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Leading Practice Mining Acts Review | Central Eyre Iron Project mining lease approved

Recent announcements regarding the South Australian mineral and energy resources sectors

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This update covers the May 2017 period and is compiled from information publicly released by companies and Ministerial news releases.

Readers should refer to the latest information available on company websites, particularly in regard to making any forward investment decisions.

Company news

Alliance Resources – Tyranna Resources

www.allianceresources.com.au
www.tyrannaresources.com

Drilling has commenced at the Zealous base metals prospect in northern Eyre Peninsula as part of the Wilcherry Project joint venture between Alliance Resources (51%, manager) and Tyranna Resources (49%). The proposed five-hole, 1,500 m drill program will test the Zealous main conductor (3 drillholes) and the Zealous NW conductor (2 drillholes; ASX release 22 May 2017).

Drilling at Zealous between 2012 and 2014 intersected significant tin grades, including:

  • 12ZLRC007, 20.0 m at 1.29% Sn from 42 m
  • 13ZLDH001, 12.3 m at 1.10% Sn from 119 m
  • 13ZLRC001, 10.0 m at 1.23% Sn from 128 m.

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Andromeda Metals

www.andromet.com.au

A review of company assay results and historical drillholes on the Moonta copper project has confirmed the presence of significant cobalt at a number of prospects, with the most substantial results at Willamulka and Alford West (ASX release 11 May 2017).

At the Willamulka deposit a number of cobalt bearing lodes generally coincident with the copper mineralised zone have been identified. The cobalt lodes are steeply dipping, traceable for over 800 m of strike, and are open at depth and along strike. Drill intersections include:

  • WAC0133, 5 m at 0.32% Co from 45 m downhole
  • WAC0098, 6 m at 0.19% Co from 15 m downhole
  • WAC0069, 9 m at 0.09% Co from 47 m downhole.

At Alford West, significant cobalt occurs in the Larwood zone, often in association with high-grade copper. Intersections include:

  • MALD-3, 4 m at 0.25% Co from 76 m downhole
  • MALRC-3, 9 m at 0.13% Co from 55 m downhole
  • AWRC002, 5 m at 0.13% Co from 152 m downhole.

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Archer Exploration

www.archerexploration.com.au

Reconnaissance RC drilling at Archer Exploration’s Blue Hills copper project in the Mid North has encountered visible copper mineralisation, including malachite and chalcopyrite, over lengths of up to 23 m (ASX release 30 May 2017). Blue Hills is part of the company’s North Burra Project which also includes the Ketchowla cobalt manganese project. Assay results are expected in the coming weeks.

Archer’s Leigh Creek magnesite project continues to progress with the bulk sample provided to a potential customer in late 2016 continuing to perform well in steel operation trials. The Leigh Creek magnesite deposit is the world’s largest magnesite deposit of its type with a mineral resource of 435 million tonnes (Mt) at 41.4% MgO (ASX release 23 May 2017).

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BHP

www.bhpbilliton.com

BHP’s studies on the Olympic Dam expansion to over 450,000 t are progressing well. Some technical adjustments with trials of new approaches to heap leach in Adelaide and smelter operation in Finland have occurred but both trials are showing great promise (BHP presentation 16 May 2017).

BHP also reported that after the development into the higher-grade southern mining area at Olympic Dam, the brownfield expansion project will debottleneck surface infrastructure and increase capacity in the 2022 financial year to 280,000 t of copper, with upside potential of 330,000 t.

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Boss Resources

www.bossresources.com.au

Final drilling results have been released for Boss Resources’ Jasons prospect, located ~12 km north of the company’s Honeymoon uranium mine (ASX release 12 May 2017).  
Significant intercepts include:

  • BMR068, 1.14 m at 1,385 ppm pU3O8 from 94.32 m
  • BMR069, 1.77 m at 1,270 ppm pU3O8 from 86.82 m
  • BMR069, 0.79 m at 899 ppm pU3O8 from 92.46 m
  • BMR072, 0.57 m at 1,146 ppm pU3O8 from 88.68 m.

These results represent the final infill stage of the drilling program which links both the northern and southern regions. The results support the general endowment seen in historical drilling and, significantly, good lateral continuity of mineralisation has been encountered.

Boss also reported that the findings of the prefeasibility study are expected to be announced by the end of May 2017.

Results of the Honeymoon preliminary feasibility study have confirmed the Honeymoon Project as highly economic (ASX release 31 May 2017). Highlights include:

  • Low capital outlay optionality for near-term production.
  • US$10m restart of existing solvent extraction plant for production of 0.88 million pounds (Mlb) per annum U3O8 equivalent, with 12 months to first production.
  • Stage 2 potential incorporation of ion exchange plant for production of 2 Mlb per annum U3O8 equivalent.
  • Stage 3 potential inclusion of Gould’s Dam and the production of 3.2 Mlb per annum U3O8 equivalent.
  • Low all-in-sustaining costs.
  • US$23.90/lb U3O8 equivalent over life of mine (lowest cost quartile of world-wide producers).
  • Direct operating cost (at mine gate) of US$15.60/lb U3O8 equivalent.
  • Significant potential for economic upside with further resource expansion and life of mine extension.

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Havilah Resources

www.havilah-resources.com.au

Havilah Resources has signed a memorandum of understanding with Wanbao Mining Limited for the completion of a prefeasibility study for the Kalkaroo copper–gold project in northeastern South Australia (ASX release 29 May 2017).

Wanbao has engaged independent mining consulting firm RPM Global to manage and complete the prefeasibility study within six months. RPM has extensive Chinese and Australian experience and expertise. Wanbao will then make a decision on its future participation in financing and development of the Kalkaroo Project.

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Hillgrove Resources

www.hillgroveresources.com.au

Hillgrove Resources has reported continued improvement in its Kanmantoo Mine operational performance with production increasing for the third consecutive quarter to the highest level in two years. Full year guidance remains unchanged at 18,000–20,000 t of copper and 5,500–7,500 ounces (oz) of gold in concentrate (ASX release 2 May 2017).

The company has identified organic growth opportunities that will be subject to further assessment during 2017. The first of these is the depth extensions of the copper–gold orebodies currently being mined in the Kanmantoo open pit. Hillgrove has approximated an exploration target of between 5 to 10 Mt with a target grade of between 1.7% and 2.2% Cu and 0.4 grams per tonne (g/t) to 1.0 g/t Au, containing ~80,000–160,000 t of copper metal and 60,000–120,000 oz gold. The exploration target has potential for significant underground resource opportunity at Kanmantoo beneath and in the wall of the existing final pit (ASX release 25 May 2017)

The second growth opportunity is at the company’s wholly owned Kanappa exploration project, located ~60 km north of Kanmantoo. A large area over 3.7 km long and 0.6 km wide of strong copper–gold endowment has been identified with >100 sites of outcropping copper and copper–gold mineralisation (ASX release 25 May 2017). Rock chip sampling has helped identify three geochemically distinct mineralised areas. To the east there is a copper–gold zone with values to 4 g/t Au and associated with anomalous tungsten, tin and molybdenum. The central zone is a strong copper zone with up to 34% Cu with anomalous silver and bismuth. The western zone is hosted by a limestone unit and is characterised by polymetallic mineralisation with up to 4.4% Cu, zinc and local magnetite.

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Iron Road

www.ironroadlimited.com.au

Iron Road has achieved two milestones for its $4.5 billion Central Eyre Iron Project (CEIP) with the granting of a mining lease and development authorisation by the South Australian Government (ASX release 3 May 2017).

The 21-year mining lease has been granted for the proposed magnetite mining and minerals processing operation near Warramboo. The mine will produce at least 21.5 million tonnes per annum (Mtpa) of high-grade, low-impurity iron concentrate. The development authorisation covers the infrastructure components of the project which comprises a deepwater port at Cape Hardy (~7 km south of Port Neill), a 145 km railway line from the mine to the port, a power transmission line, bore field with an associated water pipeline, and a long-term employee village at Wudinna. The project will employ ~1,950 people during construction and 700 during operations, all located on the Eyre Peninsula, in addition to the workforce required in the Adelaide head office.

The next stage in the development will include further engagement with stakeholders, preparing secondary approval applications, reaching a final investment decision together with strategic partner China Railway Group Limited, and ultimately achieving financial close.

In granting development authorisation, the government requires that 127 development conditions will be met before the project can proceed (South Australian Government news release 3 May 2017). These include the resolution of land access issues, continuous monitoring and public reporting of dust emissions and noise, as well as taking measures to prevent any loss of agricultural productivity from surrounding properties.

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Lincoln Minerals

www.lincolnminerals.com.au

An updated mineral resource has been released for Lincoln Minerals’ Eyre Peninsula Kookaburra Gully graphite project (ASX release 17 May 2017). The new combined measured, indicated and inferred mineral resource stands at 2.03 Mt at 15.2% total graphitic carbon (TGC; using 5% TGC cutoff). Metallurgical test work has confirmed that graphite concentrates can be produced readily at 93–98% TGC, 94–98% loss on ignition (LOI) and at >90% recovery from a simple flow sheet.

Results from more recent resource definition drilling at Kookaburra Gully include several intervals of high-grade graphite up to 24.7% TGC (ASX release 22 May 2017).  
Best intersections include:

  • KK060, 25 m at 21.5% TGC from 19 to 44 m
  • KK061, 33 m at 13.4% TGC from 70 to 103 m, including 17 m at 21.7% TGC from 82 to 99 m
  • KK062, 13 m at 24.7% TGC from 98 to 111 m
  • KK063, 20 m at 15.4% TGC from 82 to 102 m, including 10 m at 23.7% TGC from 92 to 102 m.

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Marmota

www.marmota.com.au

Marmota has reported further exploration success at its wholly owned Aurora Tank prospect with the return of results on new 1 m assays from split 4 m samples from its December 2016 drilling program (ASX release 23 May 2017). The Phase 2 drilling results indicate 35 intersections with >1 g/t Au including:

  • 16AT100, 1 m at 10.3 g/t Au from 33 m (8 m at 3.6 g/t Au from 32 m)
  • 16AT116, 1 m at 10.6 g/t Au from 31 m (2 m at 5.7 g/t Au from 31 m)
  • 16AT118, 1 m at 11.9 g/t Au from 17 m (2 m at 7.7 g/t Au from 16 m)
  • 16AT126, 1 m at 13.3 g/t Au from 41 m (4 m at 5.1 g/t Au from 41 m).

An expanded Phase 2 drilling program is expected to commence in June 2017.

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WPG Resources

wpgresources.com.au

In an ASX release on 17 May 2017, WPG Resources reported further encouraging gold assays from its Challenger Deeps drilling program ( ASX releases 3 April and 11 April 2017). Assay results for three holes designed to target the M1, M2 and Aminus lodes range from <0.01 to 21.96 g/t Au. Intercepts include:

  • M1: 17CUD2073, 0.78 m (true width) at 6.64 g/t from 53.30 m, and 0.58 m at 12.08 g/t from 63.88 m
  • Aminus: 17CUD2072, 0.93 m (true width) at 21.96 g/t Au from 90.60 m.

These results are comparable with historical drill results recorded from the M1, M2 and Aminus lodes which have been mined in the past.

An ASX release on 29 May 2017 reported results from a further four holes drilled to test the M1, M2, Aminus and Challenger West lodes on the 95 m relative level (RL), which is 40 m below the deepest mine workings. Assay results range from <0.01 to 689.76 g/t Au. Intercepts include:

  • M1: 17CUD2077, 7.62 m (true width) at 42.89 g/t Au from 45.36 m, including 1.29 m at 240.33 g/t Au from 45.36 m
  • M1: 17CUD2078, 0.98 m (true width) at 22.66 g/t Au from 48.00 m and 0.66 m (true width) at 23.38 g/t Au from 65.33 m
  • Aminus: 17CUD2075, 0.80 m (true width) at 6.65 g/t Au from 132.87 m
  • Challenger West: 17CUD2076, 1.99 m (true width) at 27.22 g/t Au from 125.00 m.

WPG aims to continue to test the lodes to even deeper levels and to test those same structures along strike to the northeast and southwest.

WPG has announced a combined exploration target for the M3 and SEZ lodes, above the 215 shear, ranging from a lower limit of 1.09 Mt at 3.40 g/t Au for 120,000 oz of gold to an upper limit of 1.27 Mt at 3.93 g/t for 162,000 oz (ASX release 22 May 2017).

An exploration and production drive has been developed on the M3 structure on the 1055 level, within 150 m of surface, with stoping operations expected to commence before end May. Further underground exploration diamond drilling into the M3 and SEZ shoots will also commence in May, with ~28,000 m of drilling planned over the next 12 months. WPG expects this drilling will provide the necessary confidence for eventually defining a mineral resource for the M3 and SEZ lodes.

A number of production records were set at WPG’s Tarcoola gold mine in May (ASX release 31 May 2017). These included:

  • A record 27,104 t of ore at an average grade of 2.57 g/t Au was mined, containing 2,239 oz.
  • Mining of the supergene enriched zone has delivered over 2,600 t at a grade exceeding 5.01 g/t; of which over 1,200 t has been crushed at a sampled grade of 6.8 g/t.
  • A record of more than 1,790 oz of gold in ore was hauled to WPG’s Challenger processing hub during May, including a daily record of 786 t of ore on 30 May 2017.

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Ministerial news releases

State Government responds to Mining Law Review submissions

Tom Koutsantonis, Minister for Mineral Resources and Energy
09 June 2017


A range of information sheets are now available to the public in response to the many submissions made to the ongoing review of South Australia’s mining laws. Submissions from more than 130 groups, landowners, operators, consultants and MPs canvassed a broad range of topics such as compliance, transparency and the environment. The two Fast Facts and 20 Policy Directions documents summarise the initial response to the key topics raised in many of the submissions received during the review’s public consultation.

Bids received for Whyalla steelworks and mine

Tom Koutsantonis, Minister for Mineral Resources and Energy
01 June 2017


Two bids have been received for the whole of the Arrium business, including the steelworks and mine in Whyalla. Treasurer Tom Koutsantonis was contacted earlier today by the Administrator, KordaMentha, notifying that the bids had been received from the shortlisted bidders. The administrator will now conduct a thorough review of both bids in consultation with sale advisors Morgan Stanley. The state and federal governments will now enter detailed dialogue with the administrators.

Review of Mintabie Township leases

Kyam Maher, Minister for Aboriginal Affairs and Reconciliation
01 June 2017


The state government will review the Mintabie Township Lease Agreement in partnership with Anangu Pitjantjatjara Yankunytjatjara (APY) and the federal government. As part of the review, the state government will consider returning ownership and management of Mintabie, which is located on the APY Lands, to the traditional owners. In conjunction with the review, a $300,000 state government grant has been given to MoneyMob Talkabout to increase its ability to provide Anangu with access to financial counselling services and connect those seeking credit with an accredited provider.

National heritage listing for Burra and Moonta mines

Premier Jay Weatherill
08 May 2017


South Australia’s historic Burra and Moonta mines have been added to the National Heritage List, recognising their Cornish mining heritage and joining six other sites across the state already included on the prestigious list. Premier Jay Weatherill and Minister for Sustainability, Environment and Conservation Ian Hunter welcomed the federal government’s announcement today that the Mid North and Yorke Peninsula towns have been acknowledged as national sites of outstanding significance.

Iron Road project approved for Eyre Peninsula

Premier Jay Weatherill
03 May 2017


Iron Road has received a mining lease and development approval for a $4.5 billion project set to create nearly 2,000 jobs during construction and 700 jobs over the 25-year life of the mine. If the company meets the conditions of the approval the Central Eyre Iron Project will be Australia’s largest magnetite mine, estimated to produce 21.5 million tonne each year. The project will include the construction of a new 145 km rail link and deepwater port at Cape Hardy, near Tumby Bay. The port will also be able to be used to export other goods from the region, such as grain.

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