international stock indexes, industry groups, interest rates, currencies, commodities, emerging markets and economic indicators. Mr. Belkin was a Vice President in the equity department of Salomon Brothers until 1992. His role was strategist in global macro proprietary trading, developing and applying innovative statistical forecasting models in a four man unit that managed the firm’s global proprietary trading equity book. Mr. Belkin studied finance and statistics at the University of California at Berkeley.
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Randy Smallwood
President and CEO, Silver Wheaton Randy Smallwood holds a geological engineering degree from the University of British Columbia, and is one of the founding members of Silver Wheaton. In 2007, he joined Silver Wheaton full time as EVP of Corporate Development, primarily focusing on growing the company through the evaluation and acquisition of silver stream opportunities. In January 2010 he was appointed President, and in April 2011 he was appointed Silver Wheaton’s CEO. Randy originally started as an exploration geologist with Wheaton River Minerals Ltd., and in 2001 was promoted to Director of Project Development, his role through its 2005 merger with Goldcorp. Randy was an instrumental part of the team that built Wheaton River/Goldcorp into one of the largest and, more importantly, most profitable gold companies in the world, and he is now focused on continuing to add to the impressive growth profile of Silver Wheaton.
Rick Rule, Chairman
Sprott US Holdings Rick Rule has been active in natural resource investing for thirty-five years. He is well recognized for his knowledge of the mining, energy, water, forest products, infrastructure, and agriculture sectors. A popular public speaker, Mr. Rule is a featured presenter at investment and industry forums and conferences around the world. Mr. Rule is particularly active in private placement markets, having originated and participated in hundreds of debt and equity transactions with private, pre-public and public companies. Mr. Rule founded Global Resource Investments in 1994. Global provides brokerage and
investment banking services to high net worth individuals, institutional investors and corporate entities worldwide. In 2011, Global was acquired by Sprott, Inc., a public company based in Toronto, Canada that has in excess of $10 billion in assets under administration in the resource and commodity sectors. Sprott, Inc. is a leading independent asset manager dedicated to achieving superior returns for its clients over the long term. The company currently operates through four business units: Sprott Asset Management L.P, Sprott Private Wealth L.P., and Sprott Consulting L.P. and Sprott US Holdings Inc.
Robert Friedland
Executive Chairman, Ivanhoe Mines For more than 20 years, international financier Robert Friedland has been a recognized figure among the leaders of the global financial sector and mineral resource industries who have influenced investment decisions and contributed to economic growth in established and emerging markets in Asia, the Asia Pacific Region, Sub-Saharan Africa and the Americas. Mr. Friedland is Executive Chairman of Ivanhoe Mines, focusing on advancing and developing three major mining projects in SubSaharan Africa. He led its successful initial public offering in October 2012 that raised CDN$306 million (US$308 million) from international investors in what was the largest Canadian IPO since 2010.
For more information about Mines and Money London 2013 visit: www.minesandmoney.com/london
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potash ridge
Growing green
Potash Ridge’s Blawn Mountain deposit in Utah has got everything going for it, pulled forward by the market and pushed forward by an enthusiastic team in a supportive jurisdiction
written by: John O’Hanlon research by: Richard Halfhide
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potash ridge Ross Phillips, COO and Jeff Hillis, CFO at the Blawn Mountain Project
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here’s a sense of purpose at Canadian junior Potash Ridge – and the tone is set by its President and CEO Guy Bentinck a Chartered Accountant who has devoted the 20 years he has spent in the mining sector to finding smart ways of securing finance. He is not a man whose head can be turned by specious arguments: every step in the development of a project has to be considered, and realistic contingency planning built in. Still, it’s impossible to miss the excitement and real passion behind his proposals for the company’s Blawn Mountain potash deposit. At first glance the pace seems to have been a breakneck one since he joined the company two years ago, at a point where Potash Ridge had done no more than acquire the rights to the property, in which it has a 100 percent interest. There’s a good explanation for this fast track development. In two years the project has come from virtually nothing to being a project with 40 years’ worth of reserves and a pre-feasibility study (PFS), completed November 7, that demonstrates its technical and economic viability. It has a lot to do with the fact that this is a well-understood resource, explains Bentinck: “This deposit was extensively evaluated in the 1970s, not for the potash but for alumina.” At the time, potash was of little interest compared to the alumina that the alunite ore also contains. The equivalent of $100 million at today’s values was spent in proving the resource and getting it ‘shovel ready’, and a pilot plant based on well understood technology
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Potash Ridge has offices in Milford and Salt Lake City, UT and in Toronto, Ontario
ran satisfactorily for three years before the market for alumina collapsed, and with it the prospects for financing Blawn Mountain. In April 2011, Potash Ridge gained ownership of all the historical data that had been amassed: “Boxes and boxes of drilling results, engineering reports, test work, permitting applications and the like fell into our lap and allowed us to develop the project very quickly,” he says. “And we expect to be able to continue to use the historical data from the remaining part of the resource,
which does not, however, form part of the basis for the PFS.” Development has been helped by other factors too. For one thing, all of the property is on land owned by the State of Utah. It is a lot harder to get a project permitted if it is on federal land and has to go through agencies like the Bureau of Land Management, the Corps of Engineers or the EPA, which are notoriously restrained where resource developments are concerned and very slow to take decisions. Utah, whose resources
“Drilling results, engineering reports, test work, permitting applications and the like fell into our lap and allowed us to develop the project very quickly” 18 | Event Showcase
potash ridge
645,000 tons
Annual SOP production play a major part in the State economy, on the other hand takes a very ‘can do’ approach to mining. It is not hard to see why the state would want to support Potash Ridge. The land that hosts the deposit is owned by the School and Institutional Trust Lands Administration (SITLA), whose land holdings are all designated for development in one form or another. “The basic business proposition is that the revenue derived is earmarked for education in Utah. We are going to be paying the School Fund around $30 million a year in royalties when we are up and running,” says Bentinck. Add to that more than a billion of capital investment in this remote part of the state, and the creation of around 500 full time jobs and the case for development is unassailable. As long as it does not go the same way it went in 1980, that is. Well that is where Guy Bentinck shows his crusading side. He is looking for every opportunity to make understood the distinction between MOP and SOP. Let us get it straight from the start: Potash Ridge is focused on sulphate of potash (SOP), a premium potassium source that is used in crops that are sensitive to chloride
Guy Bentinck, CEO of Potash Ridge
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or fertiliser burn. Tobacco, pineapple, soft chloride in many cases will reduce yields. fruits, salad crops, apples oranges and If the chloride content isn’t managed, it can avocado are all examples and there are lead to low quality crops and inhibit plant plenty more. Growers of these crops have growth in dry soils and saline areas. two choices – SOP or nothing. That SOP is a separate product, not a niche Muriate of potash (MOP) is the most subset of regular potash has been graphically common potassium source used in demonstrated over the course of 2013. MOP prices slumped from over agriculture, accounting $400 a tonne to close to $300 for about 90 percent of following the collapse of a all potash fertilisers used Russia/Belarus cartel, but worldwide. A few plants like sugar beet actually like over the same period SOP chloride; many tolerate it prices in North America rose. “The tenuous link between including leaf crops and Full time jobs created MOP and SOP in people’s soya, but the presence of
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Drilling was completed in 2013 in support of Potash Ridge’s Prefeasibility Study, which was released in November
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potash ridge
“We are going to be paying the School Fund around $30 million a year in royalties when we are up and running” minds really does not seem to be there any more. The supply dynamics of regular potash don’t exist with SOP and the market impact on regular potash has not affected SOP one iota: that is the competitive advantage of our project as against many other regular potash development companies.”
2013
The PFS that is currently giving Potash Ridge a warm glow is in fact a very conservative document. It does not take into account any potential alumina by product credits, and the closer one looks at it the lower the risk appears. Contingency elements of around 15 percent have been built into capex and opex estimates; the jurisdiction is friendly, the infrastructure available and the deposit is a surface one, unlike so many potash resources. The fundamentals of potash are sound, as the world strains to get more productivity from less agricultural land, and the product gets an additional fair wind from the growing recognition of sulphur as a plant nutrient. “When legislation was enacted to require scrubbers to remove SO2 emissions, crop yields started declining!” When the alunite ore is roasted as part of the SOP process, SO2 is driven off, captured, and converted into sulphuric acid. That will provide an additional revenue stream, as will the alumina, which was after all what the deposit set out to produce 40 years ago, so there’s quite a bit of it. The residue from the leaching process is alumina rich, and though it does not form part of the current business case for the mine this could yield significant tonnage of material suitable for sale as a substitute for bauxite in smelting
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“Too many projects today get stalled because management did not think through the financing arrangements early enough�
Areas 3 & 4 seen in the distance have had little exploration work to date
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potash ridge plants – there is a strong demand for this material, he says, especially from China. Another potential market is to sell the material as an ingredient in manufacturing ceramic proppants used to keep hydraulic fractures open. With shale gas deposits taking a front seat in global energy markets, this is a growing procedure, and these proppants are an essential part of it because they perform much better than sand. Potash Ridge is expecting to produce 645,000 tons of SOP each year, and 1.4 million tons of concentrated sulphuric acid. The company now plans to embark on a full feasibility study (FFS) early in 2014, permitting activities are already underway and offtake arrangements for sulphuric acid production are going well, with an agreement already signed with a purchaser to take 20 percent of acid production. “We are currently negotiating with third parties on build, own and operate contracts to provide gas, power and water assets at the site.” He is confident he will be able to start construction in 2015, to start commissioning the process plant in 2017 and reach full production in 2019. “My primary focus here is on expediting the project. Too many projects today get stalled because management did not think through the
Core sample
financing arrangements early enough.” This is not a trap that Guy Bentinck will allow Potash Ridge to fall into: however he does have one big remaining challenge, and that is to bring on board a joint venture partner to take a good proportion of SOP production, to share the capital cost of development and maybe also smooth the way to borrowing such sums as may be required along the road to sustainability and profitability in the future. Discussions are already under way, and with the PFS out of the way, these will gain momentum in the new year. For more information about Potash Ridge visit: www.potashridge.com
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Coastal Gold
Grade is king Coastal Gold’s Hope Brook property located in Newfoundland is rapidly developing towards becoming a very significant producer
written by: John O’Hanlon research by: Marcus Lewis
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Mine site looking north
coastal gold
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he market has a lot to answer for, and so do investors in search of a quick buck. Where gold mining is concerned, it is a wellknown fact that as the price on the international metal exchanges fluctuates the viability of higher cost mines comes into question. There are properties all over the world that have been put into mothballs either because all the high grade material has been taken or because they can’t any longer sustain a decent margin. In many cases this is not the whole story, however. The President and CEO of Coastal Gold Dr Bill Pearson is a geologist with a stellar track record in exploration, specialising in resurrecting mines that had been thought expired. He explains his apparent instinct for divination as merely a result of 40 years of learning and applying geological principles but what is not in question is that he has done it before. “Over the years I have developed a speciality in taking old and unloved mines and reassessing them giving them a new look and getting them back into production.� As VP for Exploration at Desert Sun Pearson directed exploration programs that increased the overall resource base at the Jacobina mine in Brazil by 1.4 million ounces of gold and discovered a major new extension to the Canavieras deposit that is now being developed by Yamana - with a projected mine life of 30 years. And for Central Sun he and Peter Tagliamonte discovered new zones at the Santa Pancha mine and at Orosi (now Libertad) in Nicaragua as well as significantly expanding mineral resources in the region of Limon and laying the foundations of what is
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now a $1.6 billion company. Team building from top to bottom is one of Bill Pearson’s strong points. This summer he welcomed a new chairman to the board of Coastal Gold – Justin Reed is that rare animal, a banker trained as a geologist. When his company Castillian Resources first looked at the Hope Brook deposit, discovered in 1983 by BP-Selco, and mined from 1987 to 1997 with total production reported to be 752,153 ounces of gold plus a copper
concentrate, he felt immediate recognition. Others thought the prospects were too low grade and had no potential because everything significant had been found, but they were wrong. It was a familiar picture, he explains: “It was the technical work that was lacking. It needed proper geological work and engineering work. Once it got into production the geological work took a back seat, and of course this deposit was producing during a very low gold price era.” Any exploration was
“The people here are a pleasure to work with: they love working on ‘The Rock’”
New camp infrastructure
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coastal gold
Mine site looking south
limited to the immediate area economic assessment (PEA) round the mine, but Pearson on Hope Brook. The work is has since shown that it is now progressing well with remarkably wide open. Newfoundland contractor Castillian changed its New Valley Drilling, and the support of local communities name to Coastal Gold in which make up the bulk of June this year following the workforce. Even Dave a merger with Ridgemont Drilling campaign under way Iron Ore and reflecting the Copeland the Chief Geologist company’s confidence that is a Newfoundlander, though with global experience. it can now focus all the energies of its experienced team on Hope Work is progressing well on all fronts. As Brook, properties outside of Canada have well as drilling, further attention is being paid been disposed of. The merger and the $2.7 to the old tailings. Preliminary work carried million funding it released, paved the way to out last year showed recoverable gold at about achieving its immediate milestones, a 4,250 one gram per tonne – in tailings produced metre resource definition diamond drilling when the old plant was running at maximum programme and competing a preliminary efficiency. Metallurgical, geotechnical,
4,250 metres
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“We have weathered the storm over the last 18 months and are ready to take Hope Brook forward” environmental and engineering work under technical manager Allan Polk is progressing apace and the results of this work will form a key part of the PEA. In every way, Newfoundland is a great jurisdiction to work in, and he clearly appreciates the lack of political and regulatory issues compared with many gold mining countries. Power is a case in point. Before he spent $14,000 on a line to link the camp
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with the grid he was spending $5,000 a week on diesel; now the camp, and eventually the production plant, can enjoy reliable supply for a quarter of that cost. “We have an airstrip, a wharf, existing tailing ponds, a ramp to 350 metres below surface, and we can bring all we need in by boat,” he enthuses. “Newfoundland’s main shipping port, Port aux Basques, is just a 70 kilometre sea journey to the west and the town of Burgeo is only 30
coastal gold
kilometres to the east.” However the greatest advantage Newfoundland offers is its skilled workforce. “The people here are a pleasure to work with: they love working on ‘The Rock’ having worked on forestry, fishing and mining all their lives. They fix things before they are broken!” The results of the drilling programme will be out by the end of this year and the PEA completed early in 2014. Drilling is currently taking place in two areas known as the Footwall and South West Pit Extension. Next year attention will move to the longer term potential of the property, a large area to the west of the historical mine called the 240 Connector Target. “We won’t be able to drill it in the current program but if we can establish the bridge from the South West Extension into that
target the potential expansion is tremendous.” This is more than just a gut feeling. With significant past production, he feels that there is a lot of misunderstood geology going on. “The key thing is that if you want to find a big mineral deposit you need to get into a big system and that is what I always liked about this project – it is a very big system, also very under explored.” An important discovery he has made is that some of the old drill holes on which people were assessing the area were simply in the wrong place, or had failed to go deep enough. Drilling and geophysics have identified a major fold structure that closes below surface in the Connector Zone, he says, which explains why shallow historical drilling failed to intersect the gold bearing
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Core analysis program
coastal gold rock. Understanding these fold structures, he adds, are the key to unlocking the potential of Hope Brook. And Hope Brook is far from being the whole story. “It is part of something much bigger. It is not rocket science to realise that if we have some success here we are looking at a very substantial pit here, all of it open down dip and along strike!” He also believes that the historical grade analyses are seriously flawed. “I believe historical drilling seriously underestimated the grades because of problems of grinding but also because they were only looking for higher grade material.” In the circumstances prevailing in the 1990s mid-grade and lowgrade samples never even got analysed, so they show up as zero in the database. “We are busy filling in gaps in the old drilling, eliminating historical holes we don’t think fit the picture. I am very confident we will see a big increase in grade in the next resource assessment. Naturally we want to expand ounces but right now getting the grade up is our prime focus.” Coastal gold is a company to watch. It has strong investor support and will attract those investors who believe the gold price will recover going forward. Bill Pearson at any rate is optimistic. “I think now we have weathered the storm over the last 18 months and are ready to take Hope Brook forward – just watch what happens over the next half year!” For more information about Coastal Gold visit: www.coastalgold.ca
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Leading South American exploration The work of Mariana Resources’ highly experienced team is allowing it to transform its developing discoveries into robust projects
mariana Resources
M
ariana Resources Ltd is an AIM quoted South American gold, copper and silver exploration and development company focussed on advancing mineral rich projects up the resource development curve. Mariana has an extensive project portfolio in southern Argentina poised to generate value uplift in the long-term; however it is the company’s transformational leap into Peru which has excited investors, and where the company believe that significant economic opportunities exist in the near-term. Mariana’s Peruvian opportunities consist of two highly prospective and potentially company-making gold/copper/ silver projects optioned from TSX-V quoted Condor Resources Inc. The 102 sq km Condor de Oro prospect in Northern Peru, where Mariana can earn 51 percent , is situated along the Cordillera del Condor corridor, one of the most significant emerging gold and copper belts in the world. Importantly, extensive geophysics and sampling work conducted at Condor de Oro points to the prospect containing a highly mineralised intrusive related porphyry system with the potential to host a multimillion ounce gold and base metal deposit. With this in mind Mariana has commenced an initial 1500m drilling programme with assay results due Q4 2013. The company believes these results will confirm the
mineralisation, economic and companymaker potential of the project. Mariana’s can earn a 70 percent interest in the second project in Peru being the advanced Soledad gold-copper-silver project located in the Cordillera Negra metallogenic province in Central Peru, 34 km south of the Pierina gold-silver mine operated by Barrick Gold Corporation. This project complements the company’s diversification strategy into Peru and offers excellent exploration upside which the company plans to drill in the first half of 2014. In addition, Mariana has assembled an impressive 200,000 hectare portfolio of gold, copper and silver projects in the prolific epithermal gold-silver district of Santa Cruz province, Argentina. The area has seen considerable corporate activity as companies seek out these major discoveries. Mariana has proved its ability to advance projects from discovery to resource phase; the Las Calandrias project was taken by the team from an initial discovery to a maiden Gold Equivalent resource of 519,000 ounces. Due to the current political climate, Argentina forms a longer-term delivery strategy for the company from which to deliver value for shareholders for the future. For more information about Mariana Resources visit: www.marianaresources.com
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21st North
The prospect of partnership 21st North develops mineral projects in Greenland, a territory that is today long on interest but short on experience – experience is exactly what this company brings to the party, along with some very advanced technology
written by: John O’Hanlon research by: Richard Halfhide
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Channel sampling of Ni-Cu mineralisation on Ammassalik Island, Southeast Greenland
21st North
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t was in 2009 that two senior geologists with the Greenlandic exploration company NunaMinerals decided that there was no question that Greenland was on the verge of transforming from a fisheries-based economy to a major player in key minerals. An exploration company, they reasoned, that really understood the regional geology as well as the most advanced technologies available would be urgently needed. So Claus Oestergaard and his partner Anders Lie, both based in the ‘mother country’ Denmark decided to set up 21st North to really optimise mineral exploration, whether on its own behalf or for clients. In between the two of them, Oestergaard and Lie had more than 30 years’ experience of working in all parts of Greenland, Oestergaard has also worked directly within GEUS, the Geological Survey of Denmark and Greenland, which has amassed almost all the available historical data on which more specific modern work has to rely. Lie and Oestergaard were among the first in the exploration business to realise and apply the potential of digital satellite imagery In Greenland, as well as remote sensing capabilities, hand held XRFs and hyperspectral technologies which use different wavelengths to identify alteration features and rock types even before you go into the field. “Remote sensing is helpful because it is something you can do at home from your desk!” says Oestergaard. Applying 21st century techniques to develop resources gave the company its name, and today it has a well-established partnership with the British remote sensing, image processing, GIS
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and digital mapping services company HME Partnership. Getting established was not that easy though, says Oestergaard: “We knew it was a tough place to start, which is why we included several extra legs to stand on, so we offer contract exploration services and consultancy to firms wanting to get involved in Greenland as well as developing our own licences.” However these properties, most of them owned through a subsidiary company Greenland Gold Resources, take up 75 percent of 21st North’s energies. “Our core business is the exploration and development of projects,” he explains. However it is quite a unique potential partner for anyone wanting to develop
new grassroots exploration projects in under-explored regions of Greenland and Scandinavia. The way forward for this company will be via joint ventures says Oestergaard. “Whether our key projects will be listed at some point or remain private is an open question – but at some point we would welcome partnerships that allow us to conduct exploration projects on a more regional scale, supported by investors, with a focus, probably, on east or south Greenland. There are some really interesting regions in Greenland which require grass roots exploration but further development requires financing.” 21st North’s most advanced project so far is its Akuliaruseq graphite deposit, between
Nickel prospecting in the Ammassalik region. Southeast Greenland
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21st North
“We would welcome partnerships that allow us to conduct exploration projects on a more regional scale, supported by investors” the towns of Sisimiut and Aasiaat on the west coast of Greenland and close to the airport at Kangerlussaq. Greenland has a long history of small scale graphite mining, he explains. Knowledge of the Akuliaruseq deposit goes back as far as 1912-1916 where sporadic mining took place. No further work was done until the 1980s, but by 1986 geological and geophysical exploration work
had outlined and test drilled four favourable blocks defining an open-ended indicated resource of 5.34Mt grading 9.5 percent C. Bulk sampling indicated that a significant volume of the deposit consists of large and giant size graphite flakes without impurities, the most important criteria for flake graphite deposits. The company has recently applied for extension of the property and will conduct a surface exploration programme this year to outline additional resources. In addition, a €1.85 million, 5,000 metre drilling campaign is proposed to establish the depth and extent of the Akuliaruseq deposit as well as further testing the flake size, leading to test mining in order to be certain that this is not just a large scale resource but also one that can be successfully exploited. “Though we are an exploration company and generally not interested in mine building or beneficiation as such, we always have an eye to these matters early on,” he says. Once it has done the preliminary work and taken the project up to feasibility or pre-feasibility stage, the company wants to attract partners who will buy in to the project and take it forward to production. At his point 21st North’s interest will start to dilute or may be sold outright. Less well known till 21st North came
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“Looking at reflections from different wavelengths over a wide spectrum gives you a great deal of geological information”
Lunch break . Sinarsuk Ti-V project, Southwest Greenland
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21st North on the scene was the Ikertoq Prospect, a 151 square kilometre nickelcopper licence in the same general area of Greenland, strategically located 60 kilometres from the international airport in Greenland and eight kilometres from a deep water fjord. In partnership with Northern Shield Resources, a Canadian junior, 21st North will drill up to 2,000 metres this summer at a cost of €1,000.000. It could be a very exciting project. Greenland and Canada were once joined together and Fly camp set-up within the Ikertoq region prospecting for Ni-Cu for years mining companies have been searching in Greenland for the also gold bearing rock in this region. continuation of Quebec’s Raglan Nickel Belt Titanium and vanadium are among and the structure that hosts the Voisey’s the many metals that are in increasing Bay Nickel Deposit. The Ikertoq property demand round the world. They are present could well be it. in a highly accessible surface deposit at Another nickel-copper deposit in the Sinarsuk near Fiskenæsset just 125 miles portfolio has already seen some test drilling, south of the capital Nuuk – there’s virtually and more is to be carried out. Though its no overburden at all so once 21st North has principal town Tasiilaq is easily accessible by completed its validation of the site it should sea and has daily flights to the west coast be very attractive to an investor. and Iceland, the island of Ammassalik off Though GEUS has done a huge amount of the south east coast of Greenland has seen work, and a sporadic amount of development limited exploration activities and early testing and exploration has taken place in recent up to 2005 missed the best deposits. Now years, there are still many parts of Greenland 21st North has exclusive mineral rights over that have only seen limited exploration activity an 84 square kilometre area that it considers but where there are a lot of interesting finds has great potential for copper, nickel and to be made, says Oestergaard. “We rely very platinum group elements (PGEs). There is much on that historic information to decide
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“We know how to operate in all parts of Greenland with a sure hand!” that any particular area might be interesting to go into and work on, in fact we have done that with most of our projects.” Remote sensing technologies give excellent results in Greenland.. “Looking at reflections from different wavelengths over a wide spectrum gives you a great deal of geological information. Another wonderful thing about Greenland is that there are no trees and excellent exposure due to the historic
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glaciation. You can see a lot of information you can’t in other parts of the world.” The centre of Greenland, 83 percent of its surface area, is inaccessible because of the ice cover, but its uncovered part is larger than France, he points out. He prefers to work in the southern and central part of the country. Though there are great deposits in the north, he feels that investors are less likely to be captivated by projects that are hard to access
21st North
Mobilising camp and fuel by barge in the fjords of West Greenland
from a logistical point of view, and more importantly whose production can only be shipped out for a few months of the year, Below the Arctic Circle, warmed by the Gulf Stream, pierced by numerous deep water fjords, the southern coasts are a miner’s dream compared with many parts of the world. And Greenland is one of the most secure and investment-friendly countries in the world, backed by Denmark though jealous of its independence and always vigilant on behalf of its population and its land and marine ecology. The biggest drawback is the lack of infrastructure, but this can be costed into any venture and may be offset by so many positive features that it becomes less
significant. It does require deposits with good grade and tonnage to be economic, though. “When new companies start to consider Greenland they get anxious, naturally enough. That is why most of them quickly realise they need a local partner,” says Claus Oestergaard. “That is where we see ourselves. We give the companies the confidence that their investment is in safe hands. We know how to operate in all parts of Greenland with a sure hand!” For more information about 21st North visit: www.21stnorth.com
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standard bank
the Setting
standard How Standard Bank plays a key role within Africa’s emerging markets and its ongoing commitment to the continent
edited by: will daynes research by: richard Halfhide
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A gold wagon outside an early Johannesburg branch of the bank in 1895
Standard Bank
T
he First Quantum Minerals (FQM) story began in the late 90s and spans humble beginnings from a tailings retreatment process at Bwana Mkubwa in Zambia, to its present day achievable aspiration to be one of the world’s leading copper producers. The financing and development of Kansanshi marked the transition of the company to a fully fledged miner and the beginning of a spectacular growth story for the company over the last decade. Following the Kansanshi success, FQM expanded their footprint through the African Copper belt, the African continent and then on an international scale as the company diversified into Nickel and acquired Kevitsa and Ravensthorpe. Acquisitions continued with the Antares, Haquira Project in Peru and the most recent widely publicised Inmet acquisition, including the large scale Cobre Panama Project. FQM growth story and Standard Bank support Standard Bank has partnered with the company throughout this story with a relationship dating back to the initial financing of the company’s flagship Kansanshi Project – Africa’s largest copper mine and the world’s eighth largest copper mine today. In December 2003 Standard Bank, as a Co-Lead Arranger and Underwriter, signed a $120 million export credit and commercial debt facility for the development of Kansanshi. Vaughan Wickins an Executive in the bank’s Mining and Metals teams comments, “the Kansanshi financing was a landmark transaction as it was the first
mine financing in Zambia done on a project finance basis. Standard Bank was confident to underwrite the senior loan which included the Export Credit Insurance Corporation of South Africa. The financing structure also incorporated an asset finance, overrun and power line cost element, however the senior loan facility was ultimately awarded the Project Finance Magazine Mining Deal of 2003 – Africa”. In addition to the senior loan support, Standard Bank signed a $6 million short term facility to finance the company’s capital contribution to ZESCO (the Zambian power utility), providing for the construction and installation of a transmission line and new substation to connect Kansanshi to the ZESCO power grid. In October 2006, Standard Bank was a lender to the $400 million corporate facility that enabled the refinancing of the Kansanshi facility and financing for the company’s additional projects and general corporate purposes. By the end of 2006, FQM had four African assets including Kansanshi, Bwana Mkuba/Lonshi, Frontier Copper in the DRC and Guelb Moghrein in Mauritania. 2008 was a busy year for FQM. The company acquired Scandinavian Minerals and the Kevitsa nickel-copper-PGE project in Finland - one of the world’s largest undeveloped, sulphide nickel deposits at the time - and later in the year announced the acquisition of BHP Billiton’s Ravensthorpe nickel operation in Western Australia. FQM was advancing its plans to become one of the world’s leading nickel producers. Following a decision to commence development of the Kevitsa Project, Standard Bank was again
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mandated as a lead arranger on a $250 million debt facility to fund development. Standard Bank Growth Story Standard Bank is the largest bank in Africa with over 150 years of operating history on the continent and employs more than 50,000 people worldwide. The bank operates in 18 countries in sub-Saharan Africa and is building Africa’s leading financial services organisation. Africa is expected to benefit from sustained economic growth in the decade to 2020. Standard Bank with its on-the-ground presence and unmatched knowledge of Africa’s economies, resources, clients and communities, is uniquely positioned to ride the wave of the African growth story. Standard Bank operates around 550 retail branch outlets outside of South Africa and
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plans ongoing investment in its operations across the rest of Africa. Including South Africa the bank currently operates around 8,500 ATMs across the continent. The strategic partnership with its 20 percent shareholder, the Industrial and Commercial Bank of China, has proved rewarding. In 2008 the $5.5 billion investment was the largest foreign investment into South Africa and largest foreign investment by a Chinese bank internationally. The transaction marries China’s appetite for commodities with Africa’s vast resources and Standard Bank’s expertise on the continent. Standard Bank’s achievements have been acknowledged across the industry, with the bank recently being named as Best Investment Bank in Africa by Euromoney. The award adds to Standard Bank Group’s list of accolades received in 2013, including winning eleven
Standard Bank ‘EMEA Finance Achievement’ awards; the ‘African Deal of the Year’ award for Konkola Copper Mines financing in the 2013 Project Finance Deal of the Year Awards; ‘Commercial Deal of the Year’ in the 2013 Trade & Forfaiting Review; and being named ‘Best Trade Finance Bank in Africa’ by Global Finance. Mr David Munro, Chief Executive of Standard Bank Corporate and Investment Banking said, “Our clients are at the heart of everything we do. We have a unique footprint and physical presence across Africa, global connectivity to serve Africa, unique sector expertise with a specialisation in natural resources and a talented team, all of which reinforce our position as the leading financial services organisation on the continent.” Standard Bank’s mining and metals expertise Standard Bank’s focus on resources is supported by the vast potential of the African continent. It is an institution steeped in mining history with its head office situated in the South African gold region of the Witwatersrand in the Gauteng Province. There are not many institutions that can have their employees look out of the head office windows and see mining headframes in the distance.
Commenting on the bank’s support for First Quantum and its mining pedigree, Mr Wickins says “FQM’s experience and track record in successfully developing and operating complex projects has set them apart from other miners. It remains a key aspect that has underpinned Standard Bank’s ongoing support for the company. It is a similar focus on technical expertise along with our track record that has seen Standard Bank finance the majority of new copper mine developments in Africa over the last decade, this includes financing for FQM, KCM, Equinox, Discovery Metals and Metorex. “ The mining and metals sector is high risk with the challenges only exacerbated in the current climate of falling commodity prices. At times like these it’s important for companies to partner with banks that have
“Standard Bank’s focus on resources is supported by the vast potential of the African continent” Event Showcase | 51
a long term commitment to the sector and the continent. Mining and metals remains a core business for Standard Bank and its comprehensive service offering includes providing innovative and flexible financing, advisory, trading, ECM and treasury solutions to clients. The bank’s mining and metals team includes extensive technical expertise with individuals ranging from the various disciplines of mine engineering, geology, metallurgy and process engineering. We are able to leverage this in-house technical expertise and track record of successfully executed transactions to assist clients achieve their development objectives. The Bank’s network of offices in all the major mining regions of the world enables it to provide analyses of global commodity trends and to stay abreast of local developments.
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As part of the bank’s expertise in supporting the mining sector, Standard Bank is currently the leading ECM platform in Africa, closing twelve transactions in 2012 with a deal value in excess of $2 billion and being awarded Euromoney’s 2013 award for Best Equity House in Africa. Additional product support to FQM While the funding support Standard Bank has provided to FQM has been an important aspect in assisting the company’s growth plans, the bank has also been a long standing provider of day to day banking support in Zambia, including provision of new ATMs and branches as well as situating bank staff on the client’s premises. The Bank’s FX trading teams situated in Lusaka, Johannesburg, NY and London offer real time market views and
Standard Bank
“Standard Bank is currently the leading ECM platform in Africa, closing twelve transactions in 2012 with a deal value in excess of $2 billion” trading solutions to mitigate currency risks and ensure efficient operational management. In addition to transactional and FX support, the bank has an established capability in commodity trading, notably in the African copperbelt. Steve Reece Head of Base Metals Trading at Standard Bank commented on the physical trading environment in the region: “Standard Bank has actively supported mining companies in the region and established an impressive physical commodity capability over the last ten years. Our support to miners includes the ability to act as an offtaker and take physical Cu metal in a variety of forms including everything from concentrate through to LME grade copper cathode. In addition we have provided short term working capital support linked to physical offtake solutions. In the case of FQM and various other miners, providing short dated QP hedging lines has assisted the miners in managing their near term commodity price exposure, whilst the provision by Standard Bank to many miners of longer dated lines has helped those miners provide their debtholders and shareholders with price security in extremely volatile times” FQM has a good understanding of commodity sales and marketing, following the acquisition of the trading company,
Republic House in 2010. The marketing and sale of the company’s copper production is handled by Metal Corp Trading, the separate entity it established following the acquisition. Standard Bank’s strength in global commodity trading is supported by 24 hour coverage of spot, forward, options and other derivative instruments in precious and base metals as well as capability in iron ore and other metals. Standard Bank in Zambia In Zambia, Standard Bank trades as Stanbic Bank and was established in 1992 offering Personal and Business Banking, Corporate and Investment Banking and Wealth Management. The Bank has 22 branches spread across the country, including the Copperbelt and North Western Province, with 48 ATMs all equipped with VISA facilities. The bank has invested significantly in growing its capacity in Zambia across both these provinces. Standard Bank’s Corporate and Investment Banking business in Zambia serves a wide range of client requirements across banking, finance, trade, risk management and advisory services. The division has built a deep understanding of the market dynamics in Zambia and maintains a specific focus on industry sectors that are
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“The work done in Zambia, South Africa and the UK has added significant value to the client and increased the strength of the relationship” most relevant to Zambia and have a strong local value proposition, including mining and metals, telecommunications, power and infrastructure, agribusiness and financial institutions. The local team is able to provide clients with relevant experience and deep insight into the local commercial and regulatory environments. For both FQM and Standard Bank, Zambia remains an important country of focus. Standard Bank’s strong presence in Zambia means the bank is well positioned to continue supporting FQM’s Zambian growth strategy. FQM’s current assets in-country include a strategic investment in Mopani Copper Mines (whose assets include the Mufulira mine, smelter and refinery and the Nkana mine, concentrator and cobalt plant), the expanding Kansanshi Project, construction of a copper smelter at the mine, and the Trident Project incorporating Sentinel (Copper), Enterprise (Nickel) and Intrepid (Uranium). In terms of location, the flagship Kansanshi mine and Project Trident are situated in the North Western Province of Zambia some 15 kilometres and 150 kilometres west of Solwezi, respectively. Solwezi has quickly grown into a major mining centre serving the aforementioned projects as well as Barrick Gold’s Lumwana mine. The area is
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capable of producing well in excess of 1 M tonnes per year of copper as well as other by-product metals including gold. The region has become an increasingly important province for the country. The Trident Project will be built around a new urban development, Kalumbila, in the North Western Province and the Bank has been at the forefront of providing financial services and support to FQM, notwithstanding the relative infancy of this particular initiative. We are providing a temporary drop-down ATM solution whilst the town and mine are being constructed. Once operations begin in earnest, the Bank shall open a full-service branch at the mine to ensure access by the company to the best commercial banking services possible and minimal disruption to operations at the mine. Over the last two years, Zambia has introduced significant and far-reaching regulatory changes. Several of these have presented challenges to businesses including FQM, as one of Zambia’s largest tax payers. Statutory Instrument 55 (Monitoring of Balance of Payments), introduced in July 2013, has required significant operational planning and adjustments. Standard Bank set about understanding the implications of the new regulations and in collaboration with
Standard Bank
FQM and the regulator, formulating solutions and human capital support to guide the client through the process. The work done by the Bank in Zambia, South Africa and the UK has added significant value to the client and increased the strength of the relationship. Particularly noteworthy, underlying the unique relationship that exists between the two businesses is the decision to commit part of the Bank’s headcount solely to FQM at Kansanshi as a result of SI55. Stanbic Zambia continues to service a number of the other major miners in-country, including Barrick Gold and Vedanta Resources. More recently the Standard Bank Group won Project Finance magazine’s 2012 African Mining Deal of the Year for the $700 million project funding for Konkola’s development of the Konkola Deep Mining Project. Paul Richards, Head of Corporate and Investment Banking at Stanbic in Zambia said, “We are African in ethos and culture. I personally take much pride and comfort from
one of our more recent strap lines, which I think describes in two short sentences the essence of our Bank. “They call it Africa. We call it home”. We aim to build the leading African financial services organisation using all our competitive advantages to the full. We will focus on delivering superior sustainable shareholder value by serving the needs of our customers through first-class, on-the-ground operations in chosen countries in Africa. We will also connect other selected emerging markets to Africa and to each other, applying our sector expertise, particularly in natural resources, globally” It is a testament to the Zambian Government’s commitment to supporting the mining sector that FQM has had the confidence to commit to its large scale development plans in the country. Following commissioning of Sentinel and further Kansanshi expansions, FQM will initially be targeting annual copper production in Zambia of approximately 700,000 tonnes per annum. Planned capital expenditure in-country will be in the order of $3.4 billion. Africa is a key focal point for growth within the emerging markets and Standard Bank plays an important role in continuing to support development, leveraging its people, expertise and track record. Standard Bank’s commitment to the continent and the sector is evident - “They call it Africa. We call it home”. For more information about Standard Bank visit: www.standardbank.com
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Charting a path to production Base Resources’ Kwale mineral sands operation is a game changer for both the company and the Republic of Kenya
written by: John O’Hanlon research by: Richard Halfhide
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Base Resources
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Tim Carstens
Base Resources
I
n 2008, after a career spent “being dropped into things that had to be turned round and fixed”, Tim Carstens founded Base Resources. The MD’s intent was clear - to build from scratch a meaningful resource company - and he has accomplished precisely that. Base listed on the ASX in October, 2008, with a portfolio of Australian iron ore projects. Carstens and his team, recognising that these assets would not produce any company-makers, “set sail round the world looking for the right opportunity we could build the company around”. In July, 2010, Base acquired its 100 per cent interest in the Kwale minerals sands project in Kenya. By the time the company dual-listed on London’s AIM bourse in January, 2013, it was clear that this project was rapidly emerging as the company-maker Carstens had set his sights on. Situated just 10 kilometres inland and 50 kilometres south of Kenya’s principal port of Mombasa, Kwale had already undergone investment surpassing $60 million to progress the project through resource definition, government approvals and Definitive Feasibility Studies (DFS) when Base took the reins. This meant the project was well advanced, allowing its new owner to fast track financing and development. “It was the ideal project to build our business model round, get our team in place, the capital base, the reputation to move to the next project and beyond,” Carstens says. His is a sentiment encapsulated by Base’s development model for Kwale. Instead of delegating project execution to a single
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ECPM contractor, Base engaged best-in-class specialists in port construction, dam building, process plant design and construction, and power land access infrastructure. “We have our own integrated management team that knits the whole thing together,” Carstens explains. “That model has worked well. It enables us to anticipate issues before they become reality and get engaged with the contractors very early, while we have plenty of options for dealing with those issues, supplementing the horsepower when we need to and keeping the project ‘on the rails’.” Kwale is of genuinely strategic importance to Kenya’s future mineral production and the sector’s role within the nation’s economic wellbeing. As well as proving up Base’s company mettle as an explorer, developer, and producer, the project heralds the dawn of a significantly enhanced mineral sector in Kenya. Kwale is Kenya’s first large scale modern mining operation and is poised to have a huge impact on GDP: income from titanium mining at Kwale will see mineral exports displace coffee as the fourth highest foreign exchange earner and contribute an estimated $225 million in royalties and taxes over the 13-year life of the mine. Beyond the numbers underpinning Kwale’s medium-term beneficial impact, the project is seen as a poster child for future large-scale resource development in Kenya. According
to Kenya’s Vision 2030 framework, Kwale is a long-term development blueprint to create a globally competitive and prosperous nation and transform Kenya into ‘a newly industrialising, middle-income country providing a high quality of life to all its citizens by 2030 in a clean and secure environment.’ There is collateral benefit for the government, Carstens emphasises, in terms of Kwale being a catalyst for future inward investment and development of the mining industry. “The government has been enormously supportive
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Base Resources
Pushing first ore to DMU
and has played its role.” company does business.” The So it’s important for ‘establishment’ phase of the Kenya, but it’s a blueprint to project involved the relocation of some 500 households. the future of Base Resources too, wherever it goes next. While most of these Workers on site at peak Reaching this point has taken households were squatting more than paying lip service on the land, Base treated all to CSR, Carstens says. He as if they were landowners in sees CSR more as the language of obligation the relocation and compensation process. This whereas, Base engages with the community on relocation was completed in compliance with a more transactional basis as a core function The World Bank’s Equator Principles. Roads of its business. “We give them what they need were re-routed, all infrastructure replaced so we get what we need” he says. Base wants and enhanced. Mosques, churches, schools, the communities to be satisfied with the value community hall and a new regional health and benefit the Company’s activities deliver centre have been built. to them. “In exchange, we have a proud “Employment is obviously very important workforce and a supportive community that is in a situation like this,” Carstens explains. an active and positive referee for the way the “During our peak construction phase, we
2,400
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had 2,400 people working on site, of whom 1,000 were from the local community – many had never had a job before.” Currently, 1,600 Kenyans are working onsite at Kwale and, for a country that has a very underdeveloped mining sector, Kenya has a good skills base, Carstens confirms. “71 percent of our operational workforce comes from the coastal province. There’s a good general level of education. And at a more advanced level, we have three or four comparatively young geology graduates working in the business; according to our exploration manager the guys coming out of Kenyan universities are as good as the guys coming out of Australia!” On the ground, Kwale has progressed with amazing efficiency and speed for a
DMU & process plant
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country new to mining. An eight kilometre access road, a 700 bed camp, a 16 kilometre 132 kVA power line and substation and the tailings facility have all been completed as well as the eight million cubic metre Mukurumudzi Dam that will provide water for the project while giving reliable year-round supply to the communities downstream. And the finishing touches have been put to Base’s dedicated Likoni Port facility, just across the channel from Mombasa itself, complete with a 65,000 tonne storage shed from which ilmenite and rutile is loaded onto ships via a conveyor system and a 1,000 tph shiploader on the wharf. Kwale’s infrastructure is in place. Its mining unit and concentrator are running well in the ramp up process ahead of commissioning of the ilmenite and rutile separation circuits at
Base Resources
“Zircon has very similar physical Properties to the remaining minerals in the concentrate and requires as much art as science in the separation process” the end of November. Commissioning of the zircon circuit will follow in January. “The key milestone for me is going to be in January, when we wave goodbye to our first bulk shipments,” Carstens says. “We will ramp up the ilmenite and rutile fairly quickly, so by May both will be producing at the full run rate. Zircon always takes a little longer. We will be most of the way to our target run-rate for zircon by mid-2014 but achieving the full
30,000 tonne per annum rate will most likely take all of 2014.” Mineral sands concentrate production is largely straightforward from a technical standpoint, Carstens explains. Ilmenite’s magnetic qualities, courtesy of its iron content, mean it can be extracted using powerful rare-earth magnets, while rutile, as a conductor, is amenable to electrostatic separation. “Zircon is different. It has very similar physical properties to the remaining minerals in the concentrate and requires as much art as science in the separation process. It is always the hardest part of a mineral sands plant to get your arms around.” Base has offtake agreements in place for all of Kwale’s production of rutile, ilmenite and zircon for the first year and most of the first 5 years of production. Ilmenite and rutile are predominately used as inputs in the production of titanium dioxide (TiO2) pigments used in paints, papers, ink, plastic and a huge array of other applications. Zircon is mostly used in ceramics and has many high-tech applications. China is the world’s largest consumer of all these chemicals: its demand for them has grown steadily and will certainly continue. As Kwale’s production profile is established, Base is also mindful of leaving a beneficial
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Process plant
Base Resources legacy in Kenya beyond Kwale’s 13-year mine life. Base Titanium, the parent company’s wholly-owned operating subsidiary in the country, is not just getting behind its in-house training programmes but also a scholarship programme for talented youngsters. It is also exploring a partnership with Business for Millennium Development (B4MD), an Australian not-for-profit organisation founded to build awareness and provide market insights on inclusive business opportunities in developing countries, to establish a agricultural development programme to get people efficiently growing selected crops that can be marketed globally to B4MD’s programme partners, among them the world’s largest food groups. In the near-term, Base remains fully supportive of its partner, the Government of Kenya, and continues to discuss ways in which changes to the nation’s mineral legislative frameworks can drive national economic prosperity and build a globally competitive destination for mining investment. “The real challenge at the moment that the Kenyan government is wrestling with – like many others in Africa and elsewhere – is getting in place the right fiscal and regulatory settings to balance the need to attract investment and at the same time maximise local benefit and participation,” Carstens says. “That’s something we really want to contribute to.” For more information about Base Resources visit: www.baseresources.com.au
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