MINING iSSuE 01
Diamond in the rough Diamond mining company Letšeng Diamonds is nestled high in the breathtaking Maluti Mountains of the Kingdom of Lesotho
also this issue
CENTRAL RAND GOLD
Editor – Ian Armitage Sub editors – Jahn Vannisselroy Marie Toms Tom Sturrock Writers – Colin Chinery Jane Bordenave John O’Hanlon
Advertising Sales Manager – Andy Ellis Researchers – Jon Jaffrey Marie Smith Elle Watson Sandra Parr Marcus Graham Thomas Aras Sales – Andy Williams Sales administrators – Katherine Ellis Daniel George
Financial controller – Suzanne Welsh
Production & Design
Magazine design – Optic Juice Production manager–Jon Cooke Images: Getty, Thinkstock News: NZPA, AAP, SAPA
digital & IT
Head of digital marketing & development – Syed Ahmad
CEO - Kevin Ellis Chairman - Ken Hurst Commercial - David Alstin Publisher TNT Multimedia Limited TNT Multimedia Limited, Unit 209, 16 Brune Street, London E1 7NJ tntmagazine.com
Telephone: +44 (0) 1603 343367 Fax: +44 (0) 1603 283602 email@example.com
Telephone: +44 (0) 1603 343367 firstname.lastname@example.org
Welcome Dim but not hopeless In my view, the outlook for mining in 2012 is dim, but not entirely hopeless. The worldwide economic outlook has weakened but there is vast opportunity in stillgrowing emerging economies (see INTRA Energy on page 70). Commodities prices though are likely to be relatively flat in the next year. And while copper prices could pull back a bit due to China’s slowing growth, gold is a safe bet. That’s some good news. As for the developed world, however, a mixture of political risk, structural challenges, and lack of growth spell deep trouble for both Europe and the U.S. The view amongst miners is mixed, as are fortunes. One firm with a very bright outlook is Letšeng Diamonds. Its Letšeng Mine is currently the seventh largest processing kimberlite mine in the world. But it is expanding and it believes that the global mid-to-longterm outlook for the diamond industry is overall very positive (page 04). Similarly the outlook for Australian miner Thor Mining Plc, a mining company dealing primarily with gold, molybdenum and tungsten, is positive. When the global financial crisis struck, it was one of the many businesses that felt the reverberations. Thor’s original market was narrow and the company could have faltered. On page 38, Chairman Mick Billing tells Mining Outlook how Thor moved laterally to secure its position and what the recovery means for the organisation. There are many more fascinating stories like this inside. Enjoy the magazine!
Ian Armitage Editor
TROLLOPE MINING SERVICES
C O N S O L I D AT E D T I N
SOUTH BOULDER MINES
M O LY M I N E S
CENTRAL RAND GOLD
H A R S C O M E TA L S
C O N T I N E N TA L C O A L
04 16 38 60 70
Diamond in the rough
Diamond mining company Letšeng Diamonds is nestled high in the breathtaking Maluti Mountains of the Kingdom of Lesotho. By Ian Armitage
iamond mining company Letšeng Diamonds is nestled high in the breathtaking Maluti Mountains of the Kingdom of Lesotho, the highest diamond mine in the world at over 3,000 metres above sea level. Letšeng’s story began in 1995, when the previous General Manager, Keith Whitelock, commenced a process to re-open the Letšeng mine after De Beers had closed it in the early 1980s. In 1999, the mining lease for the Letšeng mine was acquired, during which time the South African company, JCI Gold, was the majority shareholder. It
took a further five years for the mine to come into commercial production. In 2004 the mine had a single processing plant with the operation producing around 35,000 carats a year. Then, in 2006, Gem Diamonds Limited acquired JCI’s stake and became the 70 percent shareholder, in partnership with the Government of Lesotho, which holds the remaining 30 percent. In 2007, Mazvi Maharasoa joined Letšeng as the Company’s Resident Director and was appointed as CEO of Letšeng Diamonds in November 2009. The Letšeng Mine is currently the seventh largest processing kimberlite mine in the
“Processing kimberlite ore and liberating the diamonds is Letšeng’s core business”
world, with an estimated 35 year mine life from its two primary vertical kimberlite pipes of the 33 known kimberlite pipes within the Kingdom of Lesotho. “Processing kimberlite ore and liberating the diamonds is Letšeng’s core business, and upon taking control of Letšeng, the first order of business for Gem Diamonds was to approve an expansion plan, which saw the construction of a second processing plant, bringing the processing capacity of the mine to circa seven million tonnes of ore, producing circa 100,000 carats per annum,” says Maharasoa. Now in 2012, plans are underway to further increase the annual treatment capacity of the Letšeng mine to around 10 million tonnes per annum, with a carat output rising to around 200,000 carats per annum. Outlining the new expansion project at Letšeng, known as Project Kholo, Maharasoa adds, “Our business strategy is growth. The mine fundamentally needs to continue to drive costs down, improve efficiencies and maximise revenue.” The Letseng expansion project was approved in November 2011 by both the Letšeng and the Gem Diamonds Boards. Project Kholo will commence in January 2012 and when this expansion is complete, the Letšeng mine will rank amongst the top four largest kimberlite diamond mines in the world. “The total project capital expenditure for Project Kholo is estimated at US$280 million,” says Stephen Gould, the Chief Operations Officer of Letšeng Diamonds. “The expansion project at the Letšeng mine is a major step forward. The number of carats of diamonds which we 6
Alliance is a Lesotho based insurance company, whose services are focused on the provision of: Short-Term Commercial and Personal Insurance and Life Assurance Products. Alliance Insurance Company is proud to have been Letseng Diamond Minesâ€™ Short Term Insurance Partner from the very beginning of the mining operations. Alliance is heavily involved in Lesotho as a Short Term Underwriter in Mining, Engineering, Construction, Contractors Guarantees and Professional Indemnity covers. Our Life business unit offers market leading Funeral Products, Group Life and Employees Benefits Schemes. Our Re Basotho Savings Plan is a one of a kind in Lesotho. Our products are geared towards reinvestment in the community; to ensure that everybody benefits from their association with us. We strive to continually deliver unsurpassed service, as well as innovative and value-added insurance solutions and products. Contact us or see our website : www.alliance.co.ls for more information on the insurance we can offer you. Mok'haphek'ha Lazaro [Mr] Executive Director - Short-Term Alliance House, 4 Bowker Road, Maseru, Lesotho P.O. Box 01118, Maseru West, 105, Lesotho Landline: (+266) 2231 2357 Cellular: (+266) 6211 6969 Direct : (+266) 2232 6027 Cellular: (+27)7 9885 1314 Email: email@example.com Fax: (+266) 2231 0313
produce will effectively be doubled,” he adds. “Through Project Kholo, we will be improving the recovered grade through the increased liberation of diamonds from the kimberlite ore, while we introduce new technology to reduce diamond damage and unit costs.” The requirements of project Kholo go far beyond just increasing the capacity of the treatment plants. The current open pit mine will increase in depth from 150 to 500 metres. In order to expose sufficient ore for the plants, the waste mining activity has to increase from moving 15 million tonnes of waste per annum to in excess of 60 million tonnes per annum. “This will further increase job opportunities at the mine,” says Maharasoa. “In order to improve the efficiency of this large earthmoving operation, the size of the equipment employed will be increased by a factor of three. A logistical challenge will be to get this large equipment up the mountain and the project will also include building the required earthmoving workshop needed for maintaining this equipment.” The challenge of providing the increased power required is being carefully managed, and currently the plan is to increase the capacity of the current power line, Maharasoa says. However, this will stretch power supply to its limit, and in order to cater for a possible underground mine in the future, other options such as a second line and the possibility of using wind generated power are being looked into. “The additional provision of fresh water, accommodation and other services are also being addressed in the planning of project Kholo,” Maharasoa adds. In order to ensure that the implementation of project Kholo does not negatively affect the life of mine, a programme of geological drilling has already commenced to map the kimberlite deposits to greater depths in order to better understand the diamond resource deposits. “At some point in the future, it will become more economically feasible to mine these deposits from underground, and a prefeasibility study has been commissioned to establish this depth and to examine possible mining methods,” says Gould. 8
“the expansion project at the letšeng mine is a major step forward. the number of carats of diamonds which we produce will effectively be doubled”
“I am extremely excited for the future,” adds Maharasoa. “There are a great many factors for contemplation and great potential for growth and development at Letšeng. “Strategically, Letšeng is looking at ways to increase the business potential in terms of developing in-country diamond cutting and polishing facilities, known as beneficiation.” The diamonds produced at Letšeng sell for the highest price per carat of any kimberlite mine, with a grade of less than two carats per hundred tonnes. Letšeng’s sales and marketing strategy seeks to maximise revenue, through additional margins further down the diamond value chain. “Although the Letšeng mine is characterised by a low-grade ore body, producing less than two carats per 100 tonnes of ore mined, it is also renowned for producing some of the world’s largest, most exceptional diamonds,” says Gould. “The Mountain Kingdom’s gems are amongst the very best in the world and approximately 35 percent of the world’s supply of diamonds 10
larger than 10.8 carats in size are produced at Letšeng with around 90 percent of the diamonds recovered at the Letšeng Mine being gem quality. “Over the years, the Letšeng Mine has recovered four of the world’s 20 largest rough diamonds such as the 603 carat Lesotho Promise, the 493 carat Letšeng Legacy, the 478 carat Light of Letšeng and the 550 carat Letšeng Star,” he adds. “The expansion project will enable us to increase the volume of this high value production even further, thereby allowing us to invest in appropriate cutting and polishing technologies in order to participate downstream and maximise revenue potentials.” Letšeng’s diamonds are extremely valuable and so the firm is are looking at all downstream options in order to capture additional margin beyond the mine gate, Gould says. “We are becoming increasingly successful in selling rough and polished diamonds, with good margins being realised.
Tel: +266 22247200 Fax: +266 2247202
Aon are proud indeed to have been the preferred Brokers to Letseng Diamond Mine from the beginning. We continue to provide quality world class Risk Management Solutions to the entire Diamond Mining industry in Lesotho tapping into Aon worldwide resources to ensure global solutions are delivered locally.
www.g4s.com G4S is the world's leading security solutions group, which specialises in outsourcing of business processes in sectors where security and safety risks are considered a strategic threat. G4S Lesotho consists of three divisions: 1. G4S Secure Solutions
• Integrated Services • Risk Management • Secure Solutions • Guarding Services
2. G4S Cash Solutions
• Cash and Valuables Transportation • Cash Processing • ATM Outsourcing • Special Services • CASH360 Retail Services
3. G4S Security Systems
• Alarm Systems • Armed Monitoring/Response • CCTV Cameras • Electric Fence
“A cutting and polishing facility will be built in Maseru, Lesotho. Naturally this will create jobs locally and would be positive for Lesotho. Mining is an extractive industry, however, it is a finite resource, so you need to have as many economic linkages with the community, and national economy as possible – it is just good corporate practice. “From cutting and polishing you can have spin-off industries such as the jewellery manufacturing industry, which can create SME enterprises and additional employment,” he continues. “That really is our objective. We want to put the seeds down for economic development from the mining industry.” According to Maharasoa, the global mid-to-long-term outlook for the diamond industry is overall very positive. “Given the industry consensus around the extremely positive supply/demand dynamics for high-end diamonds, Project Kholo is an investment which signals confidence in future growth for Letšeng,” she concludes.
Mining Outlook profiles steel and vanadium producer EVRAZ Highveld Steel and Vanadium Limited. By Ian Armitage
VRAZ Highveld Steel and Vanadium Limited, is South Africa’s second largest steel producer and part of one of the world’s largest vertically integrated steel, mining and vanadium businesses, EVRAZ Group. On 19 July 2010 the Company’s name changed to EVRAZ Highveld Steel and Vanadium Limited, completing the integrated global rebranding strategy of the EVRAZ Group. EVRAZ holds an 85.11 percent stake in EVRAZ Highveld, which was previously owned by Anglo American, and the company is today a renowned integrated iron-ore miner, and producer of vanadium slag and steel products. “EVRAZ Highveld operates in three business segments: steel division, vanadium division and ferro-alloy division,” says EVRAZ Highveld executive Cathie Lewis, who spoke with Mining Outlook in 2011. The firm owns and operates the Mapochs mine in Roossenekal, Limpopo, which it believes has “sufficient iron-ore for 30 years” and is a key part of future plans. “Mining is an important part of what we do because, in effect, we’re vertically integrated, and having an iron-ore mine is a major advantage,” says Lewis. “The Mapochs mine is unique,” she adds. “There are not many other people who could use this iron-ore, and the whole iron-steel process was developed around the ore.” EVRAZ Highveld Steel and Vanadium Limited mines titaniferous magnetite ore at its Mapochs mine operation, and produces iron and steel products and vanadiumbearing slag at its Steelworks, based at its headquarters in eMalahleni, Mpumalanga. The steel and vanadium producer, which reported a net loss of R31 million for the nine months to September 2011, is optimistic about the coming year and expects significant operational and quality improvements to flow on from its extensive maintenance and improvement projects, which were nearing completion. The group told Mining Outlook that its 2012 performance “should be an improvement” and that demand for structural products was also relatively strong.
EVRAZ Highveld’s vision is to “create superior value and benefits on a sustainable basis across commodity cycles for all stakeholders, by developing the business into a low cost steel and vanadium slag producer.” To this end, the firm has recently been awarded a Level 5 Broad-Based Black Economic Empowerment (B-BBEE) contributor rating by BLogic, a SANAS accredited agency. “This followed an intense focus on transformation within the company over the past year,” Lewis says. EVRAZ Highveld was previously rated a Level 8 contributor, she says. “We took a number of measures aimed at increasing diversity across all levels,” she explains. These “measures” included improving representation of historically disadvantaged people in senior management structures; the provision of advancement opportunities to previously disadvantaged groups in the various management structures; education programmes aimed at skills development; preferential procurement, particularly among black owned SMMEs; and, the development 14
of local black owned businesses within the eMalahleni community to become preferred suppliers. Also, a number of external projects were implemented to target the economic empowerment of communities, on both social and business levels, through education, health, housing and supply chain initiatives. “EVRAZ Highveld aims to develop and support transformation both nationally as well as within the company. We strive to make our corporate structure reflective of the country’s demographics and to ensure that the principles of transformation are also reflected in the communities of EVRAZ Highveld’s operations”, says EVRAZ Highveld CEO, Michael Garcia. “In EVRAZ Highveld we strongly believe that transformation needs to be taken into consideration at all levels of the organisation as part of the business strategy. B-BBEE is part of our business philosophy and we are looking forward to moving further on and increasing our B-BBEE results.” To learn more about EVRAZ Highveld visit www.highveldsteel.co.za.
Blasting & Excavating (B&E) is the benchmark in the Drilling and Blasting Industry in Southern Africa. B & E have been providing Drilling & Blasting, Load & Haul, and Crushing services to the Construction, Quarrying, Civil Engineering and Mining Industry since its establishment in 1972. We are proud to be associated with EVRAZ HIGHVELD.
HEAD OFFICE : TEL : +27 11 323-4000 FAX :+27 11 323-4057 P O Box 26889, East Rand, Gauteng, South Africa www.blasting.co.ca
Trollope Mining Services provides surface mining expertise and services to the mining industry. Its journey is an uplifting story of triumph over adversity. By Ian Armitage
rollope Mining Services provides surface mining expertise and services to the mining industry. It was formed in 1975 when two brothers, Peter and John, bravely took their first steps in business and started off by purchasing ex-military equipment from auctions. They used their farm as a base, reusing their new acquisitions on short-term contracts clearing farms. They then moved onto small-scale mining. During those early days the brothers saw their business outgrow the farm, prompting a move down to Johannesburg. They focussed predominantly on the coal mining sector, but ventured too into manganese, gold and platinum. “Trollope has traditionally specialised in open pit mining; taking significant volumes from the ground, drilling and blasting it, removing the rock and stock piling the usable ore material,” Managing Director Guy Hopkins explains. “The company’s main facility is now situated just outside Johannesburg - incorporating head offices and workshops. There are also bases in Thabazimbi and Ogies. Every contract also has its own workshops and offices on site. “We are today a formidable business in the medium-sized opencast mining sector.” Current services include opencast mining, rehabilitation, bulk earthworks, plant hire, crushing & screening and road construction, he says. “We have substantial operations on different mines in the coal, andalusite, gold and platinum industries and have a substantial fleet of equipment. Over the years we have enjoyed a sound working relationship with several well-known companies including Anglo Platinum, Xstrata Coal, Anglo Coal, Exxaro, Kumba Resources, and Goldfield.” According to Hopkins, for many years Trollope’s biggest contract was with Xstrata in South Africa. However, when the crash came in 2008, some of the agreements had to be terminated due to economics. “The client ended up closing half of their mines and cancelling most of their contracts with 28 days notice. Trollope lost 80 percent of their turnover in a month. Ironically,
Trollope Mining Services
Trollope Mining Services
however, it was these cancellations that have been a catalyst for the company’s transformation.” He says the company started to take on a greater variety of contracts among the junior to middle mining houses. “The economic downturn made us look at the bigger picture,” Hopkins explains. “I think in hindsight it was undoubtedly a good thing that we were freed from the some of the long-term contracts, as it enabled us to pursue other options.” In the past Trollope was far too exposed in one single sector, with one client. Now it has an impressive range of clients, projects in several different sectors of the industry, a great reputation and a steady cash flow. “In terms of our future, there are plans to expand within key African areas, notably Zambia and Botswana – we want to expand the business. “Our order book is almost full. We probably went into the downturn quicker than anyone else, so we managed to emerge from it quicker and equip
“Trollope has traditionally specialised in open pit mining; taking significant volumes from the ground, drilling and blasting it, removing the rock and stock piling the usable ore material”
Hitachi Construction Machinery Southern Africa Co. Ltd. www.hitachi-c-m.com/za Atlas Road, Boksburg North T: +27 (0) 11 841 7700 F: +27 (0) 11 894 3307
ourselves for the future,” says Hopkins. “Some of the other guys are still carrying old contracts at poor rates at not getting the yields or profitability.” Significantly, the company has also had the opportunity to fine tune its equipment policy as well as revamp the way it does business. All primary machinery must now be new with a high level of availability, ensuring it has the longest possible life span, while also providing reliability and exceptional performance. “Peter and John are still very much involved in the company and are as passionate as ever,” Hopkins says. “John is involved in the plant side, where he is currently mentoring an up and coming manager, and Peter is lending his considerable acumen to business development. “We are keen to retain a family ethos within the business, while still embracing core corporate principals, with structured systems, policies and procedures. It’s about striking the right balance.”
“in terms of our future, there are plans to expand within key african areas, notably Zambia and Botswana – we want to expand the business”
TRollopE Mining SERVicES
Trollope Mining Services was recently appointed mining contractor at Junior South African coal exploration and development company Continental Coal’s coal project in Vlakvarkfontein, in Mpumalanga province Under the terms of the initial three-year contract mining agreement, Trollope will be responsible for the management of the site and all the mining and crushing activities. “We are delighted to have got this,” says Hopkins. Trollope was selected following a highly competitive bid process, during which a number of major mining contractors submitted tenders. The awarding of the mining contract followed a rigid selection and review process that included an assessment of the mining contractors’ credentials, capabilities, equipment and labour availability, as well as visits to a number of their existing contracting operations. “The mine is located in the Delmas area, adjacent to State-owned power
“We are keen to retain a family ethos within the business, while still embracing core corporate principals, with structured systems, policies and procedures. it’s about striking the right balance”
utility Eskom’s Kendal power station,” says Hopkins. The colliery has a measured resource of 17 million tons and is to be developed as a conventional opencast mining operation. It is forecast to produce 350,000 t/y of A-grade and B-grade export-quality coal and one million tons a year of domestic-quality coal over the mine’s initial 10-year life. “We offer a more complete service to clients,” adds Hopkins. “At the moment for us, it is very buoyant. We’ve picked up a couple new jobs. “There is general buoyancy in the market,” he says. “For the last year we have been pricing tenders left, right and centre. Obviously with the gold price coming up, with economies of scale you can actually go down deeper and make it more viable. And with Eskom and the coal requirements there is a lot of opportunity and a lot of junior miners have started up.” Trollope’s journey is an uplifting triumph over adversity.
TRAINING MATTERS (Pty) Ltd
Developing people in Southern Africa to enable them to be meaningfully employed in the Construction & Mining Industries Experience We have successfully conducted learnerships and skills programs in technical, managerial, supervisory and entrepreneurial development courses on numerous projects throughout Southern Africa and neighbouring countries. The active participation in ... alleviating the skills shortage ... contributing towards career development of individuals ..... enhancing individual employment possibilities ... the building and civil engineering construction industries by providing quality training and development to all people of Africa VAAL TRIANGLE Tel: 016 366 0882 Fax: 016 366-0890 Kobus Brümmer Cell: 082 457 0427 e-mail: firstname.lastname@example.org NORTHERN REGION Tel: 011 665 2777 Fax: 011 665 3281 Frans Toua Cell: 082 807 4783 e-mail: email@example.com SOUTHERN REGION Tel: 021 976 8057 Fax: 021 975 1277 Gawie Burger Cell: 082 800 6361 e-mail: firstname.lastname@example.org ww www.tjeka.co.za
CETA Construction Centre of Excellence
DONSEKA ELECTRICAL SERVICES
Good metal makes the difference. We specialize in the production of: Ground Engaging Tools: • Cat type J350 – J800 Tips, Adapters, Pins & Retainers (various shapes) • Esco type Tips, Adapters, shrouds, Pins & Bushes (various shapes and sizes) • Wide selection of Bucket protection components for Loaders/Excavators/Dozers including LHD shrouds, Half arrows, Bucket corners, Lip shrouds, Leading edge protectors and more.. • We also have a comprehensive range of imported Ground Engaging Tools available. Highly abrasive alloy steel castings: • Mining Track Pads • Ore crushing Hammers • Wear plates and more..
PO Box 14335 Leraatsfontein 1038 South Africa Tel: 0027 13 692 4999 Cell: 0027 72 792 3715
SG Iron castings: • Valves • Pumps • Links and more..
Phone: +27 11 828 9900/1/2/3 Fax: +27 11 828 0031 Email: email@example.com Address: 300 Main Reef Road, Knights, Germiston, South Africa.
Manufacturers’ names, numbers, symbols and descriptions are used for reference purposes only and it is not implied that any part listed is the product of the manufacturers
Zambiaâ€™s main steel and iron producer
Julius Kaoma Technical director at Universal Mining and Chemical Industries (UMCIL) talks to Mining Outlook. By Ian Armitage
ambia is blessed with substantial mineral resources. The major metal, which has been exploited for nearly a century, is copper. Since the establishment of Zambia as a nation, the metal has been and still is, the single largest contributor to the economy. But mining has a bigger role to play. To ensure that it does, the Government has taken bold steps. A new Mining Act was put into place in 1995. The main features of the act were: the divestiture of government from the business of mining through privatisation of the mines; the liberalisation of the fiscal policy; and
the provision of several tax concessions to mining companies. In this context, Universal Mining and Chemical Industries (UMCIL) was born. “We are Zambia’s main steel and iron producer,” UMCIL director Julius Kaoma explains. “We are helping to transform Zambia, for the betterment of Zambians.” According to Kaoma, UMCIL is investing some US$70 million (some K350 billion) in the implementation of the second phase of the integrated iron and steel project in Kafue, South of the Zambian capital Lusaka. Kaoma says this is part of an ambitious project, which will include the construction of a 50 km all weather gravel road from the
Kafue steel mill to the Sanje Hill iron ore mine west of Kafue. “The total investment cost for the second phase of the project is forecast to gobble up more than US$70 million when it is completed,” he says. According to Dr Kaoma, the second phase of the project would also involve the mining of a 400,000 tonnes a year of high-grade iron ore after the resettlement of Sanje Hill communities not far from the mine. “The project will also include the erection of a direct reduction plant for the processing of iron ore by the steel mill into sponge iron using Maamba coal,” he explains. “The sponge iron or direct reduced iron will substitute steel scrap that is anticipated to be in short supply next year considering Zambia neighbours’ ban on steel scrap export and the poor generation of the commodity in the country. “In terms of the road construction, that is going to be jointly done with the Zambian Government,” he adds. “We have started the construction of the road - so far 20km of road has already been done. We do hope by early next year, the road will be fully completed. This includes the procurement of machinery and equipment for both the sponge iron plant and the iron ore mine as well as infrastructure development and Sanje Hill community resettlement. “We are working with the Government and we have to resettle the people living in the surrounding areas because of the development of the mine. “The phase will also see the increase in the labour force to more than 2000 workers when the project comes fully on stream.” Besides iron ore, Kaoma says, there would be demand for other raw materials like coal, limestone, dolomite, manganese ore, fluorspar, kyanite and others. There would also be demand for construction material like sand, gravel and cement. “We currently run a steel plant whose production capacity is 100,000 tonnes per year. Scrap is the main component in steel,” Kaoma says. “We are Zambia’s leading supplier of steel with scrap being the main component in steel production which has been so much sought from Zambia in recent months.”
uniVERSAl Mining And cHEMicAl induSTRiES
uniVERSAl Mining And cHEMicAl induSTRiES
The mine in Mumbwa has the capacity of 250 million tonnes of iron ore reserves and is located 200km west of Kafue in central province. The mine at Sanje Hills (Nampundwe) reserves estimates stand at 10 million tonnes of high-grade iron ore with the project generating employment for 600 people. “Our steel plant is in Kafue in the Lusaka Province and it has a production capacity of 100,000 tonnes per year. Scrap presently is the main component in any steel production, it will be phased out with iron ore as scrap supply is sustainable,” Kaoma stresses. As the steel mill expands to meet customer’s needs, the Mumbwa iron body will need to be opened up. The ferrying of the iron ore to the Kafue Steel Mill calls for investment in a railway. UMCIL will be investing more than US$130 million, which is required to undertake such a project. The railway line would be pivotal in addressing transport infrastructure bottlenecks, Kaoma says. “We have planned to build a railway line and we will also develop the mine in Mumbwa, as I explained before. The railway line will facilitate easy transportation of our mine products. The railway line will be cheaper than road transportation. It will be easy for us to move our products between Lusaka and Mumbwa and ease pressure on the roads. “It would connect our two mines would be in Mumbwa and Nampundwe respectively,” he says. Dr Kaoma says the company has already an impact on the 24
international market as the steel products the company currently manufacture meets South African Standards, an equivalent of European and American Standards and establish itself. It is currently producing between 36,000 tonnes and 40,000 tonnes of steel per year. “We have our expansions planned and we will increase production stage by stage because this is what the market can absorb,” Kaoma says. “Most of our product is exported - we export mainly within the region to Malawi, Zimbabwe, Mozambique Botswana, Rwanda, Burundi, Democratic Republic of Congo, Tanzania, South Africa and we’ve had inquiries from Namibia and Angola. “Africa is on an infrastructure boom and demand for steel is up considerably as a result.”
with Meteor Downs South
Coal explorer Endocoal aims to be the Bowen Basin’s next emerging coal producer. CEO Tim Hedley says it is “well on track” to achieving that, confirming the company has begun a bankable feasibility study at METEOR DOWNS SOUTH. By Ian Armitage
ndocoal is an ASX-listed Australian coal exploration and development company, focused solely on the Bowen Basin in Central Queensland. With 11 tenements across approximately 5,200km2, it has one of the largest landholdings in the region and, as such, is looking to establish itself as the Bowen Basin’s next emerging coal producer. “Endocoal is a public company focused on the exploration and development of coal tenements in Queensland’s premier coal producing region -- the Bowen Basin -- which contains the most prospective coal resources in Australia,” says CEO Tim Hedley, who talked to Australasia Outlook from his office in Brisbane where the exploration team and
project development is based (the firm’s corporate office is in Sydney). “How was Endocoal formed? Well, simply a group of tenements were brought to the table and Endocoal was listed in 2010. The company then commenced a concerted exploration program exploring for coal in target areas identified by the geology team. “We are currently targeting three types of coal: thermal coal for power generation, PCI coal as a coking coal replacement for steel making, as well as coking coal.” Endocoal is actively exploring and there have been early discoveries and success in the thermal coal area at Orion Downs south of Emerald, between Springsure and Rolleston. “We are currently on a path to develop an export-quality thermal coal mine at
our flagship Orion Downs tenement, positioned close to existing infrastructure networks, to deliver coal to export markets,” Hedley says. “We also have additional tenements in the northern Bowen Basin region, which will be subject to further drilling and exploration. The current priority is the Rockwood tenement, where we have recently announced a 51.6 million tonnes JORC Resource in an area that is prospective for PCI-style coal Further north, the Talwood and Pretoria Hill tenements are prospective for coking coal and we look forward to commencing drilling in these areas in the near future. We are involved in a Joint Venture with Carabella Resources for the exploration at Pretoria Hill.” 27
Endocoal appointed Hedley, a mining engineer by background, as CEO in April. He has over 35 years experience in coal mining, both underground and open-cut, primarily with BHP in Newcastle, Illawarra and the Bowen Basin regions. “As one of the largest coal tenement holders in the Bowen Basin, I truly believe that Endocoal is well positioned to become a multi-mine and multiproduct company in the medium term and so I am really excited by this challenge,” Hedley says. “We’ve just started a feasibility study looking at the Meteor Downs South open-cut mine operation at Orion Downs, which will be our first operating production area. “We are targeting 1.5Mtpa of direct-ship thermal coal from Meteor Downs South with potential for another one million tonnes from the nearby Inderi underground prospect. “The objective is to have a mine up and running at Orion Downs by late 2013.” To carry out the bankable feasibility study at the Meteor Downs South open-cut project Endocoal has formed the ‘Meteor Downs South Project Team’. According to Hedley, the bankable feasibility study will cover open-cut mine operations, haulage roads, coal crushing and handling, and train-loading infrastructure. “It started in August,” he explains. “Subject to satisfactory resolution of land access arrangements with landowners we hope to have finished by mid-December.” An Environmental Management Plan is also being prepared. He says mining plans will target coal production of not less than 1.5Mtpa, for a proposed eight to ten year project life. “Meteor Downs South will provide direct-ship thermal coal for export through Gladstone port to the Asian market,” Hedley says. The open-cut mine will be based on the recently announced 15.4Mt of JORC Resource, with 13.4Mt already at ‘Measured’ status. At Meteor Downs South the seam averages 7.63m, with sections up to 9.5m in thickness. There is 13m of overburden at the likely point-of-entry to the open-cut and the average strip ratio is expected to be 5.5:1 across the whole deposit. 28
“We think Meteor Downs South will deliver very competitive, low mining unit costs utilising an optimised single excavator/truck fleet,” says Hedley. “The study will firm-up the operating cost outcome for a high productivity open-cut. The focus will be on delivering the lowest capital cost per annual production tonne outcome available. Above all else, delivering safety-in-operations will be the key priority.” A bankable feasibility study for the Inderi underground bord-and-pillar mine will likely follow in Q1 2012, he says. “This really does mark the next stage of creating significant value for Endocoal shareholders. Having the Meteor Downs South deposit drilled out to JORC Measured status provides us with a great platform from which to launch the bankable feasibility study. “We have engaged a highly regarded team of mining industry experts to ensure we deliver the best mining layout, optimised equipment selection and most efficient infrastructure arrangements. “To stress, Meteor Downs South has the potential to be a highly productive, low operating cost mine, with relatively low upfront capital costs, delivering at least 1.5Mtpa of direct-ship thermal coal for export.” On 1 August 2011 Endocoal announced the initial JORC Resource statement for Rockwood at 56.1 million tonnes while also upgrading the Meteor Downs South and Inderi resources to 36.0 million tonnes. Endocoal recently started drilling at the Rockwood tenement, intersecting coal seams up to 5.6 meters in apparent thickness.
A J Hickey contrActors servicing tHe coAl & minerAls explorAtion industry Services included but not limited to: Seismic Clearing, Site Preparation, Drilling, Grouting Operations and Rehabilitation Operations. Our equipment consist of Cementing units, Drill Rigs, Backhoes, Tractor/Slashers, Excavator, Dozer, Tilt Tray Rigid Trucks and Dog Trailers, Prime mover and Drop deck Float Trailer, Site Offices, Site Workshops, Gensets and Lighting plants. Located in Emerald Queensland, servicing throughout Australia.
Phones: +61 731771033 Fax: +61 49874794
Andrew (Director) 0427 787535 Colleen (Director) 0458 888799 The exploration program is ongoing with plans in place to expand the exploration footprint considerably over the coming months. Hedley confirmed that the company was planning exploration programs at other tenements including Central Bowen Basin tenements, Essex, Nebo and Springton Duaringa. “That’s correct,” he says. Endocoal is a relatively small company with only eight full-time staff in the exploration and support team. For the future Hedley is focused on getting a mine “up and running” and intends to be a near term producer. “We want to develop a portfolio of coal resources and to take them through to production as soon as possible,” he explains. Hedley is very optimistic about the future, citing the fact that Endocoal has already had early success in exploration at Orion Downs and Rockwood and is looking to build on that success at other locations across the Bowen Basin region. “There are plenty of other companies out there looking for coal but I would like to think Endocoal will be the next new coal producer in the Bowen Basin.”
Safety accountability Productivity contract drilling Services
Po Box 250 Biloela Qld 4715 P: 07 49921579 I F: 07 49921578 E: firstname.lastname@example.org
top tin 30
Consolidated Tin Mines is engaged in tin exploration and development in Queensland. It is focused on discovering and developing tin deposits at its Mount Garnet project and its vision is to develop a major Australian tin mine, says managing director Ralph De Lacey. By Ian Armitage
onsolidated Tin Mines is an emerging ASX-listed tin explorer and developer, with an advanced project and substantial JORC resource. Founder and managing director Ralph De Lacey says its primary goal is to secure new tin supply beyond the “current producers”. “Our projects are in the lower Herberton Tin Field in northern Queensland, once one of Australia’s premier tin producing fields, and we’re focused on discovering and developing major tin deposits at Mount Garnet, near Cairns.” Consolidated Tin, he says, has acquired an impressive portfolio of advanced tin exploration projects in the area, which it plans to transform into a major mining operation.
conSolidATEd Tin MinES
“The most advanced project within the Mount Garnet Project is our Gillian deposit ,” says De Lacey. The Mount Garnet Tin Project , he adds, is made up of three key deposits: Gillian, Pinnacles and Windermere. “Our goal is to confirm an initial JORC resource base of 8 to 10 million tonnes of ore from those deposits, to feed a centralised mill and process around one million tonnes per annum to produce around 5,000 tonnes of tin per year,” De Lacey explains. Consolidated Tin has conducted extensive exploration programs at Mount Garnet and has a total current JORC resource of 7. 4 million tonnes at 0.60 percent tin. “That’s right,” says De Lacey. “And that includes a JORC measured resource of 1.2 million tonnes at 0.82 percent at Gillian.” Currently, drilling designed to update the project’s resource base is ongoing, and drilling is also underway at new project area’s. “We are progressing pre-feasibility study work at Mount Garnet, which will play a key role in our future mine development plans,” De Lacey comments. Consolidated Tin remains on track for production in Queensland in 2013, he adds. “We are on course for that. Indications are that tin prices will remain positive . I certainly have not seen any negative indication on tin prices. There is a supply/ demand shortfall for sure. “Price is always a challenge; Tin is a good price at the moment and the future of tin looks good with new uses for tin being developed constantly. “Prices might come down a little or go a lot higher but I’m confident, whatever happens, we will make it work.” The tin price was sitting at US$5,000/t when Consolidated Tin started taking up areas of the tin field at Mount Garnet. “Tin’s rise as a metal has certainly coincided with our rise,” De Lacey says. “The price rise over the last 18 months has been driven by a global increase in the sale of electronic goods and legislation removing lead from solder, where tin is the major substitute. “Tin’s performance has certainly helped us become one of Australia’s leading tin exploration 31
conSolidATEd Tin MinES
and development companies.” Like most Queensland miners, Consolidated Tin’s process was slowed by the heavy wet season experienced last summer, however the project at Mount Garnet is now at full operation – and De Lacey expects any lost time to be made up throughout the rest of this year. “It did put us back,” he says. Consolidated Tin commenced its 2011 drill campaign in April with a 3,500 metre, 65 hole reverse circulation program at the Windermere deposit. Further drilling is currently underway at Windermere, and elsewhere. The outlook remains positive. While Gillian and Windermere are the company’s most advanced projects at Mount Garnet it has not limited its programme of work exclusively to them, De Lacey stresses. “We’re drilling at Pinnacles,” he says. “And we are also planning to undertake a regional drilling programme at other nearby projects held by the company in order to expose potential mineralised zones. .“We see our company as one that has genuine credentials and is moving towards being a production company and it will be a major tin producer. I see us as being a leader in the field.” Consolidated Tin recently announced that it has secured a major cornerstone investor for the Mount Garnet Tin project. Hong Kong based investment company Snow Peak International Investment Limited has taken an initial placement of A$1.6 million into Consolidated Tin, as the first tranche of a proposed long-term investment designed to see the project through to production. The initial placement is for 20 million shares at A$0.08c per share. 32
SEMF Pty Ltd are pleased to support Consolidated Tin in their mining developments. SEMF is a multi-disciplinary engineering and management firm that can provide skills to all facets of your project. We provide a total project delivery solution to clients in a diverse range of industries including feasibility studies and engineering design, planning, environmental and community relations and project, construction management and commissioning. Permanent offices are located in Brisbane, Townsville, Gladstone, Hobart, Launceston, Burnie, Melbourne and Sydney. We have in excess of 120 full-time employed professional and administration staff available. To ensure projects are delivered, providing the best possible results for our client, great pride is taken in ensuring our client’s needs and priorities are understood and delivered. Contact: Dr John McCambridge National Manager – Environmental and Infrastructure Solutions e: email@example.com p: 0409 956 898
Proceeds from the issue will be used to advance the development at Mount Garnet and provide working capital, De Lacey says. “We are delighted to welcome Snow Peak as a strong partner and look forward to a mutually beneficial relationship to take the Mount Garnet Tin project through feasibility studies and into production, to unlock the real value in the project for our shareholders.” Looking forward, Consolidated Tin will continue with its development plans to position itself as a substantial tin mining company. “In 2000 there was very little interest in tin as a commodity, but my partner John Sainsbury and myself saw great potential in the future of the metal and accumulated the best tin projects in the lower Herberton Tin Field,” De Lacey says. “Some seven years later we transferred those projects into a new company: Consolidated Tin Mines. “At the time, there was potential that tin might revive -- the price having previously crashed -- and we managed to accumulate
a number of very valuable tin areas in the Herberton Tin Field. “We had the opportunity to pick and choose the very best of what we wanted. We chose the Herberton Tin Field in Northern Queensland because it was once one of Australia’s premier tin producing fields and we had faith that the tin price would revive and, sure enough, it did. As we established Consolidated Tin Mines, we raised funds to carry out the development in 2008 we listed on the Australian Securities Exchange. We raised four million dollars in that listing and we put every bit of that towards developing the project and taking the project to where it is today.” The Herberton Tin Field was already well explored by other mining companies and taken to a certain point when De Lacey acquired his assets. Consolidated Tin has taken the projects on to the next level of development, with the express purpose of bringing them into a mining operation. “We’re a small company with an enormous project at Mount Garnet,” he concludes. 33
The World’s shallowest potash deposit
Australasia Outlook talks to Lorry Hughes, CEO of Perth-based South Boulder Mines, who tells us that his main focus is to getting to potash production in Eritrea. By Ian Armitage
outh Boulder Mines Ltd (South Boulder) is aiming to jump the pack to become a major potash producer. The company has the world’s shallowest potash deposit and it expects to start production at the world’s first open-pit potash mine by 2016 and possibly sooner, with start-up costs expected to be half the average for a typical potash mine. Managing director Lorry Hughes says South Boulder’s Colluli potash project in Eritrea could be delivered for between US$500 million and US$700 million. “This is a real gem,” he says. “On our current progress, operating costs should
be among the lowest ten percent of all the global potash producers. “What we have at the Colluli Potash Project is the world’s shallowest potash deposit, and it is accessible as low as 16 metres below surface. “There is nothing else like it in the world.” According to Hughes there is currently huge interest in the potash sector, with players such as BHP Billiton, Brazil’s Vale and Canada’s Potash Corp looking to capitalise on the market’s potential. South Boulder Mines Ltd has something they don’t though. “The Colluli Potash Project would fit comfortably into any resource giant’s portfolio; this is a Tier 1 asset,” Hughes says. “It’s great for a junior company to advance toward a multi-billion dollar producer in a relatively short space of time and it is seldom that a
company like South Boulder gets the chance to control such a potentially large producing asset in any commodity. “We are developing this from discovery through construction and production; we have the team the can deliver production for many decades to come.” Hughes says global consumption of potash, used in fertiliser for food production, is expected to surge about 45 percent in the 20 years to 2030. `This demand is there and is underpinned by rising world populations, changing diets as incomes grow, constraints on arable land, government policies to enhance crop yields, and programs encouraging things like the use of biofuels.” Since spiking in 2008, the average price for potash has been on a growth curve for the past two years and continues to trend upwards, he adds. “We continue to deliver a string of high grade potash hits from the Colluli Potash Project in Eritrea. We recently confirmed Area B as a significant addition to the Colluli Potash Project, with the results continuing to support the project Exploration Target of 1.25 to 1.75 billion tonnes at 18-20 percent potassium chloride (KCl). “The continuous zones containing sylvinite, carnallite / kieserite and kainitite mineralisation have been identified in 18 of 22 holes drilled at Area B to date. “Boosting the potential of the project even further is that the holes are open in most directions.” The Colluli current JORC Resource is 548 million tonnes at 18.6 percent KCl, for total contained potash of 102 million tonnes, he says. “We’re very excited and are expecting to confirm the robust economics of the project with the release of an engineering scoping study in October,” Hughes explains. South Boulder Mines was originally listed on the Australian Stock Exchange in 2003, with its ground pack¬age in the Duketon Greenstone Belt in Western Australia and in 2009 acquired the Eritrean Project. Today, South Boulder has shareholders all over the world and a lot of exciting developments to report. The world really is watching this dynamic company.
South Boulder Mines
South Boulder Mines
“South Boulder’s gold and nickel prospects are all located within the under-explored Duketon Greenstone Belt,” Hughes says. “The Duketon Belt is located 120 kilometres north of Laverton in Western Australia and is considered highly prospective for gold, nickel sulphide and base metal mineralisation. “From the early 1990s most of the Duketon Project was held by Normandy Mining Limited and Newmont Mining Corporation. Widespread reconnaissance was sporadically conducted but the majority of the project remains under-explored. New mines and discoveries are occurring regularly in the belt now, due to a better understanding of the geology of the area and targeted exploration. “Our key Duketon gold prospects are Moolart West, Thomson’s Bore, Terminator and The Garden Well area: our three Duketon nickel prospects are the Bulge C2, the Bulge Rosie and the Bulge Extended prospects.” Within the Duketon Gold Project area, South Boulder entered a farm-out joint venture agreement with Independence Group NL, whereby Independence can earn a 70 percent interest in the nickel rights on JV tenements held by South Boulder in the Duketon Project, by the completion of a bankable feasibility study within five years of the grant of the relevant tenement.
“We are developing this from discovery through construction and production; we have the team the can deliver production for many decades to come”
Hughes says that the Duketon Nickel JV has had recent success at The Rosie and C2 Nickel sulphide prospects, where drilling has defined intercepts of 5.20 meters at 9.13 percent nickel, 1.09 percent copper, 0.21 percent cobalt and 7.09g/t platinum group elements (PGEs) at Rosie and 50 meters at 0.92 percent nickel including 37 meters at 1.05 percent nickel at C2. “The deposits are approximately two kilometres apart and the mineralisation at both prospects is considered open in most directions,” he says. “A mining lease was granted over the Rosie and C2 deposits in November 2010. A resource definition and exploration drilling program and scoping study into an open-pit mine at C2 and an underground mine at Rosie was under way as of July 2011.” The South Boulder Mines Ltd story is remarkable. A sixth sense for holding the Duketon package, and the foresight to enter Eritrea, has com¬bined to create a strong and potentially extremely rewarding portfolio, Hughes concludes. “What at future we have,” he says. “As a general strategy, we are looking to split the company, creating a new one – one that is dedicated to potash. The effect of that is to create the best value for all South Boulder shareholders. That is part of the strategy and that will come in the next year or two.”
THoR Mining plc
When the global financial crisis struck, Thor Mining Plc was one of the many businesses that felt its reverberations. However, as a potential producer of rare minerals, its original market was narrow and the company could have faltered. Chairman Mick Billing tells Mining Outlook how Thor moved laterally to secure its position and what the recovery means for the organisation. By Jane McCallion
hor Mining Plc is a mining company dealing primarily with gold, molybdenum and tungsten. The organisation was founded in 2005 for the purpose of bringing online a tungsten and molybdenum project in the Northern Territory. The company was initially listed on the Alternative Investment Market in London, England, before floating on the Australian Stock Exchange in 2006. Its project portfolio includes locations in the Northern Territory and Western Australia. The organisation’s flagship project is Molyhil, a tungsten and molybdenum deposit located just outside Alice Springs. The elements are used in the manufacture of steel and the deposit at the site was originally estimated to be 1.4m tonnes of ore, which could be produced at a rate of 400,000 tonnes per year. “The project has been the subject of a lot of work by Thor and a feasibility study produced in 2007 that showed it is a viable proposition and that we should get going,” says Chairman Mick Billing. However the project had to be put on hold before Thor was even able to break ground. “Unfortunately, just a couple of months after that Australia was hit by the global financial crisis and the price of molybdenum in particular plummeted. Consequently the project had to be put on the back burner.” Billing joined Thor Mining in 2008, just as the decision was taken to put Molyhil on hold. Shortly after, the company began looking at acquiring gold projects that it could run in tandem with and temporarily in place 39
THoR Mining plc
of Molyhil. The primary site fulfilling this role is Spring Hill, located 150km south of Darwin. Currently, Thor holds 25 percent of the site, with rights to increase this progressively to 80 percent. “Our involvement in Spring Hill commenced in August 2011 and we began exploratory drilling in September, which continued into late November,” says Billing. “There is a historical resource on the site of 274,000oz at a cut-off grade of one gram per tonne. This is a pretty high cut-off grade considering the current price of gold.” The company is now doing its own exploration of the Spring Hill deposit, as technological improvements in the field mean that the workable resource may be larger than estimated during the original studies, which took place in 2003. “Back then, the gold price was about A$400/oz. Now it is over four times that,” explains Billing. “This will of course have a significant impact on the conclusions of any feasibility study. Consequently, we feel very positive about this project and the prospect of bringing it online.” Thor is planning what Billing describes as a “two pronged attack” for Spring hill in the near term. Firstly, the company will continue to carry out drilling
explorations, as it is expected that the estimation of the resource available will grow. “The old estimation was arbitrarily cut off at 130m below surface as back in those days, that was as deep as one would want to go with a A$400/oz gold price. It now would sustain a deeper open-cut pit.” He goes on to explain that there are also a number of targets to the north and south of the existing resource where are historically attractive intersections. “These have never been followed up, so we think the Spring Hill resource will grow quite quickly.” The second ‘prong’ of attack is securing environmental and regulatory approval. “We think that there is probably sufficient gold there that we could start mining now,” says Billing. “Unfortunately, however, we don’t have the necessary environmental and legal reports and agreements in place yet to begin production. However, once they are completed, we should be ready to get underway shortly thereafter.” Things are also looking up for the Molyhil project too. In
BorEholE GyrosCopiC and data loGGinG survEyinG sErviCEs Direct Systems Australia provides an extensive package of high quality services to the minerals industry. Standard services can be provided and/or tailored to suit the needs of projects and clients, with a broad range of services and skills on offer through our equipment and personnel.
• • • •
• • •
ds_northseeker (true north seeking Gyroscope) srG (surface recording Gyroscope) Magnetic survey instrumentation physical properties logging (nat Gamma, spectral Gamma, Mag suss/Cond, sidewall density sonde, 3 arm Calliper, Full wave sonic, resistivity) acoustic televiewer Mud Motor steering surface surveying
ContaCt: tel: +61 (0) 3 9376 5575 fax: +61 (0) 3 9376 1175 Email: firstname.lastname@example.org
THoR Mining plc
the four years since the project was put on hold, the price of molybdenum and tungsten have risen once again to profitable levels. Thor had been constantly reviewing the mine and at the beginning of 2011, with tungsten becoming particularly valuable, it was decided that the time was right to begin work on bringing Molyhil online. “The first thing we needed to do was work on updating the feasibility studies and do a bit more drilling to increase the size of the resource,” explains Billing. “We have had some success with the drilling and expect a revised, definitive feasibility study to be published in a few weeks time. Hopefully, that will say that we should start mining quite soon.” Unlike at Spring Hill, all the environmental agreements and legal agreements were put in place before the decision was taken to postpone the Molyhil already in place. Consequently, once the feasibility study is completed, it will be able to commence mining as soon as sales and finance agreements are in place. “We did at one point think that, as the environmental report was done some time ago, we may have to carry out another report. However, the government of the Northern Territory has recently confirmed that it is still valid and our agreements with the traditional, Aboriginal owners of the land still stand as well.” The total estimated capital cost of bringing Molyhil into production is A$66 million, although Thor is hopeful that it will come in under budget. The company is also confident that it will recoup this expenditure fairly quickly once the resource comes online. “The original estimate of the deposit was 42
1.4m tonnes and that ore would be produced at a rate of 400,000 tonnes per year. Out of that, we would produce a couple of thousand tonnes per annum of tungsten concentrate and 1,200 – 1,300 tonnes of molybdenum concentrate,” says Billing. “Those numbers may not appear very high, but when they are put into perspective in terms of value: molybdenum is currently valued at approximately U$15/lb, or about four times the price of copper. Tungsten is running at about U$20/lb. When you look at these numbers, the financial viability of the mine becomes clear.” By the end of 2012, it hopes to be in the development stages of Molyhil and within the next three years both Molyhil and Spring Hill should be in production. “These two projects will be taking up most of our energy for the next few years, but we are always on the look out for new projects and by the middle of the decade I hope that we will have at least one additional project in production or development as well.” After a number of years having to hold back on its projects, Thor is now in position where it can invest and grow. The company has positioned itself as an invaluable link in the steel manufacture supply chain and with the construction sector also returning to growth, for Thor Mining the only way is up.
When you’ve been doing it for as long as We have…
it’s hard to get it Wrong.
• Industrial, commercial and residential steelwork • Panel and steel drafting • Fabrication, delivery & installation • Crane and access equipment steelwork • Industrial, commercial and residential • Panel and steel drafting • Fabrication, delivery & installation • Crane and access equipment
CommerCial/industrial 56-58 Northgate Dr, Thomastown, VIC, 3074 T: 03 9465 1287 F:03 9464 4292 w: genissteel.com.au
residential 76 Northgate Dr, Thomastown, VIC, 3074 T: 03 9465 1287 F:03 9465 8654 w: genissteel.com.au 43
Developer of the worldâ€™s next major
Mining Outlook talks to Dr Derek Fisher, CEO and managing director of Moly Mines, developer of the Spinifex Ridge molybdenum-copper project in Western Australia. By Ian Armitage
oly Mines is an ASXand TSX-listed resource company focused on mining iron ore in the Pilbara Region of Western Australia, developing its world class Spinifex Ridge molybdenum-copper project - 170km east of Port Hedland, and exploring for minerals, base metals and project opportunities worldwide. Its major property is Spinifex Ridge molybdenum-copper project. According to Moly Mines CEO and managing director Dr Derek Fisher, the mineâ€™s target production is 10 million tonnes per annum, which will produce on average 11 million lbs of molybdenum in concentrate
and 13.5 million lbs of copper in concentrate per annum for the first 10 years. “In July we signed a project financing agreement with China Development Bank totalling US$454 million to construct the Spinifex Ridge molybdenum-copper mine,” Dr Fisher, giving us an update on the project’s progress, explains. The commitment, he says, consists of a US$454 million 12-year syndicated senior loan, and a US$40 million working capital facility. Hanlong Mining Investment, Moly Mines’ major shareholder, will also provide a US$6 million junior subordinated loan to fulfil its US$500 million commitment. “There are actually two loans,” Fisher clarifies. “One is for US$454 million, which I’ve mentioned. That one has an interest rate of 4.2 percent at the moment. It is variable, and it has a 12-year term. The debt repayments on that
are back end-loaded because the deposit is an open pit and it will take us time to get to the higher grade. The second piece of debt is a working capital facility. It’s a one-year piece, which will probably become a revolving debt piece. It’s about 3.3 percent; very low cost piece of debt. “Finally, the six million dollars is really just a bridge that Hanlong have to put in place to bring it up to 500 million; that’ll be in the form of the shareholder loan.” Fisher says the company has yet to drawdown on the US$454 million debt facility. “The appreciation in the Australian dollar against the US dollar has undoubtedly impacted us; it really has had a significant impact on the moly project,” he explains. 45
“Also, there has been molybdenum price volatility. Molybdenum as a metal is denominated in US dollars; it’s marketed in US dollars. So in our terms the value of the metal has depreciated significantly, and that has impacted on finances. It hasn’t impacted on China Development Bank’s attitude to the mine, which is quite comforting. And we’re anticipating the Australian dollar to come back. “The debt facility is available for drawdown up until mid-May next year, so we’ve got about 12 months.” He adds: “Do I have a timescale for the construction of the molybdenumcopper mine? Well, we are following the molybdenum market closely. We have obviously got opinions as to where it is heading. The wildcard out there is what is going on in Europe and in the world economy. At the moment, in the short term, I don’t see us making any development decisions. What I see on the horizon is not encouraging. But, look, I don’t know. I couldn’t tell you a timescale. What I can say is that we have a very bright future; I’m excited. There is so much potential here – it is the world’s next big molybdenum mine.” In addition to the molybdenum-copper deposits at Spinifex Ridge, the project also
Proud to be providing a 5 year crushing & screening contract for Moly Metals Australia Pty Ltd at their Spinifex Ridge Iron Ore Project in Western Australia
577 Bickley Road, Maddington, WA 6109 • p: (08) 9452 5888 • f: (08) 9452 5822 • e: email@example.com • www.rapidcrushing.com.au
hosts a number of iron ore deposits, and earlier this year, the company secured export for iron ore to September 2015, with access to the Utah Point facility at Port Hedland. “We reached a steady state of production at the Spinifex Ridge iron ore mine. It is a nice little project and it gives us a very steady and strong cashflow. We’re mining at a rate at the moment of a million tonnes per annum, and we have a monthly shipment of iron ore going out. And it’s operating on budget, on schedule, and in fact ahead of schedule; we only began production in December last year, so it is remarkable. We’re shipping about 80,000 tonnes a month at the moment. “The iron ore mine’s resource will never be much more than maybe 10 million tonnes. So it’s never going to be a big mine.” According to Dr Fisher, the resources at the iron ore mine at the moment stand at just under eight million tonnes. The reserve portion of that is about 4.5 million tonnes. “I’m confident we’ll end up mining most of that eight million tonnes, and
we’ve got some exploration going on, which will bring some more tonnes in. Ultimately I’m anticipating the resource will max out somewhere around the 10 million tonne level.” Given that Moly Mines is borrowing US$500 million and has revenue from its iron ore mine, the company’s financial position is very strong. Dr Fisher says cashflow this year will be about US$125 million. “We’re in a strong position; obviously once we make the investment decision to develop the moly deposit, life will change. “In terms of the next 12 months, I’m sure it is going to be a very good time for us. We will be a very different company by the end of next year. We have a lot of cash burning a hole in our pocket at the moment; we have a profitable operations; an undrawn debt facility; and we are on the hunt for something to use it on. It is a buyers’ market at the moment. We are in that sweet spot with cash and the quality technical team, good track record and I believe we will be a different company by the end of next year.”
city of gold
Joburg is a city built on gold, but returning it to its gold mining heyday is proving quite the challenge for Central Rand Gold as Mining Outlook discovers. By Ian Armitage
ohannesburg is South Africa’s city of gold. It is literally built on the stuff. And, just over 100m below some suburban streets, gold could be mined in substantial quantities, says Central Rand Gold (CRG). CRG is situated south of the city and operates on the central rand goldfield of the Witwatersrand basin. It was founded on the basis that the main reef leader, which produced historical volumes of gold and ran in the region of 8 g/t, was mined out and that, below it, in the main reef, which runs at about 3- 4 g/t, there was an opportunity to mine viably. “The reefs we have been mining were worked until the 1970s,” Patrick Malaza, CFO of CRG, tells Mining Outlook. “In those days, gold was US$35 per ounce and the mining company was only interested in high grade ore, delivering up to, say, eight grams of gold per ton of ore. We are expecting to mine reefs that have an average of four grams of gold. “Where we are working is not a new mining area,” Malaza adds. “Our aim is to bring gold mining back to Johannesburg. “However, there are two main problems that we face. The most unexpected has been the discovery of undocumented voids that, frankly, we are surprised to see. Consequently, this means that we have to drill down deeper than we originally intended in order to extract the ore.” Drilling down deeper is not as simple as it may appear. At 250m below the surface, CRG has struck not gold, but rising contaminated water – CRG is at risk of acid mine drainage (AMD) flooding. “Obviously, this prevents us from going any further down until we have pumped it out. So the immediate challenge is to get this water out so that we can begin full-scale production. Not only that, but we need to stop the water flooding into the mine in the first place - otherwise it will be an endless pumping cycle. So our intention is to put in place methods of keeping the water out, pump out the existing water, treat it and then return it to the river system.” But this process is not as simple as it may seem. “Obviously we need to be involved with the water pumping. However, this is not 100 percent our responsibility, particularly as we are the ‘new kids on the block’ here,
CENTRAL RAND GOLD
cEnTRAl RAnd gold
so to speak,” says Malaza. “The liability falls, yes, on the active miners, but also on the South African government and those companies who were mining here before us. So resolving this issue in partnership is very much our current focus as, until we have sorted it out, there can be no more mining, other than what we have going on at a small scale currently.” He says the “rising tide of contaminated underground water” is from more than 100 years of mining activity in the three geological compartments of the Witwatersrand. Spillage to the surface is already occurring on the East and West Rand. “The Central Rand Basin in which we are located has, until recently, been dewatered almost on a ‘last-man-standing’ basis,” Malaza says. “Our founding premise was that this would continue under the sponsorship of a coalition of interested and affected parties, sharing capital and operating expenses into the future.” Current development is sub-economic because of the double voids, deeper and more promising development is not possible because of lack of definition on AMD, and current stopping costs are prohibitive at present levels of dilution, Malaza says. On 29 March 2011, CRG announced the suspension of underground mining, and an intention to conduct a threemonth trial of conventional mining at its operations in Johannesburg. The company has moved to place its underground mining operations on care and maintenance, Malaza says - the objective is to understand whether conventional handheld in-stope drilling can be done safely. “The objective of the trial will be to understand whether conventional handheld in-stope drilling can be undertaken safely, reduce dilution and improve grade selectivity,” CRG said in an interim management statement in May. The company is currently using a mechanised underground mining method to extract the Main Reef. CRG continued to extract available ore before it placed its underground operations, except for the conventional trial mining, on care and maintenance, Malaza adds. “We announced plans to halt underground 50
“the objective of the trial will be to understand whether conventional handheld in-stope drilling can be undertaken safely, reduce dilution and improve grade selectivity”
Marsh is the world’s number one risk specialist.™ Marsh (Pty) Ltd 4 Sandown Valley Crescent, Sandton Private Bag X14, Benmore 2010 +27 (0) 11 506 5000 www.marsh-africa.com Marshafrica.firstname.lastname@example.org
Marsh is an authorised financial services provider Copyright 2010 Marsh Ltd All rights reserved
mining in March and announced at the time that up to 150 people would be retrenched when we moved into the care and maintenance phase,” he says. CRG has since held several meetings with the Department of Water Affairs (DWA) to clarify and agree on the technical principles, funding allocation and timing of the implementation of an interim solution to the AMD problem, currently being experienced in the Central basin of the Witwatersrand area. “We agreed that the DWA would take the lead role in coordinating the design and implementation of the interim solution, for which Treasury had made R225 million available, and that an implementation agent had been appointed,” Malaza says. “Underground exploration is continuing,” he continues. “We have reduced personnel, regrettably, and developed a new business plan.” The company expects 3.5 million euros worth of submersible pumps, with a 72 million litre a day capacity, to be delivered by August, in order to protect the 250m
level and enable gradual dewatering from December. CRG and Malaza feel that there is still insufficient clarity on key water issues, despite the South African government’s AMD report, including targeted minimum water levels, project engineering and technology, the role and responsibilities of the interested parties, cost allocation between interested and affected parties and timing to meet the degree of definition. “While there is no doubt that this will all be resolved, everything hangs on the timing, which is disappointingly uncertain,” the company said in March. “In the face of these uncertainties concerning depth, the obvious alternative is to increase development and mining in the upper levels,” it added. Surface mining of up to 76,000 t of goldbearing material will continue, probably until September, Malaza says. To learn more about CRG visit www.crg-sa.com.
Gold mining’s dirty secret Harsco Metals & Minerals managing director Koos-Jan van Brouwershaven talks to Mining Outlook about the problem of acid mine drainage and the solutions his firm has developed to cure it. By Ian Armitage
n the surface Tudor Shaft is a typical South African shantytown. However, when it rains, the streets pool with orange water, which smells awful – and you wouldn’t want to drink it or even stand in it. Experts say the water contains radioactive minerals and that it has killed all aquatic life in a nearby river. What’s happening at Tudor Shaft, which takes its name, and its troubles, from an abandoned gold mine, is just a fraction of the toxic legacy of South Africa’s mining industry. Mining accounts for 17 percent of everything South Africa produces, and the country is the world’s fourth biggest exporter; it’s not all good. There is a dark side – Acid mine drainage (amd).
Amd is not new. But campaigners are seemingly fighting harder than ever before to stop it. The effects of mining are now the focus of parliamentary debate and media stories. Harsco Metals & Minerals has a readymade solution - Mineral CSA, a finely ground calcium silicate feedstock, which provides a solution for correcting acidic conditions and managing toxic metals associated with amd. Mineral CSA has been used on operating and abandoned mine sites since the early 90s and is a highly refined, repurposed calcium silicate aggregate, says Harsco Metals & Minerals South Africa (Pty) Limited managing director Koos-Jan van Brouwershaven. “Acid mine drainage is the flow, or seepage, of polluted water from old mining
HARSco METAlS & MinERAlS
areas,” he explains. “Depending on the area, the water may contain toxic heavy metals and radioactive particles. These are dangerous for people’s health, as well as plants and animals. “Acid mine drainage is toxic water, and if it flows into rivers, it obviously contaminates rivers and underground waters, which become not a healthy source of drinking for humans, animals, plants - all living organisms. Because the necessary steps were not taken from day one, South Africans are now reaping what you would call the misfortune of the benefit that we had from the legacy of mining in this country.” Acid mine drainage in several areas has reached a crisis point. This is because some mining companies allow acid mine water to flow into streams, dams and sources of groundwater. 53
On the West Rand, toxic water has destroyed life in the WonderfonteinSpruit, Tweelopiespruit, and the Robinson Lake near Randfontein. Even some borehole water is polluted. The water has even polluted soil, so people cannot grow vegetables. “There is no quick fix,” says van Brouwershaven. “And amd is not a new issue.” Indeed it is not. It is an issue, which cynics say is one that has been conveniently silenced by the mining houses and South African government for decades. Fixing the problem is also costly. “In recent years, environmental organisations have brought amd to the fore and brought it into the public eye – it is now receiving international attention,” says van Brouwershaven. In a report presented to the Cabinet in February, a group of experts found that millions of litres of rapidly rising acid mine water under Johannesburg would start flooding the lower levels of the Gold Reef City tourist mine early next year. Shortly thereafter, the acid mine drainage would pass through an “environmentally critical” level -- with potentially devastating consequences -- before starting to flow out on the surface. The report was titled “Mine Water Management in the Witwatersrand Gold Fields with Special Emphasis on Acid Mine Drainage”.
“In recent years, environmental organisations have brought amd to the fore and brought it into the public eye – it is now receiving international attention”
It warned that if the water were allowed to continue to rise, it would start “decanting in low-lying areas in the vicinity of the ERPM Mine in Boksburg and possibly elsewhere across the Witwatersrand”. “Remediation of amd includes treatment systems designed to neutralise acidity and precipitate metal ions to improve water quality,” says van Brouwershaven. “The treatment is dependent on the types and amounts of metals in the water. Lime materials are often used, particularly in passive treatment systems. “Mineral CSA is an alternative to limestone,” he adds. “It provides a very effective and efficient means to correct the acidity. Unlike limestone, it is less vulnerable to armouring from metal hydroxide precipitates. This results in a product whose reagent characteristics are very suitable for use in a number of sustainable passive amd treatment systems.” Mineral CSA can be used in amd remediation and prevention, van Brouwershaven says.
Harsco Metals & Minerals
Harsco Metals & Minerals is the world’s largest provider of contract services to the metallurgical industry. It operates in 30 countries and hundreds of steel processing sites worldwide. “Traditionally we’ve taken care of the non-core work in the Metallurgical Industry, which can be seen as cleanup services – ladle wrecking, slag pot carrying, dig and haul, metal recovery and producing aggregates -- all services being part of our zero waste management,” van Brouwershaven explains. Recycling is an important part of the Harsco business model, he adds. “We try to find alternatives to dumping. We use slag as a concrete aggregate, asphalt aggregate. It’s also used back in the steel plant to reduce internal process costs. Harsco Metals & Minerals is interested working outside of the field of metals too and would be offering more to mines, such as non-core activities for them like crushing, screening, jigging, washing and amd remediation. “The work done in mining is very similar to our industries,” van Brouwershaven concludes. “There are different techniques but there’s a lot of overlap. Harsco Metals & Minerals is currently engaging with Wits University to do research with our Slag materials for usage as AMD solution.”
The rapid growth of Africa’s mining industry is to continue into the future, says Mark Calderwood, managing director and CEO of Perseus Mining. By Ian Armitage
old’s meteoric rise has been well documented. The metal reached a price of US$1786.54 per ounce in early August and it is expected to rise further still, with the gold market feeding off Eurozone uncertainty and, to a certain degree, off ongoing fears of slowing in the US. Gold is the quintessential hedge when there are worries about the economy and this represents a great opportunity for gold producing regions. From 2005 to the end of 2010 there were approximately 15 new gold mines in West Africa alone, averaging 200,000 ounces per year. Perth-based Perseus Mining is amongst those benefiting from the commodity’s soaring rise and is well aware of the obvious opportunity that lies in gold production. Its lead project is the Central Ashanti Gold Project (CAGP), formerly known as Ayanfuri, in Ghana, where it is working towards being in production soon. The CAGP comprises a group of large gold deposits located in the Ashanti gold belt. “It represents a big opportunity for us,” managing director and CEO, Mark Calderwood, tells us. “A major milestone was achieved on August 9, 2011 when the SAG mill commenced processing ore and first gold production is expected within a week, in line with expectations of first gold in the third quarter of 2011. “It was a tremendous effort by all involved to bring this substantial project to fruition within 14 months of starting site works. “The construction and operations teams put in a fantastic effort towards completing the project on schedule.” Commissioning the process facility to name plate capacity and optimisation of gold recoveries is expected within three months. “The mining ramp-up is progressing, and is on schedule for an average mining rate of 1,100,000 m3 per month. Approximately 4,200,000 m3 of material has been mined to date, including about 700,000 tonnes of ore,” Calderwood says. ASX-listed Perseus has forged a reputation as one of West Africa’s most
successful gold explorers. It is focused on under-explored gold belts in West Africa. “We are a miner and our first gold sale will be this quarter,” Calderwood adds. “We have two major projects at different stages of evaluation and development.” The company plans to produce at the initial rate of 220,000 ounces of gold in year one in Ghana and wants to increase this to about 280,000 ounces per annum by 2013. “The beauty of gold doré is that it can be sent to any refinery in the world,” Calderwood, who spent 11 years in Ghana before moving back to Perth to head up Perseus, continues. As well as developments in Ghana, Perseus is also planning the development of its Tengrela Gold Project in Côte d’Ivoire, with production targeted for late 2012 or earlier. “We are tendering the design - we have tendered the SAG for that one – and we are also about to lodge the EIS,” Calderwood says. “We are continuing our strategy of rapidly increasing our resource and reserve base.” Tengrela has the potential to become a significant contributor in the company’s goal to develop into a 450,000 ounce per year gold producer by 2013.
GolDEn oPPortunitY In addition to its projects in Ghana and Côte d’Ivoire, Perseus retains a 23.9 percent stake in Manas Resources Limited, which it spun off in 2008 as a focused Kyrgyz Republic gold explorer and developer. Perseus also has a 19 percent stake in, as well as a strategic alliance with, Burey Gold Limited, a listed exploration company focussed on Guinea. Calderwood has been managing director and CEO at Perseus since it listed in 2004 and he is a member of the Australasian Institute of Mining and Metallurgy. He served as Managing Director of Afminex’s West African operations and has extensive experience in the West African region as well as a network of contacts throughout the region. Recent years indicate a rapid growth in the African mining industry that is likely to continue well into the future as 58
more markets open up and new resource companies enter the market. Perseus will play its own part in it. “We are on track to start production with CAGP and we are also planning the development of Tengrela. Tengrela has the potential to become a significant contributor to our goal to develop into a 500,000-ounce per year gold producer,” Calderwood says. “West Africa is pretty early on in the discovery curve, exploration curve in terms of maturity, and there are a number of discoveries in the pipeline, given the rate of exploration that is going on. We will look to add further projects to our portfolio, aiming to get our production levels up. “We are an aggressive explorer and we have a lot of rigs – about 12 rigs at the moment - and are doing a lot of drilling. We do over 300,000 metres of drilling a year. “We are looking for robust open-pit ore bodies, which are quick solid operations that have quick payback and relatively low cost. We are looking at mines that produce 150,000 ounces per annum – that is our minimum target for new projects,” Calderwood concludes. To learn more visit www.perseusmining.com.
Group Five is a diversified construction services, materials and infrastructure investment group Group Five Projects was awarded a contract valued at R480 million by Perseus Mining Limited in November 2009 for the Engineering, Procurement and Construction of Anglogold Ashanti’s 5.5 MTPA Gold Processing Plant and related infrastructure in Ayanfuri Ghana on a LSTK basis, and with DRA Mineral Projects as a 50/50 Joint Venture partner. Design work commenced soon after contract award, with access to site only given to the Joint Venture in June 2010; the first breaking of the ground occurred on 17 June of the same year. The plant was accepted as practically complete on 20 July 2011, a record achievement for a construction contract in West Africa.
Group Five Projects Corner Paul Smit & 13th Avenue Anderbolt Boksburg North I PO Box 26807 East Rand 1461 South Africa I Tel +27 11 899 4600 I Fax +27 11 918 2707 I Email email@example.com I www.groupfive.co.za
CERTIFIED BY THE CRF INSTITUTE
PROJECTS AD AUG 2011.indd 1
2011/08/29 1:17 PM
GSE HD FrictionFlex
Bisha Gold Project – Eritrea
GSE Lining Solutions
• Mining leach pads
• World largest production capacity
• Landﬁll lining • Water and wastewater transport
geosynthetic lining products
GSE UltraFlex Color
• Complete range of
for HDPE geomembranes • Reliable product quality and durability ensuring the longevity of your project
and tailing facilities
and containment systems
• Tunnel lining
GSE products and customer services located throughout the globe... providing project-speciﬁc solutions ensuring on-time delivery supporting the completion of your project on schedule and within budget
GSE Lining Technology GmbH Normannenweg 28 • 20537 Hamburg • Germany • T +49 40 767420 • F +49 40 7674234 • firstname.lastname@example.org • www.gseworld.com
Peter McNeil, Chairman and Managing Director of Frontier Resources Ltd, talks about a great 2011 and the firmâ€™s future. By Ian Armitage
ith a history in Papua New Guinea involving three generations of family members, Frontier Resources Managing Director and Chairman Peter McNeil is an expert on the country, with vast operating experience. His son Alex is a fixed wing pilot in the country and his wife Paige is MD
of recently ASX listed Quintessential Resources Ltd, which is active in the PNG Highlands. McNeil’s father Bob is also well known in PNG’s mining scene, and only recently announced his retirement as the Chairman of Toronto-listed New Guinea Gold, which runs the Sinivit gold mine. “They say the apple doesn’t fall far from the tree and I ended up following in my father’s footsteps as geology offers a good balance between the field and office.” McNeil says. “I’ve been leading Frontier since 2001 with a focus on exploring for and developing mineral deposits in highly mineralised areas in Papua New Guinea and Tasmania.
“The business has come a long way; we listed as a company called TasGold, based on a suite of projects in Tasmania and we changed our name when the PNG projects were returned from a Canadian JV partner in 2006.” Frontier’s tagline is rather apt, ‘Exploring new frontiers’. “The potential in PNG is huge,” McNeil says. “Andewa is our main project and we own it 100 percent “It is a large and cohesive gold and copper mineralised system that has excellent “World Class Deposit” potential.” Frontier controls the entire related region for mineralisation through an exploration licence application, including Mount Schrader and major potentially mineralised crustal level structures. “The core from the initial drilling demonstrated that our geophysical, geochemical and geological anomaly modelling and identification is correct and the project has the potential to host a very large and highly mineralised gold, copper deposit. Inspection of the core consolidated my technical opinion relating to this possibility and Andewa’s associated large total tonnage potential due to the large area of known gold in soil anomalism. “I look forward to receiving the drill assays,” McNeil says. “The Frontier team is continuing to achieve very favourable results on all fronts.” Frontier undertook a major 3D-IP geophysical program over a 21km2 grid at Andewa in 2010 and collected in excess of 5,000 soil and rock samples. “The 3D-IP survey was a remarkable success,” says McNeil. “It indicated very large sulphide systems from on-surface to more than 800 metres deep and 2.4km2 of gold, molybdenum, copper, arsenic, antimony and geochemical anomalies. “We are drilling Andewa now and to midSeptember 1,602 metres of the 10,000 metre program diamond drilling program have been completed in four holes. “We are seeing chalcopyrite, pyrite and local chalcocite and molybdenite mineralisation in the holes,” he adds. Frontier has an alliance with world-class copper producer Ok Tedi Mining.
FRonTiER RESouRcES lTd
FRonTiER RESouRcES lTd
“They are a major producer of copper concentrate for the world smelting market,” says McNeil. “OTML have the opportunity to earn between 58 percent and 80.1 percent depending on which projects they are. Frontier has to dilute its equity if the government exercises its right to take up to 30 percent of the project when the mining lease is granted on the first Joint Venture (JV), which is Bulago. But the second JV, Likuruanga, is non-dilutable, so we can’t end up with less than 19.9 percent. To explain further, there are five projects, and Ok Tedi have an obligation to spend US$12 million on each project, which is a total of US$60 million on the five projects over a maximum of six years to earn-in. They have just started drilling now at Likuruanga and will mobilise to Bulago when weather allows. They’re planning on conducting 13,000 metres of drilling in the coming year on three projects. “We also have a very exciting prospect at Moina in Tasmania,” McNeil continues. “The potential for the discovery of a major gold and/or polymetallic mineralised system is very high in the Moina area and that this project warrants and will receive a major exploration effort over the next year.
“Over the next six months, exploration will consist of an extensive 3D-IP survey, following on from the success of a similar survey at Andewa.
The world’s foremost
audit-able core orientation system
Utilization of the Ezy-Mark™ front-end core orientation tool in conjunction with our new Ori-Block™ audit-able orientation head gives you the combination of an accurate gravity based bottom of hole line with an auditable footprint of the parent rock in your core tray. Ezy-Mark™ is available in five sizes and is adaptable to currently fit 27 inner tube sizes, from 35mm to 85mm.
• Fits into standard inner core tube • Audit-able core stub footprint with Ori-Block™ recorded at the start of your core run while core is still part of the parent rock • Ezy-Mark™ is retrieved at the end of every core run • Record all of your hole information on the Ori-Block™ - No need to purchase additional core marker blocks
• Easy to use • Saves time & money • First-class global support • Robust and reliable mechanical system with built in quality control, avoiding error or ambiguity that can occur with using other “black box’ designs • No Drilling Downtime
For more information contact: Global Drilling Products Australia Pty Ltd Ph: +61 8 6310 3888 Email: email@example.com
w w w. g l o b a l d r i l l i n g p ro d u c t s. co m “The goal is to identify major sulphide systems that could host gold and other metals that are known and also thought to exist in the area. “Geochemical soil sampling will be undertaken, as it was very successful in defining new regional mineralisation and associated trends earlier this year,” he says. Frontier’s recent geochemical surveys and drilling at the Moina project, along with historical regional prospecting, has demonstrated excellent potential for disseminated and vein hosted tin-tungsten-molybdenum deposits, silver-gold-zinc-lead, higher-grade gold and bismuth, and World Class Intrusive Related disseminated and high grade gold. In addition, Rare Earth soil anomalies are evident. “It is a very interesting find,” McNeil explains. “And we are starting to evaluate it systematically”. He says drilling is also continuing and will upgrade and extend the resources at the modest Stormont and Narrawa gold and polymetallic Deposits. Recent drill results
included 17.6 metre grading 10.80 g/t gold (from surface) and 15 metre of 7.67 g/t gold (from three metre). Frontier has allocated a budget of approximately $1.2 million for this project to the end of the first quarter 2012, with a subsequent $0.8 million for escalated drilling in the second and third quarters of 2012. “2011 is an excellent time to be a mineral explorer because commodity prices are high and there is a lot of demand; it is shaping up to be an excellent year for Frontier. The Company has a fantastic and highly prospective project (and perhaps deposit) in the 100 percent owned Andewa Project, but five aces in the sleave are the projects joint ventured to Ok Tedi Mining, where they will spend up to $60 million to earn in.” McNeil concludes. 63
renewables? Maybe, but the king still reigns
Coal remains the cheapest and globally in-demand power generator says Perth-based Continental Coal executive Jason Brewer By Colin Chinery
ing Coal or Carbon Pariah? For Jason Brewer, Executive Director of Perth-based Continental Coal, a no-contest. ”Coal is still one of the most cost effective sources of energy and power generation. There’s massive energy demand in Asia, especially China, and coal shortages are highlighted in weekly updates out of India. The outlook for thermal coal is positive and immense.” Continental produces thermal coal, with a project portfolio in South Africa’s major coal fields. Used in power stations worldwide to generate electricity, thermal coal’s importance is set to continue, fuelling an estimated 44% of global electricity in 2030. Already listed in Australia, last month (September) Continental listed its ordinary shares on the London Stock Exchange’s Alternative Investment Market (AIM),
“Coal is still one of the most cost effective sources of energy and power generation”
a move CEO Don Turvey says will enlarge its international profile and engagement with additional European funds and institutional investors. Continental Coal currently has two operating open cast coal mines, Vlakvarkfontein and Ferreira, producing two million mt per year of thermal coal for the export and domestic markets. Last month it began development of its third mine, Penumbra. With a further nine thermal coal projects progressing towards development Continental is targeting run-of-mine production of seven million metric tons per year by 2013. “We’ve got to this position very quickly,” says Perth-based Brewer. “It’s only eighteen months ago since we mobilised contractors to our first mine development and just this month we’ve announced the same for our third.” With strictly limited risk capital available in a South African market built up to support the Anglos, De Beers, and BHP Billiton, Continental has had to look elsewhere for asset growth investment equal to its ambitions. “The Australian market has supported us very well and has a strong track record of providing risk capital for junior exploration companies. But when it gets to a company that’s in operation – and certainly in the case of those developing assets off-shore – inevitably that support becomes less likely. “If you are in Australia and looking to invest in coal, the big institutions will look first at the Hunter Valley and Bowen Basin, less so off-shore and in jurisdictions with a perception of higher sovereign risk. But look at the London market and it’s a whole quantum shift in terms of the amount of capital that is available for mining companies active in Africa. The next step for Continental - once we have completed the first phase of organic growth - has to be dependent on the support of the London market. That’s what’s needed. And nowhere are the risks inherent in South Africa and in mining better understood than in London which has been instrumental in supporting South Africa’s mining industry over the past 100 years.” Brewer acknowledges a place for renewables, but says coal remains the cheapest and most efficient form of power
generation. “It was only twelve months ago that uranium was being pushed dramatically, and now we see governments pulling back from their nuclear programmes. “There will always be a role for renewable, but coal is a very established and cost effective form of power generation for many developing economies, and any impact other forms of power generation might have on it is well offset by the tremendous growth in coal demand. As a coal producer I’m certainly not concerned by renewables. There’s tremendous demand for coal-based power generation in developing economies, and that demand is not going to subside.” Continental began mining at Vlakvarkfontein, a shallow, open cast operation, in May 2010 and will continue for at least the next fifteen years, says Jason Brewer.” We are producing at a rate in excess of 1.2 million tons - and at times on an annualised basis as much as 1.8 million tons. For the first two months in this financial year – July and August – we had record sales of thermal coal from the mine generating R12.5 million of free cash flow. “We took over mining operations at Ferreira, our second mine, last November, 66
“it’s only eighteen months ago since we mobilised contractors to our first mine development and just this month we’ve announced the same for our third”
FRASER ALEXANDER MiNERAL PRocESSiNg
300 ton per hour DM plant and Spirals at Continental Coal’s Mashala Colliery
innovative performance In 2009 Fraser Alexander Mineral Processing was awarded a 5 year BOOM contract for the processing of the ROM at Continental Coal’s Mashala Colliery. Processing is done in a Dense Medium section: Drum and Cyclone and a Spiral Plant. Fraser Alexander (Pty) Ltd Phone: +27(0)11 929 3600 Fax: +27(0)11 397 4607 Email: firstname.lastname@example.org
inspectorate A Bureau Veritas Group Company Inspectorate, through it’s various laboratories offers a range of analytical testing services to the South African mining industry. Through our Rustenburg: Johannesburg and Middelburg laboratories we cover full geochemical exploration testing including PGM; Base Metals; Metals and Ores and Coal as well as the analysis of water and environmental samples. Inspectorate SA, backed by Inspectorate Global offers a comprehensive pit to port service including on-site mine laboratories scope to the mine’s particular requirements.
Contact details:- Celia Barbosa Phone: +27 11 661 7900 l Direct: +27 11 661 7915 Fax: +27 11 496 2337 Email: email@example.com l www.inspml.co.za
replacing the contractor, stopping operations in one pit and began developing a new one.” Here too record quarterly production and sales to the export market; 600,000 tons of an export thermal coal sold through the Richards Bay coal terminal. “This will continue for at least another 12-18 months, and we are just finalising the opportunity to extend the mine further through the acquisition of adjacent resources which would take that out for another one or two years. It’s a small operation but generating good positive cash flow to support our other activities.” Ground breaking at the third mine, Penumbra, an underground operation located just 3km from the Ferreira mine, started last month, with Brewer anticipating production start-up in the second quarter of next year, a fifteen to twenty year life and another 600,000 tons of export coal. “After that we’ve got the De Wittekrans, a combined underground and open cast mine. We’ve just completed the bankable feasibility study, and you should see some production coming on in mid-2013. And that’s going to produce 3.6 million tons a year of run-of-mine coal.” Looking beyond South Africa, an exploration programme in Botswana began last month, with a shallow coal exploration target of 2.5 billion tons. Tenders have been submitted for early stage properties throughout East Africa, and Continental is also looking at hot spot Mozambique, and Tanzania, as well as consolidating and expanding its footprint in South Africa.
“there will always be a role for renewable, but coal is a very established and cost effective form of power generation”
“We’ve got a very, very strong management team in South Africa, major executives from major coal mining companies who are really driving the business, executives who have been used to operating and managing single mines producing ten to 30 million tons a year and now finding themselves involved in a company producing a bit over two million tons. “But they are not here just to operate mines like that; they are here to grow a business. It’s about growth. And we’ve got an operating cash flow and depth funding behind us that allows us to deliver on that growth. The Company has concluded strategic off-take and funding agreements with EDF Trading for its export thermal coal production and recently signed a joint development agreement with KORES, Korea’s state mining and Exploration Company.” Bullish for coal and Continental? “Yes, absolutely”
Telephone: +27 11 281 6000 Fax: +27 11 281 6017 Email: firstname.lastname@example.org
Trollope Mining Services is a Level 4 BEE rated company which is 30% Black owned. It was established in 1975 by Peter and John Trollope and provides the services of opencast mining, crushing & screening, mining and rehabilitation services while operating in the Civil and Mining Industries. Traditionally the business has predominantly operated in the coal sector however we are currently in coal, platinum, andalusite and gold and our strategic intent is to diversify into other mineral sectors and grow our geographical footprint into Africa. The company is a privately owned entity which operates on good sound corporate practices. Our focus is customer orientated and performing at the highest levels of production and safety. We pride ourselves on the quality of workmanship on our operations through good training and upliftments of our staff in the field to maintain our reputation in the industry. We therefore put a lot of effort into maintaining our fleet to ensure high levels of availability with little or no reliance on our suppliers. We are therefore very much selfsufficient. Our core philosophy is â€œBusiness in about peopleâ€? and not just plant and equipment. We therefore invest a lot of time and money in our employees and communities. This is done through various mechanisms from external and internal to learner ships, SED programs and charity fund raising functions. We currently employ just over 1000 people in the company
for African growth
Australian firm INTRA Energy plans to invest $236 million in Tanzania’s first privately funded coal mine and a coal-fired power plant to reduce the nation’s reliance on hydropower. Executive chairperson Graeme Robertson tells Mining Outlook more. By Ian Armitage
frica has been the next big thing for a long time. Some sceptics say it will continue to be just that for many years to come. Yet, investment in Africa is growing. And with African markets outperforming their more developed counterparts, it looks like an increasingly attractive investment option. The continent is being democratified – Ghana is a great example – and good governance and good governments have been installed. Africa is beginning to boom. “Africa has vast potential,” says INTRA Energy’s executive chairperson Graeme Robertson, who stressed that the improved political stability of various African governments, the region’s vast population and a growing middle class has seen many set their sights on the continent. “This presents opportunity for us too,” he adds. “There is ever-increasing energy demand across the continent and, fortunately or unfortunately, depending on your point of view, the growth in power supply has not been sufficient.” According to Robertson, Australia’s INTRA Energy Corporation plans to invest a whopping US$236 million in Tanzania’s first privately funded coal mine and a coalfired power plant to reduce the nation’s reliance on hydropower. Robertson says mining has already started, with the first consignment of coal expected in September. “We have about 15,000t currently on the stockpile and we are starting to move coal down to the lake, with the first consignment expected in September. “We project that the mine will expand its output to 500,000 t/y by 2013, with a long-term maximum output capacity of fivemillion tons a year.” INTRA Energy’s local unit in Tanzania, responsible for the Mbalawala project, is Tancoal Energy and it has already spent in the region of US$23 million on exploration and initial development costs of the Mbalawala mine, in the south-west of the country, Robertson says. This investment -as part of a long-term plan -- will increase by
around US$93 million to increase the mining to a rate of up to five million tons a year. “The first shipments of coal will commence in September,” he stresses. “After that, we plan to invest an additional US$120 million in a coal-fired power plant near the mine and we have identified several possible sites for power stations near Mbalawala for 120megawatts.” INTRA is trying to “fast-track” this station with two 60megawatts units to be installed by end 2013, he says. “The cost of that is approximately US$1 million for each megawatt or US$120 million for the initial 120megawatts at Mbalawala.” INTRA is also considering construction of a 400megawatts power plant in the southern Tanzanian town of Mbeya and another 400 megawatts power station in the commercial capital, Dar es Salaam, between 2013/4 and 2017/8. “Why would we consider that? Well, Tanzania is east Africa’s second largest economy and it has a chronic power shortage. It is prohibiting growth,” Robertson says.
“There is ever-increasing energy demand across the continent and, fortunately or unfortunately, depending on your point of view, the growth in power supply has not been sufficient”
Mining Agriculture & Construction Services MACS is first and foremost a technical support and services solutions provider to customers in the various industries in which MACS operates. We also sell new and used earth moving equipment. Our focus is on customers who value a genuine partnership, customers who understand that our product range and technical support infrastructure coupled with the MACS commitment to “go the extra mile” will add real value to their operations. All business generated resources are re-invested in people, infrastructure and tooling to meet the increasingly demanding service level expectations of our growing customer base Our COMMitMent iS YOur peACe Of Mind • OEM parts • Qualified after sales staff available around the clock • Service & maintenance contracts • Warranted repairs and rebuilds • MACS is the authorized Dealer for Bell Equipment, Liebherr, Claas, Cummins, Pilot Crushtec
3 Mbezi Industrial Area PO Box 40624 Mbezi Dar es Salaam - Tanzania
C206 By owning and operating our own can fly aircraft for after sales services, we three within try coun in mer custo any to hours with parts/tools/technicians
Tel: + 255 22 262 7284/5/6 Fax: + 255 22 262 7287 www.macs-tz.com
He says Tanzania plans to spend almost US$800 million by the end of next year (2012) on emergency power projects aimed at ending chronic energy shortages. He also says the country wants to switch to thermal power sources such as coal. “It sense,” Robertson explains. “Hydropower is weather dependent and it currently accounts for 55 percent of Tanzania’s electricity generation. 2011 has been a difficult year because of low water levels at hydropower dams - Tanzania depends heavily on hydropower for energy and experiences frequent power shortages during dry seasons. “Also, there has been a national shortfall of 300 megawatts, which came after the hydro problems and a deficit of natural gas supply. The Tanzania Electric Supply Company (TANESCO) has been unable to cope and has had to import coal at a considerable cost from South Africa.” The International Monetary Fund has, in response, cut its 2011 growth forecast for Tanzania, saying frequent power outages would hurt output. INTRA owns 70 percent of the shares in Tancoal Energy, while the Tanzanian government holds the remaining stake through the state-run National Development Corporation (NDC).
“the first shipments of coal will commence in September. after that, we plan to invest an additional uS$120 million in a coal-fired power plant near the mine and we have identified several possible sites for power stations near Mbalawala for 120megawatts”
The first stage of the mine development targets initial production of 10,000 t/m, rising to 30,000 t/m in 2012, and stabilising at 500,000 t/y, the year after. “We’ve received strong interest from factories wanting to generate their own electricity with coalfired generation because of the unreliability or lack of availability of electricity,” Robertson says. “We’re also looking at feeding the national grid.” The Mbalawala mine is projected to substitute coal imports from South Africa. Tanzania imports 250,000 t/y from South Africa. The Tanzanian mine has a mineable reserve of 50 million tons of coal, Robertson says. “Our exports commence this year to Malawi and we believe it is our role to support neighbouring countries with exports to Mombasa, Kenya and possibly Mauritius,” he adds. INTRA has recently confirmed the acquisition of coal leases in the Songwe-Kiwira Coalfield, lying to the north of Lake Nyasa in southwest Tanzania. It has acquired a 70 percent interest in the Songwe-Kabulo Mining Licence SML235 and three surrounding Prospecting Licences and will hold its interest through the recently incorporated company, Tanzacoal East Africa Mining Limited. “We are considering several operating scenarios, which will supplement production from Mbalawala,” Robertson concludes. His focus is “African coal for African growth”.
“We’ve received strong interest from factories wanting to generate their own electricity with coal-fired generation because of the unreliability or lack of availability of electricity. We’re also looking at feeding the national grid”
PAULSAM Geo-enGineerinG CoMPAny Ltd is a leading mining consultancy firm, providing services exclusively to the minerals and construction sector in the Central, Eastern and Southern African Region. We provide a comprehensive range of consulting services within the exploration, mining, construction and financial sectors. oUr oPerAtionAL ServiCeS include mineral exploration, environmental studies, mining engineering, mineral processing, geotechnical engineering, drilling, blasting and explosive engineering, and training in various aspects of drill and blast, mine rescue, environment, health and safety systems. evALUAtion ServiCeS incorporate feasibility studies, expert reports, due diligence studies and Valuations of projects. oPerAtionS And evALUAtionS: PAULSAM’s clients include small to large mining and exploration companies, quarry operators, financial Institutions, training and government institutions. In the East and Central African Region, our local knowledge and extensive experience within the mining industry is a key to our strength. Our experts have worked and maintained close contacts with government, research and academic institutions and the private sector. In addition, our key personnel draw their experience from other countries e.g. UK, USA, Sweden, Australia, DRC, Zimbabwe, Zambia and South Africa where they had worked with mining industry and various research institutions. Since establishment in 2005, we have completed more than 100 assignments, providing us with a unique resource of global data. In addition our benchmarking services, established in 2004, provide PAULSAM with an unrivalled database of exploration tenements, mining costs, productivity indicators and performance measures. Our team of more than 80 has grown steadily in number, capability and expertise since establishment. Their qualifications and experience span from mining, geology, geo-technical, finance, socio-economic and culture, and management. From within the mining and academic sectors PAULSAM boasts of 20 years collective consultancy experience and over 30 years of operational experience. Our strength lies in the convergence of our people, our proprietary information resources and our independence. These complement the energy, intellect and experience we apply in providing our clients with innovative solutions.
10th Floor UbUngo Plaza, Morogoro road • Po box 70812 dar es salaaM, tanzania tel: +255 22 2460948 • eMail: gwaMaka1961@yahoo.coM / PaUlgongo@yahoo.coM