Diggers & Dealers chief calls on Industry to make Innovation noise

/in /by

Diggers & Dealers chief calls on Industry to make Innovation noise

ROADHOUSE GUEST: Diggers & Dealers chairman Nick Giorgetta ponders why there is too little discussion regarding innovation and technology associated with the resources industry.

Governments and communities are happy to promote an association with the resources industry when commodities prices are high and taxes and royalties associated with the development of natural resources in Australia are robust and the industry is creating substantial employment, capital expenditure and a general positive economic contribution.

When the commodity prices are in a down cycle, it seems that the resources industry becomes the ‘invisible industry’ for general Australia.

The Federal Government has a focus on developing enthusiasm and investment for innovation and technology, which is appropriate and hopefully will generate new ideas with associated emerging new industries and strong economic contribution in a substantial manner for the Australian economy.

Almost no profiling has been provided when discussing the benefits of innovation and technology within the resources sector that has demonstrably provided over a sustained period some of the most effective innovation and new technology developed in Australia and historically the industry has also been early adopters of new technology.

The Australian mining industry since the 1930s has pushed the boundaries of developing new ways to operate; mainly as a result of managing assets that are remote with associated hurdles.

The challenges aligned with remoteness have also created opportunities to develop new and practical technological breakthroughs.

These technologies and methods of operating are often initiated in remote regions in Australia and adopted as “state of the art” operational processes internationally.

Since the 1980s the Australian resources industry has been involved with the development of, or has been early adopters of the following non-exhaustive list of technologies that have often been low profile but represent significant advances in the manner the resources industry has operated.

These include:

Carbon in pulp processing;
Satellite imagery;
Remote controlled treatment facilities;
Remote controlled driverless trains;
Remote controlled driverless trucks;
Geotechnology;
Hard rock Seismic technology;
Automated remote sensors;
Drone technology;
Satellite telephones;
Remote controlled underground mining equipment; and
Advanced simulation technology.

These are a few of the examples that the mining industry uses as day to day operating processes but the technologies have a relatively low profile as innovation for the general public.

Notwithstanding the low profile, in any case study each of these examples stands alone as a major breakthrough that Governments should be shouting about as leaders of innovation and technology.

These have had direct positive impact on:

Safety;
Productivity;
Profitability; and
The ability to exploit remote resources and create positive economic activity for regions and for the nation.

Almost every company operating in the Australian resources industry has in the last few years utilised the efficient use of technology and innovation as well as excellent management practices to drive operational efficiencies and operating costs in all areas of the industry and are now again reaching levels that allow under reasonable commodity prices companies to deliver sustainable profits.

Without an industry that takes a proactive and positive approach to developing new and efficient technologies and innovative operational activities, many existing resources that have generated strong positive economic contributions for companies and the nation would not have been able to be practically or economically developed.

Numerous subsidiary industries have been developed aligned with delivering the new technologies and processes to the industry creating substantial employment.

It is impressive that the Government is spending funds and energy to encourage new ideas and test boundaries and to encourage companies to be innovators and to be bold and take risks.

It would be appropriate for the Government to hold the Australian and international resources industry up as providing long term leadership in developing and implementing new technology and innovation.

It is appropriate given the success of the industry in this area that scientific and possible associated financial and organisational support be directed to generating the next phase of technology that will drive the next mining boom.

After all, this is an industry that has a track record of success in this area and the industry has a strong historic association of collaboration with organisations such as CSIRO, the Western Australian School of Mines and other pre-eminent organisations that can deliver world class research.

This industry has always understood that the time to look for new resources and develop new methods of operating is not when the commodity prices are high.

The industry understands lead times in generating successful technology through to commercialisation and implementation.

Commodity prices are showing some early resilience.

Let’s not ignore our remarkable industry when focusing on technology and innovation.

Let’s use the expertise we have to tap into the enthusiasm the Government seems to have for new ideas.

It would be appropriate in the forthcoming budget where we would expect that innovation and technology will feature, that the mining and resources sector is provided for as a leader and a successful developer of and user of technology and innovation.

We are sending a copy of this to the Prime Minister, the Minister for Resources, Energy and Northern Australia and the Minister for Industry, Innovation and Science for their reference and we would encourage other organisations that represent various areas associated with the resources sectors and professional organisations that have a contribution to make to consider making a similar submission.

If we are silent we will be ignored.

Nick Giorgetta
chairman
Diggers & Dealers Mining Forum

The annual Diggers & Dealers Mining Forum will be held in Kalgoorlie from 1 through to the 3 August 2016.



Commodity price rise joy short lived as statistics enter the equation

/in /by

THE CONFERENCE CALLER: Patersons Securities resource analyst Jason Chesters was given an unexpected, and rare opportunity when he was asked to provide a market update on the opening day of the RIU Explorers Conference in Fremantle.

Fortunately for Chesters, and for all the explorers sitting in the packed auditorium, for the first time in some months all commodities, including recent pariahs nickel and zinc, were enjoying a rise in price.

“There has been some positives out there in the market place of late, worth highlighting,” Chester said.

These included the recent run of iron ore, which has moved from recent lows of sitting in the high US$30s mark to be just over US$51 per tonne the night befor the conference opened.

Nickel had enjoyed a buoyant run putting on 10 percent just in the week leading up to the event, as had manganese, while zinc was basking in a four month-high price.

Market darling gold had jumped again overnight to be sitting pretty at US$1222 per ounce.

The latest price highlights are all well and good, and provided much enthusiasm for the convened mass of managing directors, however the sober truth of recent times cut through when Chesters decided to take a look at the filing of 5Bs submissions for cash positions of companies.

The statistics were sobering, demonstrating around 58 per cent of resource companies that filed 5Bs for the December quarter 2015 having cash balances of less than $1 million.

Around 28.5 per cent have balances hitting between $1 million to $5 million, six per cent with between $5 million to $10 million and the remaining 7.5 per cent lucky enough to be sitting on cash balances greater than $10 million.

Of 286 resource companies listed on the ASX 186 have cash balances of less than $500,000.

120 had a cash balance less than $200,000, and 66 had less than $100,000.

“Cash balances that low, do put pressure on what it is you (exploration companies) are going to be doing for the next year,” Chesters declared.

“Assuming corporate overheads take up around half a million dollars, that doesn’t leave much for exploration.

“So companies are going to be looking to the market, and other means, to find funding to further the exploration of their projects.”

It would seem, however, the money is being spent where it should be – on the ground exploring.

Chesters explained that mineral exploration expenditure for the 2015 September quarter rose 11.6 per cent on a seasonally adjusted basis to $369.5 million.

Of particular note was that the largest contributor to that rise was Western Australia – up 12.8 per cent, or $24.8 million.

That being the case it also seems the appetite for greenfield exploration has diminished somewhat whit was exploration on existing deposits driving that growth, not exploration on new deposits with gold emerging as sitting in the driver’s seat of the exploration bus.

Craig Oliver Award 2016: Metals X

/in /by

CONFERENCE CALLER: Metals X (ASX: MLX) CEO and executive director Peter Cook was probably the only person to be truly surprised that his company’s name had been read out.

Picking up the Craig Oliver Award at the RIU Explorers Conference in Fremantle, Cook said Metals X was very pleased and honoured to be handed the gong ahead of the illustrious field that included Dacian Gold (ASX: DCN), Evolution Mining (ASX: EVN), Rox Resources (ASX: RXL), and Sandfire Resources (ASX: SFR). 

Cook paid tribute to the other companies as well as his exploration company compatriots attending the conference saying once again the Explorers Conference demonstrated the grit and determination of the industry, adding that the ‘real’ explorers were in attendance, those with genuine projects and engaging stories to tell.

Peter Cook presented with the Craig Oliver Award by conference organiser Stewart McDonald, with Mark Oliver and Hannah Oliver.

The Craig Oliver Award is presented each year at the Explorers Conference in memory of Craig who was killed when the plane carrying board members of Sundance Resources (ASX: SDL) crashed in the Congo.

It is bestowed upon an ‘all round’ small to mid-cap Australian mining company which has excelled in areas including exploration, mining, corporate, market results, environmental and community over the past 12 months.

Previous winners include: Independence Group (ASX: IGO), Silver Lake Resources (ASX: SLR), Sirius Resources, Northern Star Resources (ASX: NST), and Doray Minerals (ASX: DRM).

Adelaide Resources applies to triple Drummond gold ground

/in /by

THE BOURSE WHISPERER: Adelaide Resources (ASX” AND) anticipates tripling its holdings of gold prospective ground with the submission of two new tenement applications in the Drummond Basin in Queensland.

The company hopes the new applications will secure an additional 564 square kilometres of ground, to complement the total area of 838 square kilometres it currently holds.

The applications were made on vacant ground and geological mapping completed by the Queensland Geological Survey records exposures of Drummond Basin group rocks and, in one block, rocks of the older Anakie Inlier basement which also hosts gold mineralisation.

According to the company, historical gold prospects and occurrences are located on the new tenements, with records suggesting they include prospects of epithermal style.

“Upon grant, the company plans to complete an initial program of rock chip sampling, surface geochemistry and geological mapping to define further gold targets,” Adelaide Resources said inits ASX announcement.

Email: adres@adelaideresources.com.au

Website: www.adelaideresources.com.au

Like leopards, nickel projects don’t change their spots

/in /by

THE INSIDES STORY: It’s no secret that commodity prices across the board took a battering towards the end of 2015 and the nickel price was caught up in the carnage.

The New Year started badly for the sector with Panoramic Resources (ASX: PAN) announcing the suspension of operations at its Savannah mine in Western Australia, while Mincor Resources informed us all it would cease mining at its Kambalda nickel district Mariner and Miitel mines until there was an improvement in the metal’s outlook.

One important aspect overlooked by many industry watchers when this news came out, was that the projects themselves have not changed.

What has changed is the fundamental perception of how the market – currently – values each mine.

Needless to say this means that in the current environment it will be difficult to get a nickel project off the ground and up and running.

That doesn’t mean projects that have been idling at the rank, waiting for their turn, are not worth keeping an eye on.

On the contrary – these are the very same projects people should be vigilantly taking a great deal more notice of than they presently are.

Firmly entrenched in the upper echelons of this category is the Fisher East nickel project of Rox Resources (ASX: RXL).

The Fisher East nickel project is part of the company’s larger Mt Fisher project, located in the North Eastern Goldfields region of Western Australia 150 kilometres northeast of Leinster, where Rox has made four substantial nickel deposit discoveries over the last three years.

Early last year, Rox completed a Scoping Study, which determined the Fisher East project to be a financially robust and technically low risk project.

“What we do know is that the Fisher East nickel project – at reasonably expectant nickel prices – is a goer,” Rox Resources managing director Ian Mulholland told The Resources Roadhouse.

“Our Scoping Study showed that, but with the nickel price sitting around half of what it was 12 months ago – that has had a big effect on our bottom line.

“The current nickel price is not going to support development – but in the meantime we have certainly defined enough resources for it to be an economic project.

“We have the mining part of the Pre-Feasibility Study nearing completion and we just released a Resource upgrade for the project.”

The recent revised Mineral Resource estimate for Fisher East increased contained nickel by eight per cent from 72,100 tonnes to 78,000 tonnes.

Of particular note was the increase to the Indicated portion of the Resources, which leapt from 52 to 91 per cent.

Contributing to the increase was the Cannonball deposit, which now stands at 0.26 million tonnes at 2.8 per cent nickel for 7,300 tonnes.

The Camelwood deposit was upgraded to 2 million tonnes at 1.9 per cent nickel for 39,000 tonnes, while recent drilling, and re-modelling and separation of massive sulphides from disseminated sulphides updated the Musket deposit to 1.9 million tonnes at 1.7 per cent nickel for 31,600 tonnes.

The Fisher East total project Resources currently sit at 4.2 million tonnes at 1.9 per cent nickel for 78,000 tonnes.

The upgrade has strengthened the company’s belief in Fisher East as a project that is still too good to ignore and one that merits development.

“It can definitely be done, we might just have to take things a bit slower than what we would like, simply because the market funding is not around at the moment to support it,” Mulholland said.

“That’s why the increase of the Indicated Resources to 91 per cent is important as it means we can convert a healthy part of the Mineral Resource to an Ore Reserve.

“When we can combine that with the results of the studies we currently have underway, will be ready to take advantage of any significant rise in the nickel price.

“There is a bit of a mantra going around at the moment of ‘Prepare, Wait, and be Ready’, and at Fisher East that’s exactly what we are doing.”

As enamoured with Fisher East Mulholland is, it is unlikely a conversation with him will end without him raising the Teena deposit at the company’s Reward project in the Northern Territory, where recent drilling returned further strong results of high grade-zinc and lead sulphide mineralisation in both defined lenses.

Lens 2:
TNDD020:
35.4 metres at 13.2 per cent zinc + lead (Zn+Pb), including 21.2m at 18.6 per cent Zn+Pb;

TNDD021:
19.7m at 14.9 per cent Zn+Pb;

TNDD022:
20.8m at 12.8 per cent Zn+Pb, including 15.1m at 16.4 per cent Zn+Pb.

Lens 1:
TNDD020: 12.8m at 9.4 per cent Zn+Pb, including 6.8m at 12.5 per cent Zn+Pb;

TNDD021: 7.2m at 9.2 per cent Zn+Pb;

TNDD022: 5.1m at 9 per cent Zn+Pb, including 3.8m at 11 per cent Zn+Pb.

“The drill results we received from Teena at the end of last year were nothing short of spectacular,” Mulholland said.

“The results we got way exceeded our expectations by drilling 50 per cent thicker with 20 per cent more grade than we were anticipating.

“There is a perception that the deposit is deep, but it is, in reality, no deeper than any number of similar deposits.

“This is the best discovery of zinc in Australia since the Century zinc discovery by CRA Exploration 25 years ago.”

The Reward project is subject to an option/joint venture (JV) agreement between Rox (49%) and Teck Australia (51%), a subsidiary of Teck Resources Limited.

Teck has elected to exercise the option to increase their JV interest to 70 per cent by spending expending up to $15 million on the project by 31 August 2018.

As at 31 December 2015 Teck had spent approximately $13.6 million.

“Having 30% (eventually) of a project being developed by a major company like Teck is worth an awful lot, yet the market just doesn’t seem to get this,” Mulholland mused.

Based on the results it has achieved at Teena to date, Rox has released a revised Exploration Target of 70 to 80 million tonnes at 11 to 13 per cent Zn+Pb (10 to 12% Zn, 1-2% Pb) for 7.7 to 10.1 million tonnes (17 to 22 billion pounds) of contained Zn + Pb metal.

Rox has announced it is looking to commercialise its interest in the project either by way of outright sale to a third party, or by a spin-off into a dedicated zinc company.

Since that announcement the company has had a steady stream of possible suitors wearing a well-trodden path to its front door.

“We are talking with a number of parties, which includes some major zinc players, and they’re all very interested,” Mulholland said.

“Our peers in the industry realise the value of the project.

“That’s in contrast to the inexperienced market watchers, who don’t have any familiarity with projects like this and are unable to recognise its huge value, mainly because it is such a long-term project.

“It’s the sort of project that makes a company really good money for 20 to 30 years rather than just five years.”

Rox Resources Limited (ASX: RXL)
…The Short Story

HEAD OFFICE
Level 1, 34 Colin Street
West Perth WA 6005

Ph: +61 8 9226 0044
Fax: +61 8 9322 6254

Email: admin@roxresources.com.au
Web: www.roxresources.com.au

DIRECTORS
Stephen Dennis, Ian Mulholland, Brett Dickson

MAJOR SHAREHOLDERS
Drake Private Investments   3.4%
Rox Directors        2.1%

What the Analysts Say

/in /by

WHAT THE ANALYSTS SAY: This week our panels of experts cast their respective oculars over Hexagon Resources, and Altura Mining.

Website: www.breakawayresearch.com

Company: Hexagon Resources Limited (ASX: HXG)

Following a challenging period associated with the failed Hengda merger, Hexagon Resources (previously Lamboo Resources), under new management, has now regrouped and has had success in its refocussed efforts on delineating and bringing into production a high-quality graphite resource at its key McIntosh graphite project in Western Australia.

As part of its development strategy the company is also looking at value add opportunities, including spherical graphite production.

Following a VTEM survey in 2014, the new management took a step back and focussed activities on areas that it felt would deliver a quality resource that would provide the basis for a long term mining operation.

The company has now defined such a resource, with scope for future resource expansions.

In addition drilling results have led to a significant resource to be defined at Geumam in South Korea, with the South Korean projects providing blue sky, however given the focus on McIntosh; the Company is considering strategies in relation to the South Korean assets.

Both projects have returned excellent metallurgical results, exhibiting the potential to produce a high-quality flake graphite concentrate, suitable for use in the lucrative and growing battery (and expandable) graphite markets, and which should command a premium price.

Short to medium term price drivers are material progress on development studies which are now to commence at McIntosh and progressing offtake opportunities.

Hexagon Resources is a graphite development company with its flagship project being the McIntosh Graphite Project in the Kimberley region of Western Australia, which it now plans to progress through feasibility.

As part of an overall strategy Hexagon is also investigating the potential to produce value added products, including spherical graphite.

The three South Korean projects are being progressed in parallel – Hexagon is currently considering development options for these projects.

Website: www.beerandco.com.au

Company: Altura Mining (ASX: AJM)

In August 2015. Altura Mining announced the appointment of a general manager for its Pilgangoora project, tasked with progressing the Mining Lease Applications and completing the Feasibility Study.

Altura announced an updated resources estimate, of 26 million tonnes at 1.21 per cent lithium oxide (Li2O), of which nearly 20 million tonnes is indicated, and updated metallurgical testwork results in November 2015.

Publication of the feasibility study is anticipated in March or April 2016, with on‐site construction from July and first project late in 2017.

Altura will produce a concentrate, grading about 7.5 per cent Li2O, which it will sell to battery producers in the Asia region.

Underlying demand growth is strong and product prices are rising, with 7.5 per cent concentrate recently selling for around US$750 per tonne cif (cost, insurance, freight).

Altura simplifying its portfolio and has effectively exited its iron ore operations and has prepared to list its Indonesian Coal on the SGX, which will leave it major focus on Pilgangoora.

Disclaimer: The above is intended as a guide only. The Roadhouse accepts no responsibility for investments made from this advice, successful or otherwise.

The views, opinions or recommendations of this article do not in any way reflect the views, opinions, recommendations, of The Resources Roadhouse.

The Roadhouse makes no representation or warranty with respect to the accuracy, completeness or currency of the content. The content is for educational purposes only and does not constitute financial advice. Independent advice should be obtained from an Australian financial services licensee before making investment decisions.

Peel preparing for market recovery

/in /by

THE INSIDE STORY: To an industry observer it is interesting to watch how different companies are reacting to the current investment haze.

It wasn’t too long ago the resources industry was walking on sunshine, now – it could be said – it is swimming in quicksand.

Readers of the daily doom and gloom peddled around by mainstream publications would be surprised at the number of exploration companies that are still out there doing what they do so well – which is to develop the potential of the very same projects people were so excited about before the GFC gave Hollywood some new subject matter to make movies about.

One such company working up one such project is Peel Mining (ASX: PEX) at its Mallee Bull copper deposit, located within the Cobar Superbasin in central New South Wales.

Mallee Bull is part of the company’s Gilgunnia project (EL7461), a tenement holding of around 80 square kilometres, located about 100 kilometres south of Cobar in New South Wales. The project also hosts the May Day gold-base metal deposit (ML1361).

During the good old boom days Mallee Bull caught the attention of CBH Resources, a wholly-owned subsidiary of Tokyo-based Toho Zinc Co Ltd, and in May 2012 a binding Heads of Agreement was struck covering EL7461 and ML1361, which included the Mallee Bull deposit.

Under the agreement, CBH earned the right to a 50 per cent interest in the project over a three-year period via staged $8.33 million expenditure on exploration and contribution to previous exploration costs incurred by Peel.

In March 2014, CBH Resources paid its final Farm-in payment in relation to the agreement, to earn its 50 per cent interest, after which the two companies formed a 50:50 Joint Venture.

A maiden JORC compliant Mineral Resource estimate was completed in May 2014, comprising 3.9 million tonnes at 2.3 per cent copper, 32 grams per tonne silver and 0.3g/t gold.

Testament to the strong potential of the Mallee Bull deposit is that Peel’s JV partner, CBH isn’t going anywhere in a hurry and is eager to remain an active participant, and supporter, of the project.

The faith of the JV partners was rewarded with results from drilling carried out at the project late last year of seven RC/diamond drillholes for a total of 3,405 metres, and a diamond tail on hole 4MRC021, which had initially been RC drilled to 270m in 2012.

The RC/diamond drilling at Mallee Bull returned multiple new extensional mineralised intercepts, including:

MBRCDD050
62m at 3.15 per cent copper, 42 grams per tonne silver, 0.28g/t gold from 465m, including 34m at 4.6 per cent copper, 63g/t silver, 0.44g/t gold from 475m.

MBRCDD051
5m at 2.1 per cent copper, 59g/t silver, 0.72g/t gold from 385m;
4m at 1.18 per cent copper, 23g/t silver, 0.12g/t gold from 398;, and
4m at 1.87 per cent copper, 18g/t silver, 0.87 per cent lead, 0.22 per cent zinc from 403m.

MBRCDD050W1
13m at 0.86 per cent copper, 33g/t silver, 1.39g/t gold, 0.34 per cent lead, 0.68 per cent zinc from 407m.

MBRC052
4m at 1.52 per cent copper, 111g/t silver, 0.21g/t gold, 2.52 per cent lead, 4.2 per cent zinc from 197m.

The aim of the campaign was to test for new mineralisation near the northern edge of the current Mallee Bull resource model, where substantial zinc-lead and copper-rich mineralisation had already been defined to more than 500m below surface.

The assay results received for all holes provided highly-encouraging intercepts, which the JV believe, indicate greater strike continuity of copper mineralisation than previously assumed.

“The work we carried out at Mallee Bull in 2015 was deliberately focused on extensional drilling work,” Peel Mining managing director Rob Tyson told The Resources Roadhouse.

“We completed some geophysics early last year that identified the shallow T1 target, which we drilled and achieved some really high-grade zinc-lead-silver-massive-sulphide hits, which defined a close-to-surface lens of mineralisation.

“This year we intend going back and following that up with some more RC drilling to test along strike and follow up hits we had previously that are still open and to look for any more mineralisation close to surface.

“The drilling we completed at Mallee Bull underlined the unconstrained nature of the deposit.

“This year we will be doing more extensional drilling there as well as some drilling focusing on the main part of the deposit with the aim of de-risking it from where it currently stands.”

As strange it may sound to some, the Mallee Bull project, in the current climate, is in good shape.

The state of flux the exploration sector is currently in allows Peel to have the project fully-prepared for when the turn eventually comes.

“There’s no point waiting around for the good times to roll in again,” Tyson explained.

“Now is the time to be doing the work, because when the better times come the hard yards will be done and we will be in a better position.

“We will have done all the work necessary to complete a Feasibility Study.

“At some point the cycle will turn and the copper and base metal prices will go up and the deposits that are most advanced at that point in time will be the ones that will be able to be developed the quickest to meet demand.

“A deposit like Mallee bull is a project that warrants being continually advanced.”

Although Mallee Bull is still number one in terms of focus for Peel, the company has another prospect that is building to the point of great excitement – and that is Wirlong.

In January, Peel announced a new high-grade copper discovery at the Wirlong prospect – located within the company’s 100 per cent-owned Cobar Superbasin project (Peel Mining Ltd 100%; Japan Oil, Gas, and Metals National Corporation (JOGMEC) earning up to 50%) in central New South Wales.

The drilling at the 2.5 kilometre Wirlong prospect was funded by JOGMEC and intersected multiple mineralised intervals comprising the typical geochemical, geological, mineral and alteration assemblages of ‘Cobar-style’ deposits.

Two drillholes WLRCDD015 and WLDD001 were completed at the northern end of Wirlong.

WLDD001
9m at 8 per cent copper, 17 grams per tonne silver, 0.21g/t gold from 616m, including 2.82m at 21.85 per cent copper, 46g/t silver, 0.62g/t gold from 619.68m;

38m at 1.18 per cent copper, 4g/t silver from 450m;

6m at 1.23 per cent copper, 5g/t silver from 430m; and

4m at 1.14 per cent copper, 3g/t silver from 643m.

WLRCDD015
4.9m at 4.3 per cent copper, 13g/t silver from 402.1m, including 0.9m at 19.5 per cent copper, 58g/t silver from 402.1m;

22m at 1 per cent copper, 4g/t silver from 332m;

3m at 2.1 per cent copper, 6g/t silver from 451m; and

2m at 1.8 per cent copper, 13g/t silver, 1.63 per cent zinc from 524m.

“What these results told us, is that Wirlong can carry typical Cobar, lode-style mineralisation,” Tyson said.

“All the way through these drillholes, we saw pervasive chalcopyrite-sphalerite-galena-pyrrhotite-pyrite mineralisation occurring as sulphide disseminations, veins and veinlets, breccia, and massive sulphides within frequently silica-chlorite-sericite altered turbidite sediments and felsic volcanics – all the ingredients you want to see in our part of the world.

“It is early days, but we have compared it to CSA and Cobar Style systems and think there is potential for a big system to be buried there.”

Peel Mining Limited (ASX: PEX)
… The Short Story

HEAD OFFICE
U1/34 Kings Park Road
West Perth WA 6005

Ph: 08 9382 3955

Email: info@peelmining.com.au
Web: www.peelmining.com.au

DIRECTORS
Rob Tyson, Simon Hadfield, Graham Hardie

MAJOR SHAREHOLDERS
Hampton Hill Mining 14.87%
Point Nominees Pty Ltd 11.64%
Ariki Investments Pty Ltd 8.72%

Market suffering New Year wobbles

/in /by

ROADHOUSE REGULAR: As you can’t have failed to notice the first few weeks of the New Year have seen a return to ‘Interesting Times’.

We have seen corrections in the major stock markets, and continuing falls in commodities.

There is really no point in giving a summary of what is happening in the resources markets – current events are basically a continuation of last year, however with some added impetus given perception of news out of, and events in China.

I won’t write more on China – there is plenty of comment (both informed and uninformed) out there on the web.

I must say however, I thought we may have reached bottom on base metals late last year, with, for example copper flattening out and seeming to be looking for a recovery, but now, it goes and falls off a cliff again.

So are we in normal times in the overall markets (and concentrating here in Australia)?

Outside of the China boom/GFC anomaly, three other notable movements are readily apparent – a fall through 2002, same again through 2011 and the current market downturn which started early last year.

Now let us look at these:
2002 – Peak of 3444 in February 2002, low of 2666 in March 2003 – a fall of 23 per cent over 13 months.

2011 – Peak of 5069 in April 2011, low of 3927 in September 2011 – a fall again of 23 per cent but this time over five months.

2015 – Peak of 5963 in April 2015, low of 4927 in January – a fall so far of 18 per cent in nine months.

So, in comparison with the previous two non-GFC falls, the current market downturn is nothing out of the ordinary (thus far), despite the impression that the mainstream media may put forward.

Any continuing falls to around 4500 could possibly be considered normal.

However, who knows what will happen in the future?

We are seeing what some may consider a perfect storm of global events.

Although there is sustained growth in the United States, this is nothing spectacular, and may be slowing somewhat.

Despite this the US still has the capacity to be a major driver of the global economy.

There are deep recessions in some developing economies, including Russia, Venezuela and Brazil.

These have been partly driven by falls in commodities prices, in particular oil (Russia and Venezuela) and iron ore (Brazil).

Chile is also being hit hard by falls in copper prices.

Brazil has also been suffering from drought, which affects the economy in two ways: Firstly it affects agricultural exports (Brazil is one of the world’s top agricultural exporters), and secondly the cost of manufacturing through increased power prices – Brazil relies heavily on hydro-electric power, with electricity production turning more towards the more expensive thermal production to conserve water supplies.

Unrest continues to dog the Middle East, with this also creating issues in Europe with the movement of refugees, and world-wide with terrorism driven by the Middle Eastern groups.

And the Eurozone is still not in hearty good economic health either.

Back to the Middle East, we have tensions between Saudi Arabia and Iran (however very unlikely to escalate into anything dramatic other than the skirmishes by proxy currently going on in some places such as Yemen), and falling oil prices are unlikely to do either country any good as well.

Falling prices could also be exacerbated by potential increases in exports from Iran, which apparently has up to two million barrels of oil per day available capacity.

Australia has been hit as well, largely through the falls in commodity prices, mainly driven, with the exception of oil, by the slowdown in China.

This has led to significant falls in Government revenue, an almost complete stop to capital investment in resources projects and very high unemployment in the resources and related sectors, despite our generally quite low unemployment rate overall.

My main concern with Australia now is that we may not have the fiscal or monetary tools needed to effectively cope with any upcoming downturn.

Australia was in a relatively fortunate position prior to the GFC – we had cash in the bank, interest rates in the order of 6 per cent and the resources export market was going strong.

Now we have interest rates of around 2 per cent, which may be too low for any decreases to have a positive effect on the economy, no spare cash in the bank and we are now over the resources boom.

I won’t leave resources entirely out.

One thing I have noticed is the continuing appetite for technological resources, including graphite and lithium, both integral in the manufacturing of batteries.

Three companies I follow, Peninsula Mines (ASX: PSM, through my coverage of Aurora Minerals – ASX: ARM), Metalicity (ASX: MCT) and Ardiden (ASX: ADV) have all recently picked up graphite and/or lithium projects.

In Peninsula’s case it is both lithium and graphite projects in South Korea, and in Metalicity’s case lithium in the Pilgangoora area of Western Australia, near Pilbara Mineral’s (ASX: PLS) lithium and tantalum projects.

Ardiden has added the Seymour Lake lithium project in Ontario to its portfolio, which includes the Manitouwadge graphite project.

Mark Gordon

Senior Resource Analyst

mgordon@breakawayresearch.com

This article first appeared in

Saracen Mineral Holdings commences commissioning of Thunderbox

/in /by

THE BOURSE WHISPERER: Saracen Mineral Holdings (ASX: SAR) has commissioning of the 2.5 million tonnes per annum processing facility at the company’s 100 per cent-owned Thunderbox gold project in Western Australia underway.

First ore has been introduced to the grinding circuit with the refurbishment of all key areas of the processing plant, crushing, grinding and classification, leaching and adsorption having been completed.

The company said the $65 million Thunderbox gold project development continues to run ahead of schedule with costs under budget.

Delivery of this new open pit operation will double group gold production to approximately 300,000 ounces per annum at a forecast all-in-sustaining-cost (AISC) of greater than $1075 per ounce, diversifying Saracen’s production profile.

“The commencement of commissioning of the Thunderbox processing plant within ten months of Board development approval is an outstanding achievement,” Saracen Mineral Holdings managing director Raleigh Finlayson said in the company’s announcement to the Australian Securities Exchange.

“We remain positioned to complete commissioning and ramp-up to steady-state output ahead of the schedule and budget outlined in our March 2015 Feasibility Study.”

Email: info@saracen.com.au

Website: www.saracen.com.au

Tyranna Resources tees off at Golf Bore

/in /by

THE INSIDE STORY: December usually heralds a slow down as companies up-stumps for the Christmas break.

Not so gold exploration play Tyranna Resources (ASX: TYX), which commenced a final drilling program at the Golf Bore prospect, part of the company’s Jumbuck gold project, located in the Western Gawler Craton of South Australia.

The Jumbuck project covers approximately 8,000 square kilometres of highly-prospective and under-explored ground surrounding the million ounce Challenger gold mine operated by Kingsgate Consolidated (ASX: KCN).

The project emerged as the company’s front-runner from the merger of Trafford Resources and IronClad Mining, which resulted in a portfolio of projects representing some nine years of exploration prospect accumulation, boasting an independently-rated value of around $30 million.

Tyranna has a great deal of enthusiasm for its Gawler Craton projects, as the company is convinced the Challenger deposit cannot just be the only multi-million ounce gold deposit sitting out in the middle of the craton on its own.

Before the merger IronClad had reviewed a raft of historic exploration data, which identified over 300 targets, all about the same or greater than the single point anomaly on which Challenger was discovered (185ppb gold).

Tyranna has previously stated it aims to bring a number of these targets into production, potentially processing ore through the mill at Challenger as part of the company’s Joint Venture with its neighbour Kingsgate Consolidated (currently TYX 59 per cent – KCN 41 per cent).

Gold ore from Golf Bore, subject to certain conditions of the Joint Venture, can be treated at the Challenger mill.

Recently Kingsgate announced its intention to sell its subsidiary company, Challenger Gold Operations (CGO), which includes the Challenger mine and processing facilities, as well as its minority share in the TYX / KCN Joint venture.

With the decision to sell CGO, Kingsgate has also indicated it will no longer contribute to Tyranna’s proposed exploration and development budget for the coming six month period.

Undeterred, Tyranna has made its intentions clear that it will sole fund the proposed $2 million program which, if completed as planned, would result in Tyranna earning an additional 12 per cent equity in the joint venture.

This would then result in the Joint Venture ownership becoming approximately TYX – 71 per cent and KCN – 29 per cent.

The latest round of drilling, like the bulk of its efforts this year, will be carried out at the Golf Bore prospect (EL 4577), which is just one of seven advanced prospects situated within Tyranna’s Jumbuck gold project.

The drilling is to comprise 2,000 metres of reverse circulation (RC) drilling and has been designed to follow the earlier success the company achieved at Golf Bore during August and September, from which it has defined and extended the known, near surface, supergene (oxide) gold resource at the Golf Bore prospect.

The continuous shallow supergene zone has an average thickness of 5m over an 800m strike length with an average width of 120m

The drilling included four holes that were designed to target the deeper zones of mineralisation where earlier drilling returned encouraging gold intersections at depth including 2m at 31.6g/t gold and 1m at 27.9 g/t gold.

According to Tyranna these results enhanced the company’s understanding of the deposit and resulted in the identification of at least three primary feeder shoots, which it considers likely to carry persistent high-grade gold, thereby enhancing the economics of the prospect 

On the strength of the drilling results the company commenced mining feasibility studies at Golf Bore, submitting metallurgical samples of the different ore types from the prospect to Nagrom Laboratories in Perth for initial metallurgical studies.

High-grade and low-grade samples of oxide and fresh ore were tested for the recovery of gold by simple gravity methods and by conventional cyanidation in a Carbon in Leach (CIL) plant.

The gravity results demonstrated the fresh ore, which forms most of the orebody, is readily amenable to gravity processing with 42 per cent to 45 per cent gold recovery achieved at a coarse grind size of one millimetre.

The response of the high-grade oxide ore (greater than 5g/t) to gravity processing returned a gold recovery of 69 per cent in less than two per cent of the mass.

Although the results for the lower grade oxide ore sample were less definitive with regard to gravity recovery, Tyranna will continue to test both the fresh and oxide ores more thoroughly in the next series of test work in order to determine the optimal grind size for gravity recovery.

Tyranna has also been busy working up the Golf Bore North prospect, which is located on EL 5526 (100 per cent-owned by Tyranna Resources) immediately to the north of Golf Bore.

The North Eastern extent of the Golf Bore gold mineralisation creeps into EL 5526 and is highlighted by the continuation of the same, strong calcrete anomaly at Golf Bore.

Historic exploration work carried out by previous owners entailed the drilling of four lines of Rotary Air Blast (RAB) across that particular calcrete anomaly, returning gold intersections on the three Southern lines including:

1m at 9.89g/t gold and;

3m at 2.48 g/t gold.

Tyranna has determined that these intersections occur exactly on the strike line of the Golf Bore mineralisation and considers them to be significant, given the first pass nature of the drilling.

Riding on the back of the success of its drilling at Golf Bore, Tyranna has elevated the Golf Bore North prospect in prospectivity and importance to the Jumbuck project as a whole.

The company plans to carry out a comprehensive drilling program at Golf Bore North, with the aim of bringing both projects to the same technical level.

By doing this Tyranna anticipates it will be able to greatly increase the Jumbuck gold project’s total mineable gold inventory.

The company recently received heritage clearance from the Golf Bore North prospect tradtional owners, the Antakirinja Matu – Yankunytjatjara Aboriginal Corporation (AMYAC).

This clearance allows Tyranna to include planned drilling at Golf Bore North as well as at Golf Bore, which basically doubles the potential strike length of the target resource at Golf Bore to approximately 1.5 kilometres.

Weather permitting Tyranna intends to maintain its drilling focus within the Jumbuck project area throughout the coming year.

The new drilling will test the continuity of the central feeder structures at Golf Bore, which Tyranna is confident could indicate the existence of a gold mineralised structure similar to the Challenger Mine.

Drilling will also test the depth potential of other structures previously delineated.

The company has already announced its immediate target is to compile a near-surface (0m to 60m) gold inventory of approximately 750,000 resource ounces that can be readily and simply processed.

Once this has been established the company will target selected, deeper, primary ore with an overall aspirational target of over three million ounces within the next two years.

While all this is going on the mining feasibility study at Golf Bore will continue in order to attain earliest feasible and optimal production.

Tyranna Resources (ASX-TYX)
…The Short Story

HEAD OFFICE 
Level 2, 679 Murray Street
West Perth, WA, 6005

PH: +61 8 9485 1040
Fax: +61 8 0485 1050

Email: reception@tyrannaresources.com

Web: www.tyrannaresources.com

DIRECTORS
Ian Finch
Neil McKay
Bruno Seneque