New Year Opportunities

Good news for equipment companies and service suppliers to the mining industry at the start of the new year include a block-cave mine in New South Wales, construction of a gold refinery in Nigeria, and promising studies in Mauritania and Florida.

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Construction has been approved for a new block-cave mine, called E26 Lift 1 North, at the Northparkes copper-gold operation in New South Wales, Australia. The owners (Sumitomo Metal Mining Co., Sumitomo Corp. and China Molybdenum Co.) are to invest over A$200 million during the next three years. The project will produce about 40 Mt/y of ore over 10 years.

There are opportunities to sell equipment to gold-miners in Nigeria with the start of construction of the country's first gold refinery. In mid-December, Kian Smith Trade and Co. confirmed that the facility in Ogun State will have a 3,000 kg/month capacity (99.99% Au), with production to commence by the end of this year. At the ground-breaking ceremony, Ms Nere Teriba, vice chair of Kian Smith, confirmed that some gold-supply agreements were already in place, and most of the ore will be sourced from miners in the country. 

News on feasibility studies over the past two weeks included an announcement that the authorities in Mauritania have granted a request from Algold Resources Ltd for more time to complete a study on the company's Tijirit gold project. The company said on January 4 that the 12-month extension to end-2019 will give it the opportunity to carry out more technical work, and potentially expand the scope of the project and its resources. Tijirit is held by Tirex Gold Co., which is 75% owned by Algold, 15% by the Mauritanian government and 10% by Wafa Mining & Petroleum SA. A preliminary economic assessment outlined a net present value of US$69.0 million, at an 8% discount, based on a gold price of US$1,250/oz and a seven-year mine life.

In the US, Mosaic Co. has received the final permit for its Ona phosphate project in Florida. The permit from the US Army Corps of Engineers will enable the company to mine 150 Mt of phosphate rock and will extend the life of Mosaic's Four Corners mine by 14 years.

Chile's state copper agency Cochilco said that the country's copper production may increase by nearly 30% over the next ten years. Cochilco said that Chile's output could reach a record of 7.25 Mt of copper as early as 2025. According to the forecast, new mines and expansion projects will offset a 19% decline in production at existing operations to 4.5 Mt/y.

Financing announcements often lead to subsequent business opportunities for equipment and service suppliers. News over the past two weeks included an announcement that the former CEO of Xstrata Ltd, Mick Davis, is planning to set up a new fund called Niron Metals to explore for base metals. After leaving Xstrata, Mr Davis set up mining fund X2 Resources Ltd, which closed in 2017 (releasing investors from US$5.6 billion in financial commitments) after failing to make any deals in three years.

The founder of private security company Blackwater, Erik Prince, is also launching an exploration fund, although this one is focused on battery metals. The Financial Times reported recently that the fund is raising up to US$500 million, with investments targeted for deposits of metals such as cobalt, copper and lithium largely in Africa and Asia.

Pilbara Minerals Ltd has raised A$231 million for its stage 2 expansion at Pilgangoora in Western Australia. The company has also flagged a Stage 3 expansion and moves with POSCO to develop a larger joint venture chemical conversion facility in South Korea. The funding package comprises a US$25 million off-take prepayment facility by Great Wall Motor Co., a A$50 million equity placement by Jiangxi Ganfeng Lithium Co. and a proposed new US$50 million Nordic bond. The balance of the funds will come from existing cash (mostly related to the previous equity placement to POSCO) and future cash-flow generated from the stage 1 operations.

Strandline Resources Ltd has mandated Nedbank Ltd to arrange a US$26 million, five-year finance facility for the company's Fungoni heavy mineral sands project in Tanzania. The facility will account for the majority of Fungoni's total estimated development costs of US$32.1 million. In November, an updated definitive feasibility study pegged a net present value of US$30.8 million at a 10% discount rate. Fungoni will also pave the way for development of the company's other mineral sands projects in Tanzania and Australia, including the large scale Tajiri ilmenite and Coburn zircon projects.

Early stage business-development news includes Sumitomo Corp.'s commitment to spend up to ¥5 billion (US$46 million) to advance Novo Resources Corp.'s gold projects in Australia. Novo said it extended and expanded a 2017 memorandum of understanding that saw Sumitomo help Novo move the Beatons Creek gold project in Western Australia toward production.

In Canada, Landore Resources Ltd has updated the mineral resource estimate for its BAM gold deposit, part of its Junior Lake property in Ontario, to 28.8 Mt at 1.03 g/t of gold containing 951,000 oz.

Also in Canada, Gensource Potash Corp. has increased the measured and indicated resources at its Vanguard potash project in Saskatchewan by 65% and 68%, respectively. The total measured resource was pegged at 154 Mt of potash. The company expects to move into construction by the end of this year. 

Source: All material is taken from S&P Global Market Intelligence's Metals & Mining database.

Chris Hinde

Chief Commentator, Mining Beacon

Previously editorial director of Mining Journal, and more recently head of S&P Global Market Intelligence's metals and mining team, Chris is now Mining Beacon's editor-in-chief and lead commentator. He posts two blogs every week, one on Monday reviewing market conditions over the prior week, and a second on Thursday looking at issues on the global mining scene. There is also a quarterly blog on business opportunities in the sector.