The Pick Magazine - Issue 15 - December 2019

THE PICK DECEMBER 2019

T H E - P I C K .C O M . AU

EDITION 15

Building on Bellevue Gold legend

page 4

Cardinal’s Namdini Gold Project heading towards FID page 8

Neometals hitting core development milestones

Kalium Lakes racing towards Australia’s first SOP project

page 6

ADVERTISING FEATURE

page 10

WHY A NEW URANIUM BULL MARKET IS IMMINENT

Page 1

T H E L O N G - D I S TA N C E B AT T E R Y ‘ C O L L A B O R AT I O N ’ T H AT C H A N G E D T H E WO R L D

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COPPER MARKET U P D AT E

Page 30

S T O C K S I N P L AY MAKING A NAME FOR ITSELF IN D I G I TA L T R A D I N G

Page 32

HARTLEYS LOOKS AT ‘GOLD BULLS AND TRADE WAR BLUES’ Page 27

TABLE OF CONTENTS

15 Galan flying under the radar with high-grade lithium brine project 16 Australia stays firm as world’s leading lithium miner, but markets remain mixed 17 Metalicity turning back the clock in the WA Goldfields 18 Trigg Mining up-and-running to develop its huge SOP potential

01 Why a New Uranium Bull Market is Imminent 02 The long-distance battery ‘collaboration’ that changed the world 04 Bellevue enriching a WA golden legend 06 Neometals’ core projects ticking a number of development milestones 08 Cardinal’s world class Namdini Gold Project heads to FID 10 Kalium Lakes racing towards startup of Australian SOP first 12 Marenica building world class uranium exploration portfolio 13 Peel Mining’s Wagga Tank – Southern Nights showing its metal 14 Blackstone ready for booming global battery industry with Ta Khoa

The Pick Magazine is published independently for executives in the resources sector.

Publisher Chapter One Advisors

Consulting Publisher David Tasker dtasker@chapteroneadvisors.com.au

Consulting Editor

19 Perseus on track for production boost

Colin Hay chay@chapteroneadvisors.com.au

20 Lotus finds new life in uranium

Design/Production

21 Superior deal beckons for zinc project

Egg Design

22 Galileo navigating the Fraser Range

Colin Hay Colin Jacoby Alex Baker Guy Keller Dale Bryan Tim Boreham Gavin Wendt

23 Artemis building a golden opportunity 24 Astute nickel purchase a company-maker for Centaurus 25 RBR only ASX junior exposed to $70b African LNG boom 26 Kairos seizes a golden opportunity at historic Pilbara mine 27 Gold bulls, trade war blues – and everything in between 29 Ben Kay My Top 3 Resources Picks 30 Gavin Wendt’s Copper Market Update 32 Stocks In Play making a name for itself in digital trading 33 Ashanti makes inroads into lucrative Sydney market

Journalists

Digital Edition Digital edition in partnership with Metrix Publishing

Publishing office 68 Milligan St, Perth, Western Australia Australia 6000 Tel: +61 433 112 936

Disclaimer Chapter One has taken care to collect and publish this information in good faith but makes no warranties or representations as to the accuracy of any facts or representations, and has relied upon information provided to it in doing so. Chapter One does not accept any responsibility for the accuracy of any facts or representations published, or for any opinions expressed. Chapter One is not a financial adviser, and nothing within the publication is financial or other advice whatsoever.

Subject to any terms implied or expressed by the law, Chapter One does not accept any responsibility for any reliance, loss, damage, cost or expense incurred by any reliance upon this information or anything published by Chapter One herein, or by acting upon it or for any error, omission or misrepresentation conveyed.

The information published is general only and does not take into account any individual objectives of investors.

Front Page image provided

by Peel Mining.

THE PICK DECEMBER 2019

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To be featured in the next edition contact David Tasker: dtasker@chapteroneadvisors.com.au

Why a New Uranium Bull Market is Imminent While the uranium market tends to march to the beat of a different drum to that of other commodities, the fundamentals are beginning to dictate that positive price momentum is finally on its way and a new price cycle is about to start.

BY GUY KELLER, TRIBECA INVESTMENT PARTNERS

Boss Resources’ Honeymoon Uranium Project is one of Tribeca’s major investments.

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ollowing the 2011 Fukushima disaster, the market has seen almost a decade of unsustainably low prices which has stalled new projects and forced supply cuts since 2014 of 40 million pounds of uranium, equivalent to 20% of global annual production. To put this in context, global supply cuts for other commodities such as nickel and copper during prior cycles in the order of 3-5% saw prices subsequently rally 220% and 70% respectively.

Given the experience of the last uranium bull market in 2004-08 when the physical uranium price rallied to well over US$100 per pound, we believe that expected returns from listed equities in the sector from current levels represent a highly asymmetric potential payoff.

Overhanging the market this year has been the Trump administration’s deliberation of the Section 232 petition by two U.S. domestic producers as to whether uranium imports threaten U.S. national security. While the petitioners’ calls for import quotas were dismissed, the U.S. Nuclear Fuel Working Group was established in July with a mandate and 90 days to examine the current state of U.S. domestic nuclear fuel production to reinvigorate the entire nuclear fuel supply chain, While the Group was given a 30 day extension it remains our belief that this will remove the uncertainty – or “release the handbrake” – that has contributed to the lack of contracting between producers and utilities for the past 18 months.

As a firm, Tribeca holds substantial positions in a number of uranium related companies across it’s stable of funds focused on natural resources. This includes the specialised Nuclear Energy Opportunities Fund which pursues a concentrated portfolio approach to our bullish investment thesis on the sector.

Once we see this genuine price uplift in the uranium price, there will be an opportunity for projects to move into the production spectrum. One we are confident about is Boss Resources’ (ASX: BOE). Honeymoon Project deposit in South Australia, one of the few uranium projects ready to participate in the early stages of the new uranium bull market.

We believe that Boss will be the first Australian producer to market and amongst a handful of assets globally coming into production in this first wave of the rally in the physical uranium price.

Honeymoon is unique in that it contains a fully permitted uranium mine with $170M of established infrastructure including a plant in good condition under care and maintenance, that has produced and exported uranium from the safe jurisdiction of South Australia; where it holds approved Heritage and Native Title mining agreements.

In addition to near term production projects such as Boss Resources we also hold positions in explorers and developers in addition to having exposure to the physical uranium price.

Once the market kicks into gear, we will see investor patience from the last nine years start to pay off.

Guy Keller

Also underpinning our bullish view is the projected demand growth for uranium in the coming years given the large number of nuclear reactors planned to be built globally – 18 of which are under construction in China alone. Nuclear power generation represents the only low-emission, reliable source of base load power. With global demand for electricity poised to grow at 1.5% a year over the next 15 years, nuclear energy, currently representing 11% of global supply will increasingly represent a higher proportion of the energy mix of many countries.

DECEMBER 2019 1

Caption needed?

Lightweight, rechargeable and powerful batteries have made a tremendous impact to the development of the electric car industry.

The long-distance battery ‘collaboration’ that changed the world The paradox of one of science’s greatest ‘collaborations’ is that the three chemistry professors responsible for creating and developing the lithium-ion battery from the 1970s onwards have never been together in the one spot.

BY TIM BOREHAM

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ut all that changes when Stanley Whittingham, Akira Yoshino and John Goodenough take to the podium of the majestic Stockholm Concert Hall on December 10 to collect their joint 2019 Nobel Prize for chemistry, awarded by the Royal Swedish Academy of Sciences.

“Scientists in international business are all in different places,” explains Whittingham, adding the trio has swapped notes frequently by phone and email over the years.

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Aptly, the rare photo op will be captured by a phalanx of photographers wielding cameras and mobile phones powered by the rechargeable batteries, which have also heralded the era of the electric vehicle (EV) and are fast moving electricity grid networks to a renewables foundation.

“This lightweight, rechargeable and powerful battery is now used in everything from mobile phones to laptops and electric vehicles,” the academy said. “It can also store significant amounts of energy from solar and wind power, making possible a fossil fuel-free society.”

Based in the US for the last 50 years, the Nottingham-born Whittingham is a professor at Binghamton University in New York state. German born Goodenough is a professor at the University of Texas.

Yoshino is a fellow of Asahi Kasei Corp and a professor at Nagoya’s Meijo University.

Whittingham is credited as devising the first rechargeable battery during his time in Exxon’s research labs in the seminal years between 1972 and 1975, using a lithium-aluminium anode and a titanium sulphide cathode.

The baton was then passed to Goodenough, who introduced lithium cathodes and in effect doubled the battery’s capacity.

Yoshino then commercialised the battery and – importantly – ensured the flammable material was safe.

“It was a step-wise process,” says Whittingham. “I came up with the original idea and material and Goodenough came up with the better material.

“The Japanese worked to make it a patented product that makes money.”

In the context of the 1970s Arab oil embargoes and soaring oil prices, Exxon understandably was keen to further electric vehicles and went as far as building a manufacturing facility and buying an electric motor company.

“They were really about 20 years ahead of their time,” Whittingham says. “They perceived oil would peak in the year 2000 but of course it didn’t.”

Exxon also went as far as making prototype batteries, but didn’t make any money and eventually gave up. But Sony ran with them for their own devices, licensing the lithium-based cathode from England’s Atomic Energy Research Authority and the carbon anode from Bell Labs in the US.

The first lithium-ion battery-powered device appeared in 1991, but it wasn’t until the release of Toyota’s first Prius hybrid vehicle in 1997 that the EV push finally gained momentum.

While EVs have garnered much of the attention, Whittingham says the use of the batteries in grid-scale applications is becoming an even more important driver of the low-carbon economy.

According to the Clean Energy Council, Australia derived 21 per cent of its electricity from renewable sources in 2018, up from 17 per cent in the previous year.

This lightweight, rechargeable and powerful battery is now used in everything from mobile phones to laptops and electric vehicles.

a little bit each year as we understand it better.”

Whittingham believes battery capacity can double, in terms of power output relative to the size and weight of the units. “That’s probably the limit we can ever get to,” he says, noting there are physical limitations to how much energy can be stored in a chemical.

While Whittingham also believes the lithium-ion batteries will be the storage source of choice for decades to come, he says the batteries will be only one component of a future low-carbon economy.

But he is sceptical about hydrogen – one of the mooted alternatives – as a storage medium. Given the energy required to produce the hydrogen, he says in most cases it’s more efficient to store the energy in a battery.

Whittingham is a non-executive director of the ASX listed Magnis Energy Technologies, which is developing its Nachu project in Tanzania to mine graphite – another crucial material in lithium-ion batteries.

Magnis also has an interest in two proposed battery manufacturing facilities, in New York and Townsville.

But as the summer blackouts in wind power dependent South Australia attest, the use of batteries to smooth capacity and meet peak demand is a crucial element of the renewables tapestry.

Whittingham said he was attracted to the Magnis board – the only commercial directorship he holds – because of management’s “young start-up mentality”.

There’s also a consumer angle to the notion of grid-scale battery backup. “Australia has some of the most expensive electricity in the world and batteries can help solve the problem,” Whittingham says.

“It’s a company that in my mind is doing the right thing.”

He envisages a similar trend to California, where an unprecedented number of householders are going “off the grid” in favour of renewable power supported by battery back-up.

Whittingham says the capacity and performance of lithium-ion batteries has improved incrementally since the trio’s breakthrough discoveries.

“I don’t see it as a ‘big bang’ scenario,” he says. “But energy output is going up

As the proud trio of Nobel Prize winners mount the podium to collect their trophy – as well as 3 million Swedish krona ($A450,000) each of prize money – some in the audience will be quietly question why the accolade took almost four decades to bestow.

Whittingham says while that’s not a question for him to answer, some heavyweights viewed the science as “too applied”, which is ironic now given the plethora of practical applications.

“But if you read benefactor (Alfred) Nobel’s will, that (applied) is exactly what he wanted.”

DECEMBER 2019 3

Bellevue Gold has six rigs hard at work building on its exciting, high-grade project.

Bellevue Gold continues to build on the legend of one of Australia’s richest ever gold mines

BY COLIN HAY

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or a lot of people seven is the lucky number – and for the team at Bellevue Gold Limited (ASX: BGL) that has certainly proven the case at the exciting, high-grade Bellevue Gold mine, near Leinster in Western Australia.

Drilling to try and resurrect what was once Australia’s highest-grade gold mine, on a project that many said was tapped out, the Bellevue Gold team struck it rich when their seventh hole hit seven metres of 27 tonnes per gram gold from surface in late 2017.

From that moment on, the fortunes of Bellevue Gold Ltd and the Bellevue Gold mine have had a complete turn-around.

The company has become a market and industry darling, so much so it was recently named ‘Best Emerging Company’ at the annual Diggers & Dealers conference and ‘Explorer of the Year’ by Mining News.net.

While appreciative of those accolades, Bellevue Gold Managing Director Steve Parsons told The Pick that the focus is on the mine regaining its mantle as one of Australia’s highestgrade gold projects.

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To date Bellevue has defined a four kilometre long mineralised area that contains the current 1.8 million ounces resources of what is a larger 20 kilometre gold corridor, with a lot of exploration upside.

“The resource area is very much open along strike, and we have identified multiple high-grade gold targets that we plan to drill test before the end of the year,” Mr Parsons said.

With a successful recent capital raise the company has over $32 million in cash and is fully funded to continue its exploration success, with a lot of confidence the planned drilling programme will lead to

further gold discoveries across its large strategic landholding.

“This project has grown at a rapid rate of knots, and we have basically gone from nothing to discovering 1.8 million ounces in 18 months,” Mr Parsons said.

“The next step for us is more of the same.

We have $32 million in cash and we have six drill rigs turning and we are going to continue stepping out as all of the mineralisation is still open to the north, to the south and at depth, so we are going to keep on expanding the resource.

“That is our intention for the first and second quarters next year and we are also infilling at the moment on the resources and looking to convert those into the higher measured and indicated categories ready for economic studies in the second half of next year.”

“So, sure, we were maybe lucky to find the orebody extension, the new discoveries, but it has been an absolute dream that we have now found those extensions and of course, once you are on to them, away you go.”

Mr Parsons put a lot of that ‘luck’ and success down to the company’s geological team.

“We have a great geological team. We very much pride ourselves on exploration and geological thinking and with some back to basics geology.

“But, again, there was always the thought of the industry that you will never find anything on the property again. That was the mentality people had and it was on our mind as we drilled the first seven holes. When hole number seven came in, and it was seven metres at 27 grams per tonne, that was pretty much from surface, on a brand new lode, in the shadow of the head frame of the old mine, and you know, if people had only drilled holes 20 years ago they would have found it, but they didn’t.”

Since that time Bellevue Gold has continued to have spectacular drilling success, discovering further high-grade lodes, recently returning spectacular intersections such as 4.4 metres at 58.8 g/t gold from 575.5 metres.

So now it’s more of the same for the Bellevue Gold team as they continue to drill out this fantastic asset and prepare to bring this golden legend back into production.

“So it’s more of the same for the Bellevue Gold team as they continue to drill out this fantastic asset and prepare to bring this golden legend back into production.”

Mr Parsons said there is no real secret to Bellevue Gold’s success, just hard work, a strong belief in the asset and the introduction of modern techniques and ideas.

“The Bellevue Gold Mine has always been known as a super high grade mine and when it was in production, it was the highest-grade gold mine in Australia for a long time.

“But when it closed down in 1997, the gold price was terrible, and they couldn’t find the ore body.

“When we picked up the project we heard from a lot of people that you would never find the ore body again, it’s gone, so you know that was always the thinking on the project.

“However, there hadn’t actually been any exploration work undertaken there for 20 years and you know geological thoughts change and techniques change, new modern ways of exploring come along.

DECEMBER 2019 5

Neometals’ suite of core projects ticking a number of development milestones Minerals and materials specialist Neometals Ltd (ASX: NMT) is bringing its proven joint-venturing strategy to develop a suite of projects located around the globe.

BY COLIN HAY

Neometals recently announced the successful recovery of high purity cobalt sulphate from the hydrometallurgical processing stage of its patent pending recycling technology.

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he Pick recently sat down with Neometals Managing Director Chris Reed to discuss the company’s philosophy and its future development plans.

Pick: How would you describe Neometals to an outsider?

Chris Reed: “I think we have an unconventional strategy for a minerals and materials company. The strategy drives a distinct and common approach across our development projects.

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“We identify commodities we want to be in for the long-term, out of this we identify projects to acquire or develop them ourselves– then build the value within our eco system of expertise - and then bring in partners to jointly realise the value.

“Our strategy is to try to have our partners help us by taking as much of the operating and capital risk out of our projects as possible. This gives you a greater chance to develop at the optimal scale and accelerate the return of value back to the shareholders.

“That is one of our key tenets and we have been able to return more than $45 million to shareholders over the last four years.”

Pick: What is the major focus of the company at the moment?

CR: “We have three core projects with direct exposure to the electric vehicle and energy storage revolution, all of which are now in partnership arrangements to assist with their commercialisation.

“Out of the three core projects, we are more focussed on our lithium-ion battery (“LIB”) recycling development. That is the closest to cash flow and the most robust project at the current prices.

“We are currently in the final phase of piloting and successful completion of the LIB recycling pilot plant will constitute the due diligence required for our German partners SMS to enter into a formal joint venture agreement.

“We recently announced the successful recovery of high purity (+99%) cobalt sulphate from the hydrometallurgical processing stage of our patent pending recycling technology during pilot testing.

“Importantly, cobalt recovery from feed into the hydrometallurgical processing stage exceeded 98%.

“The pilot test-work, being undertaken by SGS in Canada, represents part of the pre-development activities for our proposed commercial LIB recycling venture targeting greater than 90% recovery of LIB materials from electric vehicle and consumer electronics production scrap and end-of-life cells.

“The front end of the planned demonstration plant will likely be located at SMS Dusseldorf and is sized at about 50 tonnes per day on a continuous basis but we will pretty much replicate a pilot sized hydrometallurgical back end at SMS in Vienna, to prove our hub and spoke configuration. We will also be trialling the cell/car maker feed through the demonstration plant to support commercial recycling service agreements.

“Our aim is to then be in a position to consider FID towards the end of next year.

Pick: How is the battery recycling market shaping up?

CR: “The battery recycling market is growing every day. There are more and more batteries being produced and so we are not worried about long-term supply of end of life cells. In the shortterm you have increasing volumes of batteries manufactured years ago which are reaching the end of life and then you need to consider a circa 10% statistical failure rate directly from the production line.

“It is going to be a pretty attractive industry in a few years’ time and we think we are ahead of the curve as one of the innovators in that area. I think that the business model that we have developed is as important as the technology, enabling a hub and spoke where you can have a centralised refining plant and multiple feed preparation or shredding plants centred around a continent.

Pick: What is your second core project?

CR: “Next in line for development is Barambie, where we are completing pilot production of titanium chemicals.

“Barambie is the biggest value, contained-in-the-ground project we have and we are now partnering with a Chinese Government metallurgical institution. They have been working with us for about 18 months doing test work.

We recently announced the successful recovery of high purity (+99%) cobalt sulphate from the hydrometallurgical processing stage of our patent pending recycling technology during pilot testing.”

“We are also preparing concentrates for the Chinese to run a demonstration plant. The plan is that they would run the demonstration plant in China in 2020. Based on that we would undertake engineering studies to enable an FID, targeted for the following year.

“China produces around half the world’s titanium pigment and is the dominant player in the market, so having a Chinese government backed specialist as our partner fits perfectly with our strategy.

Pick: What is the third core project?

CR: “Our downstream Lithium Refinery Project is a partnership towards a 50:50 JV with Manikaran Power for a jointly funded feasibility evaluation for the development of the first lithium refinery in India.

“Manikaran is India’s third largest power trading company and has extensive renewable interests.

“Engineering and Feasibility studies are targeted for completion by end 2020 with an FID under consideration in the first half of 2021.

This is timed to bring production into an improved lithium market.

“A positive FID will trigger the 50:50 JV with Manikaran to develop a refinery using our Mt Marion offtake option as the baseload feed.”

With a proven record of crystallising project value and a raft of targeted high-value developments on the advance, it seems that Neometals is ticking a number of boxes on its projects in the lithium- ion battery and energy storage system sectors.

DECEMBER 2019 7

Cardinal Pit Illustration

Cardinal ticking all the boxes as world class Namdini Gold Project heads to FID

BY COLIN HAY

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hana-focused precious metals miner Cardinal Resources (ASX: CDV) is ready to progress its rich Namdini Gold Project to financial investment decision (FID) on-the-back of the release of an extremely positive feasibility study.

A cashed-up Cardinal will now proceed to finalise CAPEX funding of an estimated US$390 million as it makes strong progress towards the construction phase of its Tier One gold project.

Highlights of the recent Feasibility Study results included: • 5.1million ounces (Moz) Ore Reserve • 421,000 ounces in first 12 months • US$1.46 billion in un discounted, pre-tax free cash flow forecast with the current life of mine (LOM) plan of 15 years at US$1,350/oz • US$324 million in undiscounted, pre-tax free cashflow, forecast during first year of full production at US$1,350/oz • CAPEX payback of 21 months at US$1,350/oz, driven by yearly higher grades and recoveries, low strip ratio and low costs, within the starter pit • Aachen Process Technology adopted to provide economic benefits via operating cost savings; 85% gold recovery during first three years; 83% gold recovery for current LOM plan • Namdini 9.5 Mtpa gold project based upon a single, large open-pit with a conventional process plant design; crush, grind, float, regrind, high shear oxidation and carbon in leach (CIL) • Pit design LOM Strip Ratio 1.9:1 (PFS 1.4:1); Starter pit Strip Ratio of 0.9:1; LOM pit design based on US$1,235/oz (PFS US$1,105/oz) • Financial Model based on US$1,350/oz for 15 years (PFS US$1,250/oz) • 4.2Moz (130 metric tonnes) produced over 15 years (PFS 3.9Moz); AISC US$895/oz (PFS US$769/oz) • First gold pour targeted for H2 2022 Larger-than-life Cardinal CEO/MD Archie Koimtsidis said the results of the Feasibility Study have confirmed the world class quality of the Namdini asset.

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“With over one million ounces slated for production in the first three years; 421,000 oz in Year 1 alone, and an average annual gold production of 287,000 oz over a 15year mine life, Namdini ranks amongst the world’s largest known, financially robust, undeveloped gold projects,” he said.

According to Mr Koimtsidis, Namdini’s 5.1 million ounce Ore Reserve is projected to generate US$1.46 billion in undiscounted, pre-tax free cashflow over 15 years including US$324 million in undiscounted, pre-tax free cashflow during its first year of full production, based on a gold price of US$1,350.

“Since the discovery of Namdini in 2015, we have continued to be focused on derisking the project and have reached a robust Project CAPEX accuracy level of +15/5% for this Feasibility Study.

“Unlike whole of ore gold processing plants, we have the benefit of being able to produce a concentrate for gold extraction on site which means that we have a much smaller back half of the plant providing a huge positive impact on capital costs.

“Economic and technical optimisation confirms a large, single open-pit utilising a conventional process plant with a throughput of 9.5 Mtpa and a very attractive 24-month debt payback.”

Mr Koimtsidis said the Feasibilty Study demonstrated a viable, globally significant, long-life gold project at Namdini. Potential remains for further improvements in Project economics which will form the basis of ongoing evaluation work, including: • FEED and PEP programmes incorporating Whittle Consulting’s mine and schedule optimisation plan.

• OPEX savings by evaluating a flotation cleaner circuit; potential to reduce required regrind power.

• Additional Mineral Resources that are not part of the current Ore Reserve which represent lateral strike and depth extensions to the current LOM pit design at US$1,235/oz.

• Subject to the outcome of additional drilling beyond the current pit design, any economic discovery not in the current mine plan may extend the life of the current mine and may also include a new underground mine plan.

• The Regional land package may also have potential to define satellite pits with close proximity to Namdini. Recent results from drilling completed within the Ndongo Project, located approximately 24 km north of Namdini, are within hauling distance.

Drill testing new zones of high-grade gold mineralisation to define satellite pits will recommence soon.

Cardinal Resources is moving in the right direction to bring Namdini into production.

participated in various capital raisings during 2014 and 2015 and received these options. We would like to acknowledge and thank these holders in particular for their continued long-term support of the company.”

communities and their elders, along with the Government of Ghana, to bring this project into production.”

Mr Koimtsidis said that it was particularly notable that Cardinal’s Directors exercised all their Listed Options, totalling a further “skin-in-the game” investment in the company of approximately $1.67 million.

In September 2019 Cardinal Resources added to its strong cash position when it successfully raised $17.6 million through the exercise of Listed Options in the company.

A total of 117,398,958 of the Listed Options were exercised, being 99.84% of the Listed Options issued by the company.

Mr Koimtsidis added that on a social level, Namdini is poised to become the first large scale operating mine in the Upper East Region of Ghana, delivering sustainable prosperity and opportunities to all stakeholders.

Mr Koimtsidis said the very strong take up of the Listed Options considerably strengthened the company’s balance sheet and provided much improved scope to do certain long lead time activities as it prepares for development at Namdini.

“We are grateful for the continued overwhelming support of these

“Many of the options exercised were held by long-term shareholders who

The company is now well advanced in its plans to secure project debt finance on competitive terms and continues to assess various funding options.

“In addition to traditional financing solutions, the company is concurrently evaluating strategic alternatives to bring the project into production with a view to maximising economic outcomes for Cardinal shareholders,” Mr Koimtsidis said.

With a highly experienced and proven executive and mining team, a worldclass asset and strong institutional support – Cardinal Resources is moving in the right direction to bring Namdini into production.

Cardinal Diamond Drilling Rig DECEMBER 2019 9

Kalium Lakes racing towards start-up of Australia’s first SOP project Kalium Lakes Ltd (ASX: KLL) is well on its way to establishing a new Australian resource industry which will not only be a major boost for the company and its backers, but also for Australia’s rural sector and balance of payments.

BY COLIN HAY

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he company’s Managing Director and CEO, Brett Hazelden, told The Pick magazine that the Beyondie Sulphate of Potash Project (BSOPP) is on target to begin production at the end of 2020 and become the country’s first SOP project.

Mr Hazelden said the Beyondie SOP Project will fill an important gap in the supply of fertilisers to the Australian and New Zealand agriculture sectors.

“The production of Sulphate of Potash is a new Australian industry which will supply potash to Australian and New Zealand farmers. All of this product is coming from overseas at the moment. There are only four of our type of SOP mines in the world and we are on target to be the first in Australia,” Mr Hazelden said.

“A successfully operating SOP project will overcome the need for imports and ensure our own security of supply.”

“At the moment a lot of product imported into Australia is coming from the other side of the world, so having a local producer will be a great result for both our farmers and our economy.”

There is certainly a high value target market to aim for with the introduction of a successful SOP project.

In Australia 70,000 tonnes of SOP is used per annum, while another 400,000 tonnes of Muriate of Potash (MOP) is used. Although MOP is cheaper, it contains a chloride element.

“Farmers in general - if both products were readily available at the same price - would use SOP because the potassium and sulphur are fully utilised by the plants with no harmful residue left in the soil.

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Kalum Lakes Trial Pond Harvester.

However, with MOP, the chloride remains and increases the salinity of your soils,” Mr Hazelden said.

The value of a local Sulphate of Potash supplier to Australia has been recognised by the Federal Government, with the company awarded Major Project Status for the BSOPP in September 2019.

Kalium Lakes has also obtained exploration, pilot scale, early works and full project construction approvals for the Project, which is located 160km south east of Newman in Western Australia’s resource friendly Pilbara region.

Mr Hazelden said it is now full steam ahead to take the Beyondie SOP Project to first production.

“We have already committed to more than 80% of our contract items, so really it is now about bringing it all together,” Mr Hazelden said.

“Certain equipment is coming from Germany, so there is a bit of logistics to coordinate that and getting it all to site. Then there are

The gas pipeline will not only supply gas for the initial 90,000 tpa of SOP production but there is sufficient capacity to supply gas for expansion plans to produce 180,000 tpa of SOP, as well as other potential by-products such as magnesium.

Mr Hazelden said the BSOPP construction camp is almost finished and the small airstrip and access roads are already installed. The next piece of infrastructure required will be fresh water and power, with the gas pipeline set to be in place by October or November next year.

Kalium Lakes has also demonstrated its innovative thinking with a cost-effective transportation agreement for its offtake.

“We have looked at all the various ports, with the closest being Port Hedland. However, what the customers want is sea containers, so we are going to send our product through to Fremantle.

“We have done a deal with Toll Mining Services- which takes all the ammonium nitrate from Perth up to the iron ore mines to blast the rocks up there. Those trucks are coming back empty and they go straight past our front gate. They will just pull up our driveway, two to three trucks a day, pick up our load and take it back to Fremantle. A win-win for both parties,” he said.

With a ready to fill local market, an easy to mine operation and access to critical infrastructure, Kalium Lakes is right on target to bring a new and valuable industry to Australia’s mining sector.

A successfully operating SOP project will overcome the need for imports and ensure our own security of supply for Australian farmers.

Three of Kalum Lakes’ Directors Mal Randall, Brett Hazelden and Stephen Dennis at the newly installed pond liner. significant earthworks and making sure everything is prepared for construction with the aim of achieving first production by the end of next year,” The Project will start off at 90,000 tonnes per annum, which Mr Hazelden said is effectively enough to supply both Australia (70,000 tpa) and NZ (20,000 tpa).

“We will also look at selling some into South East Asia, Japan is a big market, as is Indonesia and Malaysia. We won’t be focusing on China, but will investigate everywhere else,” he said.

Being located in one of Australia’s premier mining districts there is no shortage of infrastructure to support Kalium Lakes’ construction activities and its plans to send product to market across Australia and overseas.

To fill the project’s long-term power needs Kalium Lakes has awarded contracts for design, supply and construction of a fully owned gas lateral and power station.

DECEMBER 2019 11

Marenica building a world class portfolio of uranium exploration assets Marenica Energy Limited (ASX: MEY) is progressing strongly towards its aim of being amongst the leading ASX-listed companies in the uranium exploration space.

BY COLIN HAY

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ith drilling at its Koppies project in Namibia and its proposed acquisition of a significant 48 million pounds of high-grade Australian uranium resources creating excitement, Marenica is grabbing the attention of international uranium industry followers as a company to watch out for.

The company’s current exploration focus is Koppies in Namibia where it recently hit some spectacular drilling intervals including two metres at 4,504 ppm U3O8 contained within an intersection of 13m at 905 ppm U3O8. 4,504 ppm U3O8 is over 10 times the typical exploration grade in the area.

“With such fantastic results, the Koppies story continues to develop, with excellent grades achieved from Phase 2 drilling, coupled with the discovery of a new highly mineralised palaeochannel at Koppies 2,” Marenica’s Managing Director Murray Hill said.

Mr Hill said the mineralisation at Koppies 2 appears to extend approximately 3.6 km in length.

“We are excited with the exploration results at Koppies and are taking a measured approach where we determine the palaeochannel location with HLEM, drill the palaeochannel and assess the assay results before repeating that process,” he said.

“To date, every palaeochannel we have drilled has been mineralised, which is a great outcome. We intend to extend our drilling within the Koppies tenement with the aim to identify extensions to known palaeochannels and locate new palaeochannels.

“Once we understand the nature of the palaeochannels at Koppies we will extend exploration to other granted tenements.

“We have proven at Koppies that we have been picking up high quality exploration ground.”

Mr Hill said Marenica is the largest land holder by area for nuclear fuels in Namibia with 14 EPLs in total in the country, made up of seven applications and seven granted tenements, with Koppies the main priority at the moment.

Mr Hill, a veteran of mining in Namibia, says the country is a great THE-PICK.COM.AU

place to operate, with great geology, a supportive government and local community, and spectacular local wildlife.

Marenica is in the process of acquiring Optimal Mining Limited’s Australian uranium portfolio of 48 Mlb at 859 ppm U3O8 and the completion of the acquisition is expected during December 2019.

The transaction includes the outright purchase of the Angela, Thatcher Soak, Oobagooma and Minerva project areas and joint venture interests in the Bigrlyi, Malawiri, Walbiri and Areva joint ventures.

The Australian mineral resources and the Namibian exploration success are significant in their own right but could be dramatically enhanced when coupled with Marenica’s patented U-pgradeTM beneficiation process. A process that increased the Marenica Uranium Project ore grade from 94 ppm to ~5,000 ppm U3O8 and thereby lowering the cost base by ~50%.

Marenica is building a multi-asset, geographically diverse, uranium portfolio in Namibia and Australia providing a pipeline of sustainable developments into the future, in a uranium market where demand continues to outstrip production. The uranium mineralisation styles targeted by Marenica are suitable for processing via its breakthrough proprietary U-pgradeTM beneficiation process.

Meanwhile, Mr Dave Princep has been appointed Consulting Geologist to the group. Mr Princep has extensive uranium exploration experience in Namibia and Australia. Whilst working at Paladin, Mr Princep also prepared and oversaw the mineral resource estimates on the majority of the Australian tenements that Marenica is in the process of acquiring from Optimal Mining Limited.

Mr Hill said with its Namibian tenements and Optimal’s Australian uranium assets, Marenica will be one of the leading ASX listed uranium companies with a portfolio of tenements spanning the premier uranium jurisdictions of Namibia and Australia.

Marenica Energy is the largest holder of uranium exploration acreage in Namibia.

Since then, the company has been busy with a follow-up drill campaign of approximately 10,000 metres of RC and diamond drilling, primarily to develop a larger deposit and progress towards development.

In particular, Peel has targeted the Corridor Zone, which lies between Wagga Tank and Southern Nights, where they are testing for mineralisation that connects the two deposits.

Peel Mining continues to have drilling success at Wagga Tank Southern Nights.

Peel Mining’s Wagga Tank – Southern Nights showing its metal With a maiden resource at its flagship Wagga Tank- Southern Nights project under its belt and follow-up drilling further boosting the project’s potential, Cobar Superbasin-focused Peel Mining (ASX: PEX) is certainly not sitting idle.

BY COLIN JACOBY

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ince listing back in 2007, Peel has been busy exploring the Cobar Superbasin in New South Wales, one of the most important metalliferous regions in Australia containing some of the largest base metal deposits in NSW.

The region has seen its fair share of exploration and development over the years since the discovery of the Great Cobar copper deposit back in 1870.

For Peel, the jewel in the crown is its wholly-owned Wagga Tank-Southern Nights project which comprises four tenements with notable prospects including the namesake Wagga Tank polymetallic deposit, Southern Nights, Siegal’s Shaft/MD-2 and the May Day Tails anomaly.

Wagga Tank lies on the western edge of the Cobar Superbasin ~130 km south of Cobar, and represents a significant polymetallic Cobar-type deposit.

Back in July, the company ticked off a major milestone with the roll out of its maiden Indicated and Inferred Mineral Resource Estimate for Southern Nights-Wagga Tank of 3.8 million tonnes for 206,000t contained zinc, 78,000t contained lead, 9.1Moz contained silver, 10,000t contained copper, 38,000oz contained gold (or 348,000t contained zinc equivalent).

Strong new mineralisation has been confirmed in the Corridor Zone with intercepts including 2.1 metres at 4.7% copper, 129g/t silver, 0.15g/t gold, 0.4% zinc, 0.5% lead from 530.2 metres and 9 metres at 7.6% zinc, 4.7% lead, 0.1% copper, 153 g/t silver, 0.46 g/t gold from 501metres (including 2.8 metres at 21.6% zinc, 12.7% lead, 0.4% copper, 441 g/t silver, 1.23 g/t gold from 505.1 metres).

Peel Mining Managing Director Rob Tyson said results highlighted the potential to infill the zone between Wagga Tank and Southern Nights, further enhancing the development prospects of the project.

“VMS and Cobar-style mineral systems are renowned for clustering and stacking and we see every chance that this will be the case here - we look forward to completing follow-up drilling in due course,” he said.

The company is continuing with resource upgrade drilling at Wagga Tank and Southern Nights to advance the deposits towards development.

Meantime, Peel is also moving ahead at its 50% owned Mallee Bull joint venture project with CBH Resources, regarded as one of Australia’s highest-grade undeveloped copper resources.

A JORC resource update from 2017 highlighted a resource of 6.8 million tonnes grading at 1.8% copper, 31 g/t silver, 0.4 g/t gold, 0.6% lead, 0.6% zinc (2.6% copper equivalent).

Peel is currently in talks with CBH to further develop Mallee Bull including carrying out a resource infill drilling program to upgrade classification of the resource estimate ahead of feasibility studies.

DECEMBER 2019 13

“Nickel prices are also on the rise on the back of Indonesia’s policy on nickel production,” Mr Williamson added.

That wasn’t the case when Ta Khoa operated between 2013-2016, during which time nickel prices were extremely low.

“There was no nickel battery market back then,” Mr Williamson said.

“It is forecast that half of the nickel produced in the future will end up in the battery market.”

Mr Williamson said it wasn’t only the low prices that led to Ta Khoa shutting down previously.

“It was largely because there was no investment in exploration.

They focused on the first ore body discovered and mined that out,” he said.

“We have already identified 25 targets and we know there is also another big ore body right next to the processing plant.”

The previous operators were also handicapped by their decision to only produce a concentrate.

Processing plant at Blackstone’s Ta Khoa Nickel Project

Blackstone ready to take advantage of booming global battery industry at Ta Khoa They say timing is everything, and that is certainly the case for Blackstone Minerals Limited (ASX: BSX) and its Ta Khoa Nickel Project in Northern Vietnam.

BY COLIN HAY

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he Ta Khoa Project includes the Ban Phuc nickel mine which operated as a mechanised underground mine from 2013 to 2016. The Ta Khoa Nickel Project has existing modern infrastructure built to Australian Standards including a 450,000 tpa processing plant located within a premier nickel sulfide district.

“Under Vietnam Government rules, if you only produce a concentrate the Government will receive 20% in royalties. They paid the Government around $65 million in the three years they were in operation,” Mr Williamson said.

“Our plan is to develop a downstream processing facility that will produce nickel sulphate for the battery industry so we won’t have to pay that 20%. The Government wants the downstream processing to create employment opportunities for the locals.”

Mr Williamson believes that Ta Khoa’ s Vietnamese location means it is ideally placed to meet the demands of the growing Asian market.

“We have already had discussions with potential South Korean customers. An added bonus is that leading global battery and solar firm LG Chem is just down the road with a battery facility at the Port City of Hai Phong,” he said.

“So we are right on the radar of the potential end users.”

With $5 million in the bank to fund the next phase of its strategy, Blackstone has an aggressive plan to explore the upside at Ta Khoa.

“Currently we are drilling out the large ore body and we have four drill rigs on the ground. The aim is to prove up a resource and a scoping study in six months’ time,” Mr Williamson said.

Blackstone is the first company to use IP as a targeting tool at Ta Khoa and initial results suggest the geophysical method will allow the company to define higher grade zones within both the massive sulfide vein (MSV) and disseminated sulfide zone (DSS) prospects there.

The company’s Managing Director Scott Williamson says the Ta Khoa Project has Blackstone perfectly placed to take advantage of rising nickel prices and new market opportunities.

An added bonus is that previously unrecognised PGE grades associated with the Ban Phuc DSS suggest a potential by-product credit which Blackstone believes could significantly enhance the future economics of the Ta Khoa Nickel Project.

“We are well placed to meet global demand for the battery industry.

The lithium-ion-nickel battery potential is huge, with the growing interest in electric cars creating a big uptake of nickel.

With a large nickel target that will help it deliver a high value product to a rapidly growing global market, now is the time to take a closer look at Blackstone Minerals.

THE-PICK.COM.AU

Galan flying under the radar with high-grade lithium brine project While it has been a gloomy time for lithium, ASX-listed junior Galan Lithium (ASX:GLN) believes it is in a strong position to ride the current downturn and benefit when the market improves with its high-grade, low impurity lithium brine projects in Argentina.

BY COLIN JACOBY

Galan Lithium’s maiden drilling campaign at the Candelas lithium brine project, Argentina.

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here is no disputing lithium has had a tough year with the price plunging in response to over-supply in the market and subsequently a number of new Australia-based hard rock lithium producers have pulled back operations.

However, Galan believes it is well placed since lithium brine, compared to hard rock lithium, is less costly to mine and operate mainly due to the production process being much simpler with a smaller number of steps to production.

“Lithium brine is cheaper to extract and mine because the drill and blast method used in hard rock mining requires a lot of energy,” Galan Lithium Managing Director Juan Pablo Vargas de la Vega said.

“For lithium brine, nature has already done it for us. The minerals are already dissolved in the brine so all we need to do is pump lithium brine from the salar, produce concentrate through solar evaporation and treat concentrated brine to deliver the lithium carbonate product. So the cost compared to the hard rock method is significantly lower.”

Galan holds six projects totalling around 25,000 hectares in the best neighbourhood for lithium brines in the world, the Hombre Muerto salar in the world-renowned Lithium Triangle in Argentina.

Hombre Muerto, along with the Atacama salar in Argentina, hosts the world’s largest reserves of lithium with 60% of global annual production coming from these salars.

What also places Galan ahead of its peers is that its project represents not only one of the highest-grade resources in Argentina but also features the lowest impurity levels of any project in the country.

In 2019, Galan accelerated work at its flagship Candelas project conducting an eight-drill hole campaign. Drilling primarily in the northern zone of the project unearthed some stellar numbers including 192 metres at 802 mg/l lithium with very low impurity levels.

This led to a maiden JORC resource for the project’s higher-grade north zone of 684,850

tonnes of contained lithium carbonate equivalent (LCE) at 672mg/l Li (500mg/l Li cut off).

Importantly for Galan and investors, the resource was better-than-anticipated and has provided them with the impetus to kick off a pre-feasibility study into the planned Candelas development this quarter with a pilot plant slated for third quarter 2020.

While work on Candelas is bubbling away, Galan is also ramping up exploration work at its Western Basin projects in the Hombre Muerto Salar.

Recently, Galan’s drilling campaign intercepted the highest ever recorded brine hit in Argentina at its Rana de Sal tenement with a lithium grade section 39m grading over 1,000mg/l Li, with low impurity levels. The heavy brine was encountered from a depth of only 83m.

“We are delighted with the interim grades in excess of 1,000 mg/l Li with low impurities at Rana de Sal, being the highest-grade samples returned by Galan to date,” Mr Vargas de la Vega said.

“This augurs well for potential new, very high-grade resources for the Western Tenements which would greatly complement our recently reported maiden resource from Candelas.

These high-grade, low impurity results are the key outstanding factors that differentiate Galan and strengthens our view that the Company’s projects have excellent development potential at Hombre Muerto.”

In addition, Galan also confirmed the highgrade nature of its Pata Pila tenement in Western Basin with all samples returning lithium grades of greater than 900mg/l Li with low impurity levels.

The Rana de Sal and Pata Pila licences both cover large alluvial fan areas lying adjacent to Livent Corporation’s (NYSE: LVHM) tenure, covering the western margin of the Hombre Muerto salar.

What also sets Galan apart from other lithium juniors is its wealth of experience.

In September, Galan appointed former Sociedad Química y Minera de Chile (SQM) Vice President of Sales Daniel Jimenez as a Non-Executive Director. Mr Jimenez has 28 years of experience in the lithium industry with SQM – a world leader in lithium production.

DECEMBER 2019 15

Australia stays firm as world’s leading lithium miner, but markets remain mixed A new report from the Federal Department of Resources and Energy has confirmed that Australia remains the world’s largest producer of mined lithium, producing 58% of the global total in 2018.

BY COLIN HAY

The Government study suggested that lithium production chains are evolving rapidly, with a shift in the market towards the use of hard rock deposits.

“Lithium hydroxide produced from hard rock is more amenable to hightemperature sintering, which makes it more suitable for use in high-nickel products such as batteries. Hard rock production involves pulverising the ore to extract raw material, producing concentrates, and the mixing of concentrates with nickel, manganese and cobalt to produce oxides that combine with electrolytes.”

Lithium-ion investment on record pace Meanwhile, leading global resource sector analyst firm Wood Mackenzie reports that more than US$350 million was invested in advanced lithium-ion technologies during the first half of 2019.

Wood Mackenzie’s global energy storage outlook, Q3 2019 suggested that the market is set for a record year the total figure for 2018 sitting at US$600 million.

More than US$350 million was invested in advanced lithium-ion technologies during the first half of 2019.

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he Federal Government’s Resources and Energy Quarterly for the September quarter reported that the Australian mining sector invested heavily in new mining opportunities, and its output increase amounted to 56% of additions to world production in 2018.

However, with spodumene prices falling, ASX-listed Australian producers cut their revenue forecasts and experienced dramatic falls in their share prices in 2019 — with some down over 50% since January 2019.

The September Quarterly said that lithium producers are reassessing expansion plans, to minimise their risks in the face of declining prices.

However, the report suggested that even if expansion plans are delayed, the ramp up from mines which started operating in 2018 is expected to see output rise in the short-term.

“Australian lithium production (in lithium carbonate equivalent terms) was 288,000 tonnes in 2018–19, and is forecast to hit 358,000 tonnes by 2020–21,” the report stated.

The surge in production is expected to contribute to growing levels of stock, both in Australia and elsewhere, while world stock levels are expected to peak at levels equivalent to almost two years’ consumption in 2021.

THE-PICK.COM.AU

Mitalee Gupta, a Wood Mackenzie Analyst, said that as the demand for lithium-ion batteries continues to grow, future battery price reductions will be driven by manufacturing ramp-up, improvements in battery energy density and advancements in commercialising advanced lithium-ion technologies.

“Since 2018 the market has seen significant investments in advanced lithium-ion technologies from automotive giants and oil companies alike. Investments have focused on developing batteries that are cobalt-free and use alternate electrode materials or solid-state electrolytes.

“While not all these technologies will become successful, several of them will make their way into the electric vehicle (EV) and storage markets in the coming years,” Mr Gupta said.

He said that in the future, this differential is expected to shrink as NMC price declines continue to be driven by demand from EVs and energy density improvements.

“Earlier this year the Company looked to shift towards stronger growth prospects, targeting gold and in particular the Kookynie project which presents a nearterm production target,” Mr Livingstone said.

“The area hadn’t been explored in over 25 years and represented a compelling opportunity.

“The work completed to date has been above our expectations with initial inspections of the ground showing there is further gold mineralisation which was left untouched by the now-ancient mining activities.”

MD & CEO Jason Livingstone (Left) and Chairman Mathew Longworth (right) discuss future plans.

Metalicity turning back the clock in the WA Goldfields What’s old is proving new again for gold explorer Metalicity (ASX: MCT) as the ASX-listed prospector unearths fresh high-grade hits at its historic Kookynie project, located 50 km south of Leonora in the WA Goldfields region.

BY ALEX BAKER

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he Kookynie project hosts six previously operating mine sites, including Cosmopolitan which was one of the largest producers in the nation, pumping out 360,000 ounces of the yellow metal from 1896 to 1922.

Metalicity has been inspecting a mineralised structure which is believed to extend across these sites, with modern exploration generating rich pickings from unexplored zones that are along strike and down dip from mined areas.

At the former Leipold mine Metalicity has only had the opportunity to sink a single hole, which returned 9 metres @ 7.31 g/t Au from 34 metres.

In an earlier campaign, assays from Cosmopolitan have confirmed 2 metres @ 22.1 g/t Au from 76 metres.

Exploration in the area is in the early stages with recently appointed Managing Director and CEO Jason Livingstone completing a strategic refocus in May this year to direct attention to its new gold assets.

The Company is also hard at work at the Yundamindra gold project, located within 20km of Kookynie, which was brought into the company at the same time as Kookynie.

“Both are farm-in projects through our partners Nex Metals (ASX: NME), whereby a total $5m exploration spend within five years will permit Metalicity 50% ownership,” he said.

Since the agreement, the Company has been actively pursuing this exploration spend target with two exploration campaigns across the large tenement.

Metalicity has also been busy pegging ground and stringing together additional farm-ins – consolidating ground at the project – which will also count towards the $5m target.

The Company holds a diverse mix of other minerals projects in its portfolio, making project area applications in the copper-gold rich Paterson Ranges as well as tenements east of Leonora dubbed Fraser Range North, which are prospective for nickel-copper.

Meanwhile the Company is also in the process of spinning-out its zinc assets on to the Canadian TSX-Venture exchange.

While global zinc conditions have been unfavourable, the Company has said it will continue to evaluate options for the tenements moving forward.

The Admiral Bay project, which is located in WA’s Kimberley region, is one of the world’s largest undeveloped zinc deposits.

DECEMBER 2019 17

Trigg Mining upand-running to develop its huge SOP potential After completing a successful IPO and listing on the ASX in late October 2019, Trigg Mining (ASX: TMG) is not sitting on its laurels.

BY COLIN HAY

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s you read this article, the company is already out in the field in the Goldfields-Esperance region of Western Australia aggressively exploring its large tenement holdings as it takes the first steps towards developing an exciting project that “communities can be proud of”.

In a winning hat trick of recent corporate moves, the company raised $4.5 million in its IPO, acquired K2O Minerals Pty Ltd and successfully listed on the ASX. Those activities have left the company well-funded for an aggressive drilling campaign across its massive 2,640 sq, km of granted tenements across two Sulphate of Potash (SOP) Projects.

Well regarded Trigg Mining Managing Director, Keren Paterson and a former winner of the Telstra Business Women’s awards, told The Pick magazine recently that the company’s IPO was successful for a range of reasons.

“Sulphate of Potash hasn’t really been a part of the vernacular of mining before in Australia. It is quite new, but it is where mining and food supply come together,” Ms Paterson said.

“Initially when I started Trigg Mining, it was about building mines communities could be proud of and how that connects very well with fertiliser, global food security and sustainability of mining.

“There is huge demand for Sulphate of Potash in Australia, with all the product used today currently being imported.”

That philosophy was reflected in the support for Trigg’s IPO which was backed by the Australian public, a large resources-focussed institutional investor and the agricultural community.

The quality and size of Trigg’s Laverton Links and Lake Throssell SOP Projects, the low environmental impact of the proposed developments and their proximity to key infrastructure, are strong foundations to building a successful company.

Evaporation is the main processing element, there is no open pit and there is no waste rock dump.

THE-PICK.COM.AU

“So there is a very light environmental impact, especially if you keep the dams on a salt lake, as we have the potential to do so there with our Lake Rason Prospect - which is part of the Laverton Links project,” Ms Paterson said.

“There are no chemicals used in the process to produce it, it’s purely evaporation and it has the potential to be certified organic.”

SOP has already been identified across half of Trigg’s tenements, including a JORC Compliant Exploration Target, which the company is already actively testing with a programme of shallow aircore drilling.

“Between now and Christmas we are undertaking activities right across all our project areas. The programme to define the mineral resource is now underway,” Ms Paterson said.

“Our Laverton Links Project is made up of three prospects - Lake Rason which has an exploration target which has had some early drilling, Lake Hope Campbell and East Laverton.

“So we are doing some drilling across the tenements to expand the exploration target and to potentially upgrade some of that to a mineral resource.”

With a unique deposit and a massive local agricultural market crying out for locally developed sulphate of potash, Trigg Mining is definitely a company to follow as it fast-tracks exploration on its very large tenement holdings.

Trigg Mining’s Managing Director Keren Paterson at Lake Rason

Canaccord Genuity remains bullish on Perseus, maintaining a Buy rating with a 12-month target price of $1.20/sh.

“PRU has outperformed most of its gold producer peers since August, which we attribute to a growing recognition of PRU’s improved operational stability and now diversified (i.e. lower risk) production base.

We continue to see PRU as undervalued on both an absolute and relative basis,” Canaccord’s latest report said.

Perseus on track for production boost With its third West African gold mine under development, Perseus Mining Limited (ASX/TSX: PRU) is moving into new territory.

Bringing a third mine into production – and moving past that 500,000oz per year benchmark – has been a long-held goal for Perseus, and led it to acquire Yaouré through a merger with Amara Mining in 2016.

“By 2022, we expect to be producing slightly over 500,000 ounces with costs around $800 per ounce,” Mr Quartermaine said.

As it continues construction at Yaouré, Perseus’ next task is to build on its existing inventory through exploration.

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“We are putting the final touches on an organic growth strategy that will be driven by exploration,” Mr Quartermaine said.

Managing Director Jeff Quartermaine said Perseus had “turned a corner”, demonstrated by the company’s 11 consecutive quarters of meeting production expectations, along with Yaouré’s successful development to date.

“We’re also looking at various alternatives around Edikan where we are looking at a number of initiatives that if they stack up, as we think, they will also incrementally increase the life of Edikan.

“We’re consistently producing on target and we’re gradually bringing our cost base down,” Mr Quartermaine said after Perseus reported a 3% increase in production and a 7% decrease in costs for the September 2019 quarter. It finished the quarter with more than A$100 million in cash and bullion on hand.

“The potential for extending the reserve inventory, and therefore the mine life, at Yaouré, which currently sits at about eight and a half years, is excellent.”

he company is on track to boost its gold production more than 500,000 ounces per year by 2022 after its Yaouré gold mine in Cote d’Ivoire comes online in late CY2020.

“We’re now moving into a different phase of our existence and we are financially very strong.

Our balance sheet is excellent,” he said.

Perseus’ performance hasn’t gone unnoticed, with the company’s share price improving consistently through CY19 as it continues to deliver on its goals in tandem with a resurgent gold price that’s reaching new highs.

Jeff Quartermaine

Credit Suisse upgraded Perseus from Neutral to an Outperform rating on the back of the September quarter performance, highlighting its increased production diversity and earnings with the development of Yaouré.

“Yaouré will lift group production to ~500koz/yr, at which scale a structural re-rating might be achieved,” the report said.

Credit Suisse said Perseus had demonstrated its capabilities to permit, design, build and operate gold mines in West Africa. Perseus’ second mine, Sissingué in Cote d’Ivoire, was on schedule and budget when completed in January 2018.

“Edikan and Sissingué are performing strongly and now reliably, and generating consistent free cash flow,” it said.

DECEMBER 2019 19

Acquiring the Kayelekera Uranium Project has transformed Lotus Resources.

Lotus finds new life in uranium When little-known Hylea Metals announced it was acquiring a majority interest in a Malawi uranium mine earlier this year, the news caught the attention of some big-name investors.

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he deal to acquire an initial 65% interest in the Kayelekera mine from producer Paladin Energy has been transformative for the company, now trading as Lotus Resources (ASX: LOT).

Paladin permitted, constructed, commissioned and operated Kayelekera between 2007 and 2014 and produced 10.9Mlb of U3O8 from the mine. But the project has been on care and maintenance since then due to the low uranium price.

Lotus Managing Director Simon Andrew said the deal was an excellent opportunity for the company.

“Kayelekera is a world class uranium asset that has produced more than 10.9 million pounds of uranium and represents an opportunity to use the past production information to re-engineer certain mining and processing processes in order to reduce the overall

Sachem Cove principal and major Lotus shareholder Mike Alkin

capex and opex of the operations,” he said when the deal was announced.

“We are optimistic about the global uranium market and the outlook for firmer pricing.”

Since the June announcement, Lotus has seen considerable movement on its share register with firms including Copia Investment Partners, Regal Funds Management and Sachem Cove Special Opportunities Fund all becoming substantial shareholders, declaring a 5%+ interest in Lotus, while Matador Capital’s Grant Davey, who crafted the deal for Lotus, now holds more than 8% of the company.

The Sachem Cove fund is held by Sachem Cove Partners, a USbased fund headed up by uranium industry ‘guru’ Michael Alkin and Lloyd Harbor Capital Management, LLC to take advantage of the dislocation between supply and demand in the global uranium mining sector.

Alkin, a former hedge fund analyst, has been talking up the opportunities in uranium investment for the past few years.

“I just don’t care about short-term price action. For me and for Sachem Cove it’s about risk/reward. What’s my potential upside versus my potential downside. You can’t calculate that unless you look at it on a company-by-company basis,” he told CRUX Investor.

Alkin’s optimism for uranium was echoed by others in the industry, such as Joseph Boskovich, co-founder and partner at Old West Investment Management in the US, who says uranium could be the most undervalued commodity in the world right now.

Old West launched a uranium-dedicated fund a year ago.

“We actually don’t feel that we’ve ever seen an opportunity like this,” he said.

That’s good news for newcomers like Lotus as it looks to square the Kayelekera deal away, having completed $3.5 million in capital raisings via a placement and rights issue to fund the acquisition.

It needs to satisfy a few more conditions on the deal including obtaining consent from the Government of Malawi and the Reserve Bank of Malawi, but Lotus is confident these steps will be achieved.

Once that hurdle is passed, Lotus can increase its interest in the project to 85% with an option to acquire the 20% held by joint venture partner Lily Resources. The remaining 15% is held by the Government of Malawi.

THE-PICK.COM.AU

Superior deal beckons for zinc project After demonstrating the high margins possible at its namesake zinc project in Canada, Superior Lake Resources (ASX: SUP) is on track to lock in funding to develop it.

38,000 tonnes of contained zinc and 1,400 tonnes of copper a year over a nine-year mine life. The BFS gave the project a pre-tax Net Present Value of US$157m.

Mr Davey said the potentially low AISC was a factor driving the project’s development.

“The purpose of the BFS was to validate Superior Lake becoming a viable zinc operation and this was clearly achieved as the study demonstrated the project will generate strong cash flow throughout the nine-year mine life,” he said.

The BFS was supported by a maiden reserve of 1.96 million tonnes of ore at 13.9 per cent zinc, 0.6 per cent copper, 0.2 grams per tonne gold, and 26.2 g/t silver.

A research report by BW Equities after the BFS results was positive, stating “SUP provides investors exposure to an emerging zinc producer in a stable jurisdiction, with lightly explored ground and proven production history. The project can come into production quickly (we expect 2021) with the benefit of existing infrastructure and permitting,” “SUP is well positioned to take the project into construction with a manageable equity component. With the funding process and project optimisation work well advanced, we expect to see certainty on the funding route firm up in the near term.”

Meanwhile, it is back on the ground at Superior Lake, hoping to make new discoveries close to the Pick Lake deposit, which hosts the majority of the 1.96 million tonne Ore Reserve.

SUP identified several major geophysical anomalies during its 2019 exploration program that the company is now following up.

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edia sources including The Australian Financial Review and The West Australian reported SUP has been in talks in recent months with several big names in the industry to secure financing and offtake arrangements to get the project back into production.

SUP confirmed offtake suitors include Glencore, Trafigura and Swiss metals trader IXM while Sprott and Société Genérale have submitted indicative funding proposals.

But it is yet to make a deal on either front.

“While the Company continues to hold discussions with these parties, there is no agreement, no formal offer has been received,” Superior Lake’s Executive Director Grant Davey told the ASX in September.

SUP delivered a Bankable Feasibility Study for the project in August 2019 which presented excellent project economics, including an all-in sustaining cost (AISC) of US$0.47 per pound of zinc produced. This would rank the project in the lowest quartile of producers globally.

The project, near Thunder Bay in Ontario, is expected to produce

“A discovery at any of these anomalies would significantly change the parameters of the project both in terms of mine life as well as production profile,” Mr Davey said.

To date, exploration efforts have identified four previously unknown geophysical conductive bodies close to Pick Lake. SUP is excited about the potential of these new mineralised horizons and is awaiting assay results to determine the best way to proceed its strategy.

Superior Lake has a history of zinc production. High-grade zinc was first discovered in the region in the late 1800s and the Zenith deposit was developed in 1900 and mined for several years, followed by another stint in the 1960s. Nearby, Winston Lake was developed in 1986 and it produced 3.4 million tonnes grading 1.0% copper and 16% zinc.

Winston Lake Mine included a 1,000tpd mill which produced approximately 900 million pounds of zinc, 53Mlbs of copper and more than 50,000 ounces of gold at reported recoveries of 93% (zinc) and 78% (copper). A test stope was later developed at the Pick Lake deposit with production from this deposit adding to the ore feed for several years until operations ceased in December 1998 and later closed due to a zinc price slump.

SUP acquired the project in late 2017, and in November 2018, undertook the first drilling on site in more than 20 years.

DECEMBER 2019 21

mineralisation within the same rock types that host mineralisation at the Nova and Silver Knight deposits.

“The intrusive rock unit matches the location of a conductive zone at depth which provides us with an excellent target for drill testing into the future.”

Drilling at the Lantern prospect, located in the high-profile Fraser Range area in WA.

Galileo navigating the Fraser Range With the backing of legendary Fraser Range prospector Mark Creasy and increasing hints of the region’s famed nickel-copper sulphides, junior explorer Galileo Mining (ASX: GAL) is charting the course towards discovery in the Fraser Range.

BY ALEX BAKER

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alileo listed in May 2018 with a handful of Fraser Range joint-venture tenements handpicked

by Mr Creasy as well as the wholly-owned Norseman project which hosts highly-prospective copper mineralisation.

Under the stewardship of former Creasy Group manager and current Galileo managing director Brad Underwood, the company has developed a prolific exploration campaign testing three Fraser Range prospects as well as the Norsemanbased Subzero copper-gold prospect.

In the Fraser Range, the Company’s flagship Lantern prospect, located along strike from the Creasy Group’s unfolding Silver Knight deposit, continues to emerge as a key contender to host high-grade nickel.

Two rounds of aircore drilling plus a moving loop electro-magnetic (EM) survey have THE-PICK.COM.AU

defined a large-scale conductive target with the right rock types capable of hosting magmatic nickel sulphides.

A top result from nearby reconnaissance work has returned 27m @ 0.18% nickel and 0.17% copper from 47m.

While the company maintains momentum in the Fraser Range it has also been testing its Norseman Subzero coppergold prospect, which caught the eyes of investors earlier in the year when assays from surface sampling returned a top result of 19.9% copper.

The sampling was located near a historic prospector shaft and follow-up surveying and drilling has confirmed the shaft sits above an EM conductor within a large volcanic massive sulphide-style system.

An initial program of six RC drill holes at Subzero returned thick zones of copper and zinc mineralisation with hints of gold and silver. The maximum copper assay of 1m @ 0.31% was associated with a sulphide unit which also carried a maximum of 1.9% zinc and up to 0.12 g/t of gold.

EM modelling has significantly enlarged the size of the Subzero project, defining a conductive zone which stretches across two kilometres.

Galileo is planning a second round of RC drilling at Subzero in late November giving the aspiring explorer plenty of opportunity for a breakthrough discovery before Christmas.

Hunting for higher grades, the Company has confirmed it will look to utilise reverse circulation (RC) and diamond drilling for its upcoming drilling programs to test for mineralisation at the source of the EM conductors.

Commenting on the aggressive exploration at Lantern, Mr Underwood said: “The Fraser Range is one of the most underexplored nickel-copper provinces in Australia and Galileo has an obsessive focus on drilling and exploring to make an economic discovery.

“Early results at the Lantern prospect have been very positive, hitting anomalous

Legendary prospector Mark Creasy (left) and Galileo’s Brad Underwood discuss the potential of the Lantern prospect.

Artemis building a golden opportunity

“With the ground cleared we will look to update and improve our resource estimate and following this complete a detailed scoping study outlining a potential mining operation.

With exposure to the WA Pilbara region’s gold riches, as well the Paterson Range’s emerging copper-gold potential, Artemis Resources (ASX: ARV) is an exploration company with a number of strings to its bow.

“A core goal of the company is to define a minimum three-year mineable reserve, which will support sustainable operations and progress to mining. We believe that the transition from explorer to producer can happen in a relatively rapid timeline considering our existing Pilbara experience and asset base,” he said.

BY ALEX BAKER

Unlike many other resource companies, Artemis’ portfolio includes a previously operating mine plant, known as Radio Hill, which is in close proximity to Carlow Castle.

“A core goal of the company is to define a minimum three-year mineable reserve, which will support sustainable operations and progress to mining.”

The Carlow Castle project has become a major asset for Artemis.

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hief among the explorer’s assets is its Carlow Castle project – a largescale conventional gold-copper-cobalt deposit located approximately 30km from the Pilbara hotspot of Karratha and the port facilities of Dampier.

Artemis has seen the value of its Carlow Castle project significantly improve with its JORC resource expanding twice this year to reach an imposing Inferred resource estimate of 418koz gold, 48kt copper and 7kt cobalt within 8Mt grading at 0.51% copper, 1.6 g/t gold and 0.08% cobalt. The project has also benefited from strong tailwinds of a soaring gold price.

Since then the explorer has continued to prove up the deposit through sub-audio magnetic surveying and high-impact ground clearing.

With the mineralised zone almost outcropping the high-impact exploration has removed a thin veil of clay, allowing more detailed geological mapping directly from the top of the ore body.

According to Artemis Resources Managing Director Ed Mead the cleared ground not only allows for better geological mapping but also anticipates more efficient drilling operations.

“Carlow Castle is an exceptional ore body which we see as a top-tier priority for the company and Artemis has been hard at work evaluating a number of pathways forward,” Mead said.

The plant’s refurbishment is approximately 80% complete, with the market junior waiting for its mineral reserves to reach critical mass before completing the restoration.

While the combination of Carlow Castle and Radio Hill offers a rare value-add proposal Artemis has also been busy in the Paterson Range developing its Armada project.

The project lies adjacent to Greatland Gold’s emerging Havieron gold-copper deposit and near the large-scale Telfer gold mine.

Armada surrounds the Havieron project to the north, south and east with Artemis hunting for similar mineralisation through a series of gravity and seismic surveying.

Artemis will look to drill its Armada project in the near future with more than 10 priority targets identified, adding further momentum to the aspiring precious metals explorer.

DECEMBER 2019 23

Astute nickel purchase shaping up as a companymaker for Centaurus After snaring the Jaguar nickel sulphide project from global miner Vale, the well-backed junior is drilling out a large-scale nickel sulphide resource in north-eastern Brazil .

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f there’s one thing most miners, analysts, traders and investment funds seem to agree on, it’s that nickel is the standout metal in terms of its market fundamentals and price outlook. A poll of delegates at the recent LME Week metals conference in London – the flagship event of the global metals industry – saw nickel receive the highest rating as the metal most likely to be the ‘standout performer’ in 2020.

Nickel enthusiasts have been buoyed by a sharp drop in supply of the metal in LME warehouses, a looming ban on nickel ore exports announced by major producer Indonesia and predictions of a surge in demand driven by new-age lithium-ion batteries for electric vehicles.

Against the backdrop of a broad consensus that there simply aren’t enough new nickel projects globally to meet traditional demand from the stainless-steel industry super-charged by the EV industry, the hunt is well and truly on for leveraged exposure to the high-value metal – which has more than doubled in value since 2017 and is up nearly 60 per cent this year alone.

Centaurus Metals (ASX: CTM) is one junior which has put itself front and centre of this new era of nickel excitement after securing a deal with global mining giant Vale S.A. to purchase the advanced Jaguar nickel sulphide project in the world-class Carajás province in Brazil.

The company attributes its decade-long presence in the Brazilian mining industry (between 2009 and 2013 it brought the large Jambreiro iron ore project to the cusp of development) and a growing depth of relations with Vale as keys to securing the asset.

“There’s no doubt been some changes of approach by some of the big miners in Brazil towards dealing with juniors,” says Centaurus’ managing director Darren Gordon.

THE-PICK.COM.AU

Servdrill diamond drill rig operating at the Jaguar nickel sulphide project, Brazil “Plus, we had a quality IOCG exploration asset called Salobo West that is strategically located next to Vale’s massive Salobo copper mine, and this formed part of the deal as an asset swap which also included US$250,000 in upfront cash, US$6.75 million in deferred payments (most of this payable on the start of commercial production) and a production royalty,” he said.

However the deal came about, there’s no doubting its enormous value to Centaurus.

Located just 35km from the major regional centre of Tucumá, Jaguar hosts a non-JORC compliant resource based on some 55,000m of diamond drilling conducted by Vale of 40.4Mt at 0.78% Ni for a total of 315,000 tonnes of contained nickel metal.

Vale was aiming to delineate a Tier-1, bulk tonnage nickel deposit.

While Jaguar may not have quite met the lofty scale requirements of Vale, it is still of a scale that could be a genuine company-maker for a junior with mid-tier aspirations, like Centaurus.

“It’s worth remembering that Australia’s mid-tier nickel sector got going in the 1990s by purchasing mines in the Kambalda district from Western Mining Corporation,” says Gordon. “These mines were not considered big enough for a major but they were certainly large enough to spawn several sizeable companies – Independence Group, Panoramic and Mincor to name a few.

“If we can replicate the success of these companies, we’ll be pretty happy.”

Centaurus’ exploration plan is relatively simple. It aims to focus in on the high-grade massive to semi-massive sulphide zones which yielded outstanding high-grade intersections such as 34m at 3.31% Ni from 56m and drill out a smaller tonnage, but highergrade resource.

The company raised $10 million in September, attracting the support of a number of institutional investors including affiliates of the Sprott Group, and is rapidly getting on with the job.

Two track-mounted diamond rigs rolled up to the site and a 10,000m diamond drill program kicked off in earnest in early November.

There should be news-flow aplenty, leading to a JORC resource estimate in the first half of next year and underpinning scoping and feasibility studies.

“We believe we have a project that could rapidly transform us into a real force in the nickel sulphide development space. Given the outlook for nickel and the paucity of new projects,” Gordon says.

“That’s a really exciting place to be – and we think it will create a substantial amount of value for our shareholders.”

$10m RBR only ASX junior exposed to $70b African LNG boom You will not read much about it in the mainstream press, but $70 billion worth of LNG construction is set to start any day on the Mozambique coast.

And there is only one junior company listed on the ASX which offers investors exposure to this enormous opportunity.

BY STAFF WRITERS

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BR, with a market capitalisation of just $10 million, has spent the past five years laying the foundations to capture a slice of this huge industry by supplying it with crucial labour hire and training services. And now its day is about to come.

The world’s biggest petroleum companies, including ExxonMobil, Total, Eni and Shell, are planning to build several massive LNG projects on the Mozambique peninsula.

The first of these, which is operated by French giant Total, has already been given full approval by its owners. Construction of the supporting infrastructure is now underway, including the first phase of the marine facilities (temporary beach landing), and preparations are being made to build the huge workers’ accommodation camp.

RBR managing director Richard Carcenac said staff and equipment had already been allocated and the initial focus is on helping workers to secure the internationally-recognised ECITB International Health and Safety Passport, as well as a range of workplace skills needed by the LNG construction industry.

“RBR’s centre started training Mozambican citizens from the local stakeholder communities in August with the aim of creating employment opportunities in semi-skilled and skilled roles,” Mr Carcenac says.

“RBR has received expressions of interest from contractors operating in the area which want to hire the graduates as they become available, with several already interviewed for future positions once construction ramps up.”

Mr Carcenac said RBR’s capabilities in Mozambique gave the company a significant point of difference. “Other labour providers focus on recruiting ‘work-ready’ candidates but do not have RBR’s capacity to develop their own workforce with internationally recognised qualifications,” he says.

RBR is also teaming up with Mozambique training specialist Regional Offshore Training Centre (ROTC) in a deal which will see the companies combine their respective strengths in skills training to tender for contracts and supply services primarily to the maritime and LNG offshore construction industries in Mozambique.

Mr Carcenac said the agreement was aimed at enabling RBR and ROTC to offer comprehensive, accredited training courses to the offshore LNG and maritime sectors in the Mozambique market.

RBR has similar alliances with other specialist service providers, including in scaffolding and the provision of blue-collar ex-pat labour, to ensure it can maximise the amount of work it gets from the LNG construction industry and other employers in the booming region.

“We believe RBR is ideally placed to provide a wide range of training and labour hire services to what will soon be one of the biggest construction sites in the world,” Mr Carcenac said.

The second of the LNG projects, which is operated by ExxonMobil, is expected to be given the official go-ahead by its owners early in the new year.

Analysts estimate that up to 50,000 workers will be needed to build these LNG projects, with locals accounting for a substantial share of this workforce due to the Mozambican Government’s local content requirements.

These workers need to be identified, medically assessed for their fitness to work, trained and matched with suitable employers. And this is where Perth-based RBR fits firmly into the picture.

As part of its strategy to assess, train and provide workers to the LNG projects, RBR has opened a training centre in the Mozambican city of Palma, which is close to the LNG construction sites.

DECEMBER 2019 25

The mine was shut as Lynas Gold turned its attention to its Paraburdoo gold joint venture with Sipa Resources, walking away with significant resources remaining in the project’s multiple open pits.

Turn the clock forward 20 years and Kairos is dusting off old drilling and geology plans from the Lynas Find operation against the backdrop of an Australian Dollar gold price sitting around A$2,155 an ounce – a vastly different metal pricing scenario to when Lynas Find last produced a gold bar.

RC drilling underway at the Mt York gold-lithium project

Kairos seizes a golden opportunity at historic Pilbara mine After establishing a 643,000oz gold resource at its Mt York Project last year, Kairos is aiming to breathe new life into a dormant Pilbara gold mine that was last operated 20 years ago in a vastly different gold price environment.

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hey say the best place to find gold is next to an old gold mine. It’s a strategy that has paid rich dividends for a host of recent WA gold success stories like Bellevue Gold (ASX: BGL), Red 5 (ASX: RED) and, before them, Northern Star Resources (ASX: NST).

Junior gold explorer Kairos Minerals (ASX: KAI) is hoping it can replicate the runaway success of these home-grown gold stories as it embarks on a bold new exploration program and re-evaluation of the existing resources at its Mt York gold-lithium project, located 120km south-east of Port Hedland in WA. Kairos acquired Mt York back in 2016, initially for its lithium potential (it is located immediately adjacent to the world-class Pilgangoora lithium mining centre, which has since been developed by nearneighbours Pilbara Minerals and Altura Mining).

The company quickly turned its attention to the gold potential, associated with the historic Lynas Find gold mine that produced 125,493oz between 1994 and 1998 and was operated by Lynas Gold (the predecessor of the rare earths miner Lynas Corpoation) when the prevailing gold price was around A$350 an ounce.

THE-PICK.COM.AU

“It’s amazing to think that gold mines could operate profitably back then, when gold was trading at a fraction of what it is today,” says Kairos’ Executive Chairman, experienced geologist and mining executive Terry Topping.

“The Aussie Dollar gold price has increased sharply even in the 18 months or so since we last updated the resource base for the project in April last year.

“The last resource update, which was based on successful drilling programs in 2016 and 2017, more than doubled the contained gold from 258,000oz to 643,000oz using an optimised pit shell at A$2,000 an ounce,” he said.

“We plan to reoptimize the resource base using the current gold price. At the same time, there’s plenty of organic growth potential as we extend some of the key deposits.”

The resource, of 14.4 million tonnes at 1.39g/t, encompasses the Mt York, Iron Stirrup and Old Faithful deposits.

The 486,000oz Mt York deposit was the focus of most of the company’s prior drilling activity, which confirmed that its constituent deposits (Main Hill, Breccia Hill and Gossan Hill) form part of a single continuous gold mineralised system, rather than a series of “pods” as previously thought.

“Our current exploration focus is at Iron Stirrup, which accounted for the bulk of historical production at Lynas Find,” says Topping. “A recent geological review of historical data has identified extensions of the high-grade gold lodes beneath the historical Iron Stirrup open pit mine.

“There are some very significant historical intercepts directly below the existing open pit with good gold grades and widths including 30m at 3g/t and 25m at 3.3g/t.

“The mineralisation occurs over a minimum strike extent of 300m and remains open along strike and at depth. Our November drilling program will test this potential.”

In the meantime, while its focus is on building the resource base and moving to mining studies at Mt York, Kairos is far from being a onetrick pony.

An extensive 1,158 square kilometre exploration portfolio across the Pilbara includes numerous conglomerate-hosted gold targets, extensive nugget patches and an intriguing 8km long gold and copper exploration target at the centrally located Croydon project.

And the Roe Hills Project south-east of Kalgoorlie is located near Breaker Resources’ (ASX: BRB) +1Moz Bombora discovery and is also prospective for nickel sulphides.

Gold bulls, trade war blues – and everything in between

Hartleys has been assisting ASX-listed resource and energy companies through the various ups and downs in the commodities cycle since 1955 and CY19 has been no different. The year started in despair (US market melt-down), but it recovered quickly. The iron ore price jump (in tragic circumstances) led to a rally in the big miners (BHP, RIO, FMG), and gold miners continued to rally strongly. Since the first quarter rebound, it’s been a mixed year with some sectors firing (gold and nickel) and others really struggling (lithium).

BY DALE BRYAN, HEAD OF HARTLEYS CORPORATE FINANCE

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n a choppy market, investors remain cautious, with investment decisions generally well considered and researched. We are increasingly seeing investors focused on high margin projects and exercising greater caution in respect to projects with modest economics. Similarly, high-grade exploration success, such as the significant recent copper-gold discovery made by Stavely (SVY), is being well rewarded, whereas encouraging results (technical success/further followup required etc) often gain little to no traction in the market.

A flow of capital into typically high-quality projects is an encouraging sign of an early stage investment cycle, with plenty ahead of it. Making predictions for the year ahead are always challenging, with the resource and energy sectors well known for being boom-bust; however, we are seeing the bust well and truly behind us with the best ahead. We think that an industry such as the resources sector that is critical to global growth, is capital starved and under-invested with supply shortages forecast across most commodities is probably a good bet.

Gold has been a stand-out commodity again this year. Against the favourable gold price environment of very low interest rates, global trade wars and general softening of global market sentiment, the gold price has risen considerably in 2019, up ~US$200/oz since 1 January. With the benefit of a falling Aussie dollar, the AUD denominated gold price is at record highs which has led to a considerable re-rating across ASX listed gold stocks. These gains have been primarily concentrated on large Australian producers that are able to take advantage of the current gold price market such as Northern Star (NST), Evolution (EVN), Saracen (SAR) and Regis (RRL). However, we have also seen strong performance by the next tier of Aussie producers such as Silver Lake (SLR), Red 5 (RED) and Ramelius (RMS), and offshore producers such as Perseus (PRU). We look forward to seeing the next batch of producers fund their projects and move towards first production, including companies like Cardinal Resources (CDV) and Ora Banda Mining (OBM).

As a result of the buoyant gold price environment, we have seen a significant amount of ECM and M&A activity within the gold sector relative to other commodities which we expect to continue into CY20.

During the year we assisted Perseus to fund the development of their Yaouré gold mine, funded an exciting resource drill out program for Tietto (TIE), helped fund the acquisition of the Central Norseman Gold project by Pantoro (PNR) and completed the successful re-capitalisation of Ora Banda Mining (OBM).

It has been a mixed year for Base Metals.

Nickel prices have risen significantly this year with the price around 180% up since January. The price has trended upwards as global stockpiles in the metal have gradually fallen, with LME stockpiles at their lowest levels since 2012. Although traditionally driven by its use in stainless steel, Nickel Sulphide is a critical commodity used in the lithium ion battery sector, particularly for high-end batteries, meaning it is well leveraged to the growth in Electric Vehicles. Within the sector, we have been working with Panoramic Continued over...

DECEMBER 2019 27

Continued...

(PAN), which was recently the subject of a takeover bid from Independence Group (IGO), as well as a number of junior nickel explorers that provide significant leverage in the event of exploration success, including S2 Resources (S2R),Buxton (BUX) and Dreadnought Resources (DRE).

The copper price had a relatively buoyant start to year, off a fairly poor December 2018 quarter. However, gains in the first half of the year have mostly been lost in the second half driven by deteriorating sentiment and rising levels of global stockpiles. The long-term consensus outlook on copper is positive with sentiment expected to return to the commodity provided a positive resolution on US-China trade talks. In addition, with copper being a significant component of batteries, it is also exposed to the same dynamics as the “battery minerals”. We have been working with Metals X (MLX), Copper Mountain (C6C) and Venturex (VRX) which all offer strong leverage to a rising copper price as well as Paterson Province explorer Antipa (AZY).

We are seeing continued interest in zinc and lead which have performed strongly in the second half of CY19. In the lead space we like Galena (G1A), whose Abra lead project is fully financed for development with compelling economics. In the zinc space we like Red River (RVR), with its operating Thalanga mine, which also provides strong leverage to lead and copper. In addition, another zinc, lead (poly-metallic) junior explorer having encouraging exploration success is Todd River Resources (TRT).

Across the Battery Metals sector, it has been a difficult year, however recent weeks have seen some recovery. Lithium prices experienced strong decline this year after reaching record highs 18 months ago. However, there continues to be strong interest in the space as we have seen with Wesfarmers (WES) taking over Kidman Resources, large Chinese battery maker CATL investing into Pilbara Minerals (PLS), and Mineral Resources (MIN) closing a deal with Albemarle Corporation on its Wodgina Lithium mine.

Throughout the year we assisted lithium producer Pilbara Minerals (PLS) raise THE-PICK.COM.AU

capital to strengthen its balance sheet through this period. With the broader, longer-term investment thesis for the battery metals sector strong, we expect to see further recovery in this space which, together with current depressed share prices, presents opportunities for those who remain bullish on the thematic.

Iron Ore has had a resurgent year with the price surging following the failure of the tailings dam at Vale’s Córrego do Feijão iron ore mine, and the subsequent significant downgrade in the Brazilian giant’s production. The iron ore price (62% CFR Qingdao Equivalent) peaked in July at ~US$126/dmt which was 68% up from the price at the beginning of the year.

The majors such as BHP (BHP), Rio Tinto (RIO) and Fortescue Metals Group (FMG) are the major beneficiaries of the iron ore price spike, and all have experienced buoyant share prices with healthy dividends declared. One company we are looking at is Fenix Resources (FEX) which has just announced promising feasibility study results on its high grade (~64%) iron ore project. For those bullish on iron ore, this stock offers great leverage to the commodity.

Oil and Gas has been relatively volatile through CY19 with North American E&P stocks, in particular those focused on unconventionals, under pressure due to a growing uncertainty over the oil price outlook. Exploration success however continues to be rewarded and there have been some exciting developments in our backyard with two significant gas discoveries made in the onshore Perth Basin reminding investors of the significant gains to be made from oil and gas exploration success. We have been working with Norwest Energy (NWE) who alongside JV partner Mineral Resources will be drilling an exploration well in 1H 2020 in the Perth Basin targeting this same play. The Australian East Coast gas thematic also remains very strong with

high gas prices driving exploration and development of Cooper Basin projects.

We have also assisted 88 Energy (88E), Pancontinental (PCL), Buru Energy (BRU) and ADX Energy (ADX) during the year.

Another interesting space is the Silica Sands space, underpinned by a growing global population (think windows, bottles, solar panels). Companies we follow that have good exposure to this space include Western Australian developer VRX Silica (VRX) and Queensland developer Diatreme (DRX), both of which have presented compelling economics for their projects.

Mineral Sands prices have also experienced some relative price volatility this year. Zircon market conditions of late continue to be affected by global economic uncertainties, whilst conditions for high grade titanium feedstock remain steady. Looking out from 2020 we do expect a significant supply gap in this space and expect this to be increasingly met by projects in low sovereign risk jurisdictions. We continue to follow a number of interesting companies in the mineral sands space, both listed and unlisted. A stand out producer in the space this year has been Image Resources (IMA) a company that very effectively commissioned its operations in 2019 and a company that continues to deliver.

Rare earths have also had a re-awakening this year with Wesfarmers (WES) bid for Lynas (LYC) increasing investor awareness, which was then quickly followed by the US/China trade war.

Prices had a rapid spike earlier in the year over concerns around surety of supply.

The global economic dependency on the sector is increasingly mainstream in politics, which should be positive for companies with assets in low sovereign risk jurisdictions.

Dale Bryan Head of Hartleys Corporate Finance

As a result of the buoyant gold price environment, we have seen a significant amount of ECM and M&A activity within the gold sector relative to other commodities.

Bryce Crocker is the most impressive MD I’ve come across in my 20 years as an advisor and he has been integral in leading the Company’s change in focus. I will continue to back him as the company grows.

These guys have skin in the game. In Jervois’ last capital raise, directors and management tipped in A$2.76 million, with Brian Kennedy totalling up more than A$1.4 million of that. They believe in what they are doing and their ability to deliver.

That attitude has seen a shift in JRV’s register with investors like Australian Super coming in as a major shareholder.

BW Equities Executive Director, Ben Kay

Ben Kay

My Top 3 Resources Picks Executive Director BW Equities Jervois Mining (ASX: JRV) The battery metals sector is heating up again and cobalt is one of the drivers. Roskill predicts the cobalt market is going to ‘explode’, that demand will double over the next 10 years, mostly due to increased demand for electric vehicles.

For me, Jervois Mining is the only way to play cobalt on the ASX. It has been a massive year for Jervois, completing at-market mergers with north American companies eCobalt and M2 Cobalt Corp to create one of the world’s largest listed cobalt-focused companies.

Now it is developing the best cobalt project outside Africa – the Idaho Cobalt Operations in the United States.

The company has one of the most impressive board and management teams in the world. Everyone there has decades of experience in the game with majors like Glencore and Xstrata, including Chairman Peter Johnston and Director Brian Kennedy who have a combined 70 years of experience, so they know how to get projects financed, built and into production. JRV’s General Counsel and Executive General Manager of Legal Kenneth Klassen was also at Glencore.

JRV has been in talks to secure the Kabanga project in Tanzania, previously held by Glencore and Barrick Gold who spent more than US$250 million on exploration. The fact that JRV is even in the mix for a project of that scale is a testament to management’s skill and experience. If they can pull that off, it will be a massive coup for the company and take it to the next level.

Lotus Resources (ASX: LOT) Uranium is going to be the big story of 2020 and Lotus Resources is the best way to get in on that now. These guys just tied up a deal to secure 65% of the Kayelekera mine in Malawi from Paladin Energy at a bargain price of $5 million.

Paladin produced 10.9 million pounds of uranium at Kayelekera between 2007 and 2014 before the price slump started to bite and they put it into care and maintenance.

Kayelekera has a mine life that would see it produce 3 million pounds per year for at least another eight years once the uranium price hits a target to make it profitable to restart. With $200m sunk into capex already, it could be back up and running with as little as US$35m investment.

Its proven, its produced, it can return very high recoveries and we expect the new team to substantially cut C1 costs as well as care and maintenance costs in the meantime.

Lotus will be working to get the most from this asset by adding resources and extending the mine life.

Newly appointed board member Grant Davey, who secured this project for Lotus, is a seasoned veteran of the mining industry who knows how to identify opportunities to create shareholder value.

Superior Lake Resources (ASX: SUP) Superior Lake delivered an impressive BFS a few months ago for its namesake zinc project in Ontario, Canada that’s now attracting serious attention from the big end of town who are keen to make financing and offtake deals.

SUP is working through the offers to negotiate the best deal to bring the project into production just when the zinc market will be crying out for supply.

Despite this attention from major firms and smart investors, SUP’s share price is totally depressed right now and it has a market cap of just $14 million. I can’t see how this can be so low with such an impressive asset. It’s a Buy in my view and our latest research has a target price of 4 cents per share on it.

DECEMBER 2019 29

Copper Market Update

Copper is presently engaged in a tug-of-war between negative near-term factors and positive longer-term considerations.

BY GAVIN WENDT an overview of operating conditions at specific manufacturers identified as heavy users of copper. It is based on data provided by companies around the globe.

As many copper users are producers of primary manufacturing goods, the index that measures output levels can also

provide an indication of the direction of global manufacturing output.

The Global Copper Users PMI rose above 50.0 during September, indicating the first improvement in business conditions since November 2018. Key to the upturn was a moderate expansion in output, the fastest for a year, as firms looked to build stocks of manufactured goods in hopes of stronger future demand levels.

On a regional basis, Asian copper users have seen the greatest change in the output trend this year. Production during the second half of 2018 was mired by the introduction of US tariffs on Chinese goods, causing a downturn in new orders

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opper is facing near-term economic/trade-related concerns on the one hand, which have negatively impacted metal pricing and demand; whilst on the other hand the outlook is positive based on the prospect that copper mine supply will fail to keep up with burgeoning electric vehicle (EV) demand, along with other applications.

While the global manufacturing sector has experienced significant headwinds so far in 2019, a revival of optimism in copper end-users could fuel a wider improvement over the coming months and into 2020.

Countermeasures to US trade tariffs have contributed to a rebound in Asian manufacturing, suggesting that although demand pressures remain weak, there is the prospect of some relief to the current slowdown.

The IHS Markit Global Copper Users PMI is a composite indicator that provides THE-PICK.COM.AU

As Asia accounts for a large proportion of the global copper-using industry, this has had a notable impact on global output levels - and could signal a boost for the world manufacturing sector.

and subsequent output cutbacks across the region. China responded with fiscal stimulus measures to ease tax burdens on manufacturers, which helped soften the decline and, more recently, lift production levels.

Historically, the Global Copper Users PMI Output Index has correlated strongly with the Global Manufacturing PMI Output Index, so the latest upturn in copper usage offers some optimism that this could transform into higher output in other industrial sectors. That said, caution is required, as Asian copper PMI data have shown greater volatility in recent times, particularly as Asian operating conditions have diverged from those seen in European and US markets.

There are some positive factors that may help support copper prices. For instance, China has announced additional stimulus measures for its domestic economy, which may boost manufacturing demand during the fourth quarter. Also, there have been further trade talks between the US and China, although sentiment toward these discussions has been mixed. The trade war remains the number one issue affecting the global industrial sector, so any progress could lead to upward pressure on copper prices.

Either way, the underlying PMI picture has become more positive, suggesting a possible rebound in the Asian copper-using industry, albeit one that is likely to leave prices subdued for now. Upcoming data releases will confirm whether higher output levels can be maintained or whether demand stagnates again.

Longer-Term Outlook There is a strong feeling that growth in electric vehicle production is going to push copper demand well beyond production over the coming years. Matt Badiali at Banyan Hill Research recently stated in Barrons that the world will need to produce 5 million metric tons of copper per month by 2030 - about 2.5 times more than it will produce this year - in order to meet projected demand from the electric-vehicle industry.

The investment bank, Jeffries, is forecasting a 1 million metric ton deficit in 2024 without copper miners expanding their production capabilities. Goldman Sachs has a similar projection. The deficit could grow to 4 million metric tons by 2028. This of course could lead to a tight supply situation, as annual world copper production is about 18 million metric tons. It would seem that miners would be able to expand production to fill in this supply gap, but that might not be likely.

Higher prices tend to lead to more production and lower prices tend to cause producers to produce less. This is a generalization, but it is the typical cycle that happens time and again in commodities.

There are significant capital costs to open new mines and even to ramp up production at current mines. CEOs and CFOs of mining companies like Freeport-McMoRan and Rio Tinto typically don’t like to invest heavily in expansion during periods of falling prices, which has been the case in recent years.

It remains to be seen how much production will increase in the coming years, as it could be considered fairly risky by copper producers to do so in the current environment. It could be very

interesting if prices continue to decline and producers curtail production or at least don’t expand production. The supply gap could be even greater if the forecasted demand materializes.

Conclusion In the copper market at present, speculators are very much focused on the here and the now. Fears over trade, economic growth and political instability, have taken centre stage for the time being. These concerns have led to pessimism and lower levels of investor interest generally in the copper sector. However as we know, things can change very quickly. Investor sentiment can change rapidly, particularly if a trade deal between the US and China can be reached.

From a bigger picture perspective, the outlook for copper remains positive. There are big question marks over the supply-side’s capacity to meet burgeoning demand. Of course, higher prices will ultimately flush out new sources of supply, but at the present time flat prices are hampering the development of new supply. Current circumstances have the potential to delay the onset of new copper mines, thus making the supply gap even worse.

For savvy investors, now is likely an appropriate time to be evaluating copper equities.

DECEMBER 2019 31

Stocks in Play making a name for itself in digital trading With the significant surge in smartphones and apps over the past decade, stock trading is now more accessible than ever resulting in a plethora of investor trading platforms hitting the market.

However, one Perth-based share trading app stands head and shoulders above the rest in this highly-competitive space.

stocks can also be ranked creating an “in play” screen of the most popular stocks over particular days, months and years.

According to Stocks in Play co-founder and former managing director of Perth broking house CPS Capital, Tony Cunningham, the system provides a much more transparent environment where participants are able to collaborate and discuss ideas.

“Stocks in Play is a unique platform designed to encourage social interaction, where the best tippers with an established record can lead the discussion, unlike other sites where the noisy user leads the discussion, creating a much more cohesive environment,” Cunningham said.

“It goes without saying that you wouldn’t follow the advice of someone who has a poor track record and our platform allows users to openly see that history, meaning you can quickly assess whether commentary is likely to be reliable or ramping.

“With over 100,000 tips placed in our short history and 2 million market depth views, it is very common for our chatboards to be looking forwards toward the next stocks to hit the “In Play” screen which is a good predictor of which are set to move the market next.”

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tocks in Play has staked its claim as the premiere app for networking, Social Trading, stock ideas, tipping and sharing reliable information. The app is able to provide live updates on market depth, with data tabulated so users can quickly see which stocks are gathering the most interest – both positive and negative.

On the Apple app store and Google Play, Stocks in Play is amongst the top Australian finance apps, driven by free access to live data on the ASX and Chi-x. User uptake has surged to more than 200 new users per day, with the app now boasting a total user base of over 9,000 members and on target for 15,000 users by the end of the year.

This number is only expected to increase in the near-term with the recent purchase of forumbased website www.TopStocks.com.au. With this purchase, Stocks in Play has created a forumbased option to complement its stock trading app available on the website, as well as mobile through Apple IOS and Android.

Through Stocks in Play’s built-in paper-based trading app, participants are able to place tips on different ASX securities for different periods, meaning it is quick to understand a successful user’s sentiment and trading timeline.

Importantly, through the website’s history of tipping performance, a user can also gauge the credibility of a particular user and also the net sentiment for a particular stock. From this, all

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Cunningham added that while there had been a big emphasis on engineering of the platform for transparency, the system is also designed to be fun with opportunities for any investor to jump in and have a go – all at no expense. At the same time it’s amazing to see the performance of some of the users. The top users are getting it right 92% of the time which is an amazing result.

In an exciting first and with the release of version 2.0 of the App on the 25th of November, Stocks in Play will be launching its first prize money competition starting the 1st of December 2019 and running until 31st December when the winners with the highest profit will share $5,000 prize money.

The prize money will be higher if more people join up.

The app has a wealth of experience behind it with the trio who co-founded stock forum HotCopper - Tony Cunningham along with former managing director Greg D’Arcy and Tech Entrepreneur Arnaud Moret - behind its development.

“We intend to build out the east coast platform over the next 12 months. This will include research capabilities in different sectors.”

In terms of past performance, Ashanti has been behind some significant deals.

One of its most successful transactions has been its involvement with UK-based zinc polymetallic explorer and developer Adriatic Metals PLC which owns highgrade zinc polymetallic assets in Bosnia and Herzegovina.

Ashanti makes inroads into lucrative Sydney market With a new office in Australia’s financial heartland of Sydney, specialist investment and advisory firm Ashanti Capital is building a name for itself in identifying quality, emerging companies and supporting them through various stages of development.

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ounded back in 2016 by Managing Director Rob Hamilton, Ashanti has steadily carved out a reputation as a specialist in providing alternative capital market solutions for Australian companies from its offices strategically located in Hong Kong, Perth and most recently Sydney.

“Ashanti co-invest with our clients, and play a pro-active role with management teams to ensure the best chance of success,” Hamilton told The Pick.

“Ashanti’s capabilities are focused on Equity Capital Markets, Mergers and Acquisitions, Research and Sales and Trading.”

The model appears to be working with Ashanti having raised around $100 million

for 2019 calendar year so far across a number of transactions.

Realising the need to better cater for its clients on the east coast, Ashanti opened a new office in Sydney in March this year with two experienced brokers Chris Dorney and Sam Christie (both who are ex-Wilsons Advisory) heading the office.

“It’s important to have boots on the ground when servicing our east coast institutional clients. We intend to build out the east coast platform over the next 12 months. This will include broader research capabilities,” Hamilton said.

“The firm is also focussed on diversifying our offering. While the WA team will remain specialised in mining and mining services, the Sydney office will concentrate on industrials and other sectors.

The stock was the ASX’s best performing IPO for 2018, delivering a 188% return in 2018 on its issue price of $0.20 primarily on the back of impressive high-grade zinc hits from its Vares project and fast-tracking of its projects towards development. Adriatic was trading at $1.43 (21st November 2019), a healthy 151% increase since beginning of 2019.

Ashanti acted as Co-Lead Manager to the pre-IPO raise at $0.13 in October 2017 and IPO to raise $10 million at $0.20 in May 2018. In addition, Ashanti has acted as Lead Manager to a $10.8 million institutional placement at $0.56 in November 2018 and Co-Lead Manager to recent $25 million placement at $1.00 in October.

Ashanti has also been instrumental in Botswana-focused copper play MOD Resources prior to its recent acquisition by Sandfire Resources for $167 million.

Coming up, Ashanti is assisting with the hotly touted $10 million float of copper exploration play Cobre Pty Ltd which owns 80% of Toucan Gold Pty Ltd and its whollyowned Perrinvale copper project in central Western Australia.

Investors sat up and took notice of Cobre after a maiden 1000 metre reverse circulation drilling campaign earlier this year intersected very high-grade volcanogenic massive sulphide (VMS) base metal and gold mineralisation at shallow depth.

Cobre is already backed by London Stock Exchange AIM-listed specialist resource investor Metal Tiger which took a 19.99% stake back in July. Metal Tiger was also the major shareholder of MOD. The float is anticipated in January and should no doubt be one to watch.

Vertical Events

conference line-up

18, 19 & 20 February 2020

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Sofitel Sydney Wentworth, NSW SERIES 10

31 March 2020 Grand Hyatt Hotel, Melbourne, VIC 2 April 2020 Surfers Paradise Marriott Resort & Spa, QLD SERIES 11

20 October 2020 Fullerton Hotel Sydney, NSW 22 October 2020 Grand Hyatt Hotel Melbourne, VIC

15 September 2020

Fullerton Hotel Sydney, NSW

9 & 10 September 2020 Hyatt Regency Hotel Perth, WA

17 September 2020

Grand Hyatt Hotel Melbourne, VIC

14 & 15 October 2020

Hilton Brisbane, QLD

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