Mining Breaks

START THE WEEK: WHAT YOU NEED TO KNOW
Many Australian mining commentators, always ready to jump on the next bandwagon, are hailing BHP's announcement of the $US3.4B development of its next major Pilbara iron ore mine at South Flank as confirming the return of the much-missed mining investment boom of the 1990s and early 2000s.
The announcement by BHP, No 2 among Australian iron ore producers, comes less than a month after the third largest of the team, Fortescue Metals Group, approved the $1.275B development of its Eliwana mine and rail project.
Still to come is confirmation by the largest Australian producer, Rio Tinto, of the go-ahead for development of a likely $2.2B new mine at its Koodaideri deposit.
Rather than a return to the boom days of fond memory, the current plans by the Big 3 more accurately represent the transition to a new generation of mines designed to take greater advantage of the Chinese market's willingness to pay more for premium ore.
BHP's 80Mtpa South Flank development is being scheduled to take up the decline in production as its Yandi mine reaches the end of its economic life.
More importantly for the miner, South Flank is expected to help lift the average grade of its Pilbara mines from 61% to 62% Fe, while also improving the proportion of lump to fines ore from 25% to 35%.
For Fortescue as well, the development of a 30Mtpa operation at Eliwana is planned to enable it to maintain production of at least 120Mtpa over 20 years.
But it will also would enable the company to introduce a 60% grade premium product in early 2020 that it hopes will enable it to offset the impact of Chinese discounting of sub-premium ore.
Fortescue's current output ranges in grade between 56% and 59%, but the growing pressure on prices has seen it lower its price forecast to just 65% of the Platts 62 CFR index price in the current half-year.
Rio Tinto approved a $A31M investment a year ago to complete a feasibility study on the proposed 40Mtpa Koodaideri development as its next major mining project in the Pilbara.
Its stated aim with Koodaideri is to replace existing production, but the mine is also expected to be a case study on the automation, technology and operational changes being implemented across its portfolio with the aim of delivering a productivity bonus of $5B additional free cash-flow.

YOU MAY HAVE MISSED

• DRAFT SOUTH AFRICA MINING CHARTER AIMS AT 30% BLACK OWNERSHIP 
• GLENCORE READY TO SACRIFICE MUCH TO PROTECT DRC COBALT POSITION 
• BHP SEES IRON ORE PREMIUM BOOST FROM $3.4B SOUTH FLANK DEVELOPMENT 
• ATLAS IRON BATTLE IMPACTED BY STATE SWITCH ON PORT DEVELOPMENT 
• GOLDCORP SEES NO PRODUCTION LOSS FROM MEXICAN DRIVERS BLOCKADE 
• HILL END PFS UNDERPINS AUSTRALIAN ALUMINA PLANT PLANS 

COMMODITIES
LME ($US), Jun 15 -
Aluminium 2,239.50
Copper 7,136.00
Zinc 3,189.00
Nickel 15,265.00
Lead 2,431.00
Tin 20,900.00
Cobalt 81,000.00
Gold 1,277.00

COMEX ($US), Jun 15-
Gold 1,282.00
Copper 3.136
Silver 16.57

NYMEX ($US), Jun 15 -
Iron ore $65.39

CALENDAR
Public holidays -
Jun 14-19: Eid-ul-Fitr
Jun 17: Martin Miguel de Guernes Day (Argentina)
Jun 20: National Flag Day (Argentina)
Jun 22: Midsummer (Sweden, Finland)

South Africa could not achieve president Cyril Ramaphosa's target of attracting $US100B foreign investment in the next 5 years under its new draft mining charter, the South African Minerals Council says.
While it accepts the new draft released on Friday is materially better than the 2017 version, the council says there are other measures that could benefit communities and employees without undermining the future viability of mining.
Stakeholders have 30 days to respond to the draft charter.

Americas project acquirer Libero Copper has bought 100% of the Mocoa porphyry copper-molybdenum deposit in Colombia, Canada, from B2Gold for a 19% stake in Libero.
B2Gold also retains a 2% NSR on the project, which has an inferred 636Mt grading 0.45% copper equivalent.
Libero’s portfolio also includes the inferred 711Mt at 0.33% CuEq Tomichi deposit in the US. Its properties contain a total 7.9Blbs of copper and 1.1Blbs of molybdenum.

South Africa plans to raise black ownership of permit-holding mining companies to 30% from 26% within 5-years, according to the latest draft of a hotly-contested new industry charter, Reuters reports.
The new draft charter extends to 5-years from 1-year the time that existing mining permit holders will have to meet the new black ownership requirement.
A new addition to the latest charter is that at least 50% of the seats on mining company boards will have to be allocated to black South Africans, and that at least 20% of those must go to black women. Other proposals include new mining rights holders must pay 1% of core profit (EBITDA) to employees/communities and 70% of mining goods procurement budgets must be spent on SA-made goods.

Truck drivers that have been blocking access to a Mexican mine operated by Canadian miner Goldcorp for 2-weeks, have lifted their blockade and will negotiate their demands with the company, Reuters reports.
Work at the Peñasquito mine, one of the top gold producers in Mexico, was not affected by the protests, with Goldcorp well organised to withstand such illegal blockades, the company says. The local truck-drivers say Goldcorp has reneged on promises to hire locally.
Peñasquito, in the N state of Zacatecas, produced 476,000oz last year, 18% of Goldcorp’s total production.

A new scoping study has paved the way for a Q1 2020 start for Savannah Resources’ 75%-owned, low cost, $US109M initial capex Mina do Barroso spodumeme lithium project in N Portugal.
CEO David Archer says the project, acquired just over a year ago and now with a pre-tax NPV8% of $356M, now has a solid base to fast track an FS and the potential to become a major European spodumene lithium producer.

Global miner-trader Glencore has followed up the settlement of its subsidiary Katanga Mining's dispute with DR Congo state miner Gecamines by backing off on a row with Israeli businessman Dan Gertler.
Glencore said in late April it would fight a bid by Gertler to freeze its DRC copper-cobalt assets over a royalties dispute.
After reconsidering, it now says it will pay the claimed royalties to avoid the risk of disrupting its operations.
Because Gertler is subject to US sanctions, Glencore says they'll be paid in non-US dollars and without any US persons involved.

OZ Minerals' $A418M off-market cash/scrip unconditional takeover bid for Brazil-focussed copper-gold miner Avanco Resources has reached 74% and has been extended to July 6, 2018.
All the Avanco directors/key management have accepted the 8.5c cash/0.009 shares offer for each Avanco share. The combined entity could have 7 mines in production within 6-years by adding Avanco's Antas, CentroGold, Pedra Branca and Pantera projects in Brazil to OZ's producing Prominent Hill mine, Carrapateena development and PFS-stage West Musgrave project in Australia.

Sibanye-Stillwater has recovered the body of the 5th and final missing mine worker after a 3-day search at its Kloof Ikamva Gold Mine in South Africa, Reuters reports.
The 5 Sibanye workers killed went missing on Monday after entering an abandoned section of the mine near Johannesburg, the latest in a series of fatal incidents at the company’s SA operations. At least 20 people have died at Sibanye’s SA mines this year, including 7 trapped underground at its Masakhane mine in May.

Ardea Resources has appointed advisor KPMG Australia to find one or more strategic financing partners to bring on its flagship 100%-owned $A599M capex Goongarrie Nickel-Cobalt Project in Western Australia.
The Heron Resources spin-off says it has already received a number of approaches from potential partners and will now undertake a global competitive process to fast-track development of the project, 85km N of Kalgoorlie.
The Mar 2018 PFS envisages a simple open pit mining/processing nickel-cobalt sulphates operation, with a base case 1Mtpa producing 1,180tpa of cobalt metal and 9,300tpa nickel over an initial 21-year LoM. The study gives Adrea a base case pre-tax NPV8% of $1.43B (post-tax $1.04B), a 25% IRR and payback in 5.3 years. A 1.5Mtpa option sees a pre-tax NPV8% of $1.93B ($1.40B post-tax), 25% IRR and payback in 5.6 years.

African-focused BMZ has attracted exploration specialist North Atlantic Mining Associates as farm-in partner to expedite progress towards production at its Busumbu phosphate project in eastern Uganda.
NAMA can earn 51% of the project by spending $US3M on exploration over 3 years. BMZ will be free-carried for 24% of initial exploration.
Vilhjalmur Thor Vilhjalmsson, chief executive of NAMA's African Minerals Ventures, says it's keen to get the compelling world-class phosphate asset into commercial production.

BHP's go-ahead for the $US3.4B development of the South Flank iron ore mine in Western Australia represents a boost for CIMIC Group construction arm CPB Contractors.
CPB has been awarded a construct-only contract worth about $A260M for bulk earthworks, concrete and underground services for the Pilbara region development.
Construction is scheduled to begin in July for completion in Sept 2020.

Australian engineer/constructor Decmil is reviewing the impact of revenue shortfalls from two resource contracts on its financial results for ye June 2018.
Decmil's $A75M contract awarded in Nov 2017 to upgrade accommodation for BHP's South Flank mine construction in Western Australia is progressing, but it says a second contract awaiting approval may now be under the forecast $30M.
Wet weather impacting logistics have slowed a $50M mine infrastructure project at Rio Tinto's Amrun project near Weipa, Qld.
Nevertheless, Decmil says significant late 2017 contract wins should boost H2FY18 revenue by about 50% over its H1FY18 result of $140.8M.

Technical experts are evaluating three options for re-entering the Pike River coal mine in New Zealand's Greymouth district for the first time since 29 mineworkers were killed in methane explosions in late 2010.
Families of the dead workers have been promised the mine will be inspected seeking the cause of the fatal blasts and retrieve any remains if possible.
Radio NZ says a workshop in Greymouth has been told specialist teams may excavate a new 200m long 2x2m tunnel, drill a large diameter borehole from above or go in through the main drift if it can be done without risk.

UK-based international miner Anglo American has signed heads of agreement to sell a 29.1% interest in its proposed 225,000tpa Quellaveco copper project in Peru to Mitsubishi Corporation.
Mitsubishi will pay $US600M for the transaction, increasing its interest in the project to 40% while Anglo American retains 60%.

BHP is targeting first production in 2021 after giving the go-ahead for the $US3.4B development of the South Flank mine at its West Australian Iron Ore operations.
The South Flank development has been scheduled to replace the declining production of its 80Mtpa Yandi mine, while lifting the overall grade of its Pilbara region production to 72% Fe and raising its proportion of lump ore.

The West Australian govt appears to have reversed a policy that gave junior producer Atlas Iron and its North West Infrastructure JV partners priority development rights over additional shipping facilities at Port Hedland.
Atlas says it's been told by the office of state transport minister Rita Saffioti that any development application would be dealt with on its merits.
Saffioti confirmed the planned Stanley Point berths 3 and 4 would be reserved for junior miners.

Following a positive PFS, Hill End Gold expects to commission its $US271M capex, 8,000tpa high purity alumina (HPA) Yendon project near Ballarat, Victoria, Australia, in Q4 2022.
The company has previously flagged Yendon as becoming one of the biggest HPA projects in the world, with the new study envisaging low production costs of $7,668t, capital costs of $33,875t HPA and HPA grades of 99.99% aluminium oxide, resulting in a potential EBITDA of $133M pa. IRR is estimated at 34% and NPV10% $692M, with payback in 4.1-years.

Strandline Resources is positioning itself for an emerging mineral sands structural supply gap by launching a DFS on its 100%-owned zircon-rich Coburn project in Western Australia.
Coburn is part of Strandline's advancing international portfolio. In Tanzania, it completed a positive DFS on the Fungoni project, is progressing a scoping study on the Tanga South project and conducting early stage exploration at its own and Rio Tinto JV projects.
Strandline is generating bulk samples for offtake negotiations and process design at Coburn, where reserves of 308Mt @ 1.2% HM could support over 19 years mine life.

SML is targeting a mid-2019 resumption of copper production at the Leigh Creek mine in South Australia following its $A3M acquisition in Dec 2017 from privateer Resilience Mining.
MD John Peters says SML has assembled a highly experienced study team to conduct a technical assessment of the mine, mothballed since 2012.
The UK-based company plans to begin drilling of existing heap leach pads this month.