Mining Breaks

Lower than forecast Sept qtr (Q3FY2021) production due to excavator equipment availability issues for its mining contractor have led Hummingbird Resources to amend guidance for its Yanfolila gold mine in S Mali to the lower end of its 100,000-110,000oz production and upper end of its $US1,250-1,350/oz AISC ranges.
The UK-based company cautions the revised guidance is based on mitigation measures being implemented with its contractor to bring mining volumes back to contracted levels being successful.
Q3 production by the openpit mine was 22,102oz (Q2: 24,494oz) at $1,520/oz ($1,386/oz).

Some of the world’s largest nickel and chemicals producers are part of a plan to develop a cathode precursor production pilot plant at Kalgoorlie in Western Australia to produce locally sourced materials for electric vehicle batteries, adding value in downstream processing within Australia.
The companies are members of the Future Battery Industries Cooperative Research Centre, which has signed an $A18M contract to design and commission the pilot plant, with installation and commissioning to commence in the March 2022 quarter.
Ardea Resources, an active FBICRC member, says its globally significant Kalgoorlie Nickel project with contained metal resources of 5.9Mt nickel and 384,000t cobalt is well-placed to supply the lithium ion battery sector.

Rail haulage operations covering major coal mining centres in the Hunter Valley of New South Wales and Central Queensland will be subject to a demerger or trade sale as part of the $A2.35B acquisition by Australia’s rail freight leader Aurizon of regional business One Rail Australia.
Aurizon says it will give an enforceable commitment to divest ORA’s East Coast Rail business to address likely official objections by competition authorities. The choice between a demerger or trade sale will be whichever creates greater value for Aurizon shareholders.
The transaction is subject to clearance by the Australian Competition and Consumer Commission, and will be fully funded from debt facilities.
Aurizon will integrate ORA’s bulk and general freight assets in South Australia and the Northern Territory, 2,200km Tarcoola to Darwin railway line, yards and rolling stock with its existing businesses.

The continuing strong magnet demand and increasing prices for neodymium and praseodymium in global economies recovering from COVID-19 disruptions have enabled Lynas Rare Earths to post invoiced revenue of $A121.6M in the Sept qtr (Q1FY22), second only to the previous period.
Total REO production at its Kuantan plant in Malaysia of 3,166t (Q4FY21: 3,788t) was achieved despite an 11-day shutdown of the cracking and leaching plant due to unavailability of staff in COVID isolation, a period used to carry out major maintenance programs. NdPr production was 1,255t (1,393t).
Sales receipts of $92M ($192M) saw Lynas close the period with a cash balance of $667.3M ($680.8M).

The merger of leading listed Australian drillers DDH1 and Swick Mining Services is expected to create a world-leading mineral driller with a strong balance of surface and underground drilling exposures with a combined fleet of more than 170 rigs and generating pro-forma FY21 annual revenues of about $A445M and a combined pro-forma FY21 EBITDA of $104M.
Their binding scheme implementation agreement under which DDH1 will issue 0.297 shares for each Swick share represents an enterprise value of $115M.
DDH1 chair Diane Smith-Gander says the highly complementary partnership with Australia’s leading underground diamond driller is a natural evolution to the company’s specialised surface drilling operations.
Swick says the demerger of its Orexplore mineral technology will proceed prior to the DDH1 takeover.

Mexican mining-metallurgical group Penoles has exercised its option to purchase 100% of the zinc concentrates produced by Consolidated Zinc’s wholly owned Minera Latin American Zinc operation at the historic Plomosas zinc, lead and silver mine in Chihuahua state.
The high-grade zinc concentrates are processed at Penoles’ Met-Mex smelter about 600km from Plomosas, offering significant savings in transportation costs compared to alternatives.
The agreement includes a further 1-year option to extend the zinc concentrate purchases to end-2023.

West Australian explorer Apollo Consolidated is urging shareholders to hold off on any decision on the off-market $A166M takeover offer from miner Gold Road Resources in competition to the board-endorsed original offer from Ramelius Resources.
Gold Road says its $A0.56 per share all-cash offer represents a premium to Ramelius’s cash-plus-shares offer, which it values currently at $0.554 per share.
The company has revealed a 19.9% shareholding in Apollo after buying 58M shares at $0.56 this week that gives it the capacity to block the Ramelius offer, which is conditional on 90% acceptance.

Australian developer BCI Minerals is confident of finalising project funding within weeks after green-lighting its 100%-owned Mardie salt and potash development on WA’s Pilbara coast. The decision comes after it wrapped up $A740M of the project’s total $1.2B funding requirement this month.
The company is targeting an early 2022 construction start for the solar evaporation operation slated to produce 5.35Mtpa high-purity sodium chloride and 140,000tpa SOP fertiliser over a mine life of at least 60 years.
Chairman Brian O’Donnell says, with projected annual EBITDA of about $A260M and real NPV at 7% discount of over $1.6B, the Mardie investment case is compelling with its large scale, low cost and long operating life - key attributes of a sustainable tier 1 asset.

Globally diversified miner South32 has made a strong start to the new financial year with quarterly record production at South Africa Manganese and a strong start at Australia Manganese in the Sept qtr (Q1FY22).
Group Mn production rose 7% to 1.57Mt, from 1.46Mt in the previous period. Metallurgical coal production was 1.58Mt (Q4FY21: 1.34Mt) and energy coal 313,000t (385,000t).
With Worsley Alumina operating above nameplate capacity, production of alumina was 1.28Mt (1.43Mt) and aluminium 248,000t (246,000t). Payable nickel production was 9,600t (10,900t), silver 3.5Mt (4.18Mt), lead 31,900t (41,200t) and zinc 15,400t (19,500t).
CEO Graham Kerr says the operating performance further strengthened the company’s financial position. Net cash balance increased to $US660M ($406M).
With all operations continuing to plan, the company has maintained its FY22 production guidance.

Australian miner Allegiance is targeting a long-life underground development delivering premium coking coal to the seaborne market with a $US19.9M agreement to acquire the long-term Short Creek surface mine in Alabama, USA from Drummond Coal.
While the mine holds permits in good standing for openpit production and operations, Allegiance is set for a 6-9 months permitting process for an underground mine at the site 25km W of Birmingham.
Chairman-CEO Mark Gray says the acquisition sets a pathway for Allegiance to become a producer of a variety of US coking coals from New Elk, Black Warrior and now Short Creek.
The company has raised $A30M through a placement to institutional and professional shareholders for the acquisition and development of the mine.

Australian developer Metallica’s confidence in its 100%-owned Cape Flattery silica sand project in FNQ is higher again after total resources grew 40% to 53.5Mt @ 99.19% SiO2, including a maiden measured resource of 9.6Mt @ 99.29% and potential for expansion with further infill and step-out drilling.
Exec chairman Theo Psaros says, as well as being a major milestone on development of the high-quality project, Metallica continues to receive positive interest from international and domestic customers.
The company aims to complete its PFS metallurgical testing and reporting within months while continuing environmental studies and fieldwork.

The records keep coming for Australian miner Manuka Resources at its 100%-owned Mt Boppy mine at Cobar in central NSW with production of 10,089oz gold in the Sept qtr (Q1FY22), more than double the 4,965oz in the previous period. The company says the high ore grades, steady production and improved recoveries that delivered the result are expected to continue.
Gold sales grew to 9,284oz (Q4FY21: 4,831oz).
Manuka says the continued strong performance of Mt Boppy, with gold production to date over 30% above its 22,000-24,000oz forecast, will delay the planned transition of the Wonawinta plant from gold to silver production has been deferred to March 2022.
Operating cashflow of $A8.2M (Q4FY21: $0.78M), with strong cash generation reasonably expected to continue for the remainder of Phase 1 gold production.

Improving market prices for thermal coal have encouraged Tian Poh Resources to revisit plans for the proposed 5Mtpa Nuurst project in central Mongolia it acquired for $US2.2M in 2015.
Tian Poh has engaged CSA Global to update its current 478.3Mt mineral resource estimate for the project 120km SE of Ulaanbatar from JORC 2004 to 2012 compliance.
Once it has results, due before end-2021, Tian Poh plans an engineering study and study of funding options for a coal-to-gas plant.
The company, headed by Singapore-based entrepreneur Poh Kay Ping, has also carried out trials of supply chain and infrastructure/logistics services on purchased coal to support the engineering studies.

West African-focused miner Perseus continues to advance, posting another quarterly gold production record of 112,786oz in Q1FY22, up from 102,788oz in the previous quarter. Weighted average AISC also improved to $US966/oz (Q4FY21: $1,047/oz).
Sales of 107,650oz (106,899oz) at $1,655/oz ($1,652/oz) generated notional cashflow of $77.8M ($62.1M).
Major contributor was the Yaouré gold mine in Côte d’Ivoire, which overcame disrupted mining schedules and ore access due to unusually high rainfall to deliver 64,558oz (37,443oz) at $671/oz ($1,036/oz). The same weather issues reduced its Sissingué mine to 16,067oz (37,343oz) at $931/oz ($676/oz).
Lower grades influenced the decline at the Edikan mine in Ghana to 32,161oz (42,221oz) at $1,574/oz ($1,217/oz).

A slightly better than forecast Sept qtr (Q1FY22) performance and more improvement expected in Q4 have reinforced West Australian miner Ramelius Resources’ confidence of achieving its first half gold target of 130,000-150,000oz at AISC of $A1,450-1,550/oz.
Ramelius posted Q3 production of 65,686oz at $1,445/oz, up from 61,840oz at $1,394/oz in the June qtr, with Mt Magnet delivering 33,958oz (35,208oz) and Edna May lifting to 31,728oz (26,632oz).
Gold sales of 55,075oz (64,194oz) at $2,317/oz ($2,254/oz) resulted in total revenue of $127.6M ($144.7M). With the $30.25M received from the sale of its Kathleen Valley lithium royalty, Ramelius ended the period with net cash of $273.9M ($234M).

The rapid growth in production by Australian-based mineral sands miner Iluka Resources has continued through the Sept qtr (Q3FY2021), with its zircon/rutile/synthetic rutile output reaching 201,000t, up from 175,300t in the previous period. Production of ilmenite also increased to 165,100t (Q2: 160,000t) and monazite concentrate to 12,200t (10,000t).
Iluka says its zircon in concentrate production rose 38% with its Narngulu mineral separation plant in WA running at full capacity, and operational improvements have contributed to an 18% improvement in rutile production at Sierra Rutile in Sierra Leone.
Rutile sales continued to grow with strong demand for high-grade feedstocks amplified by low inventory levels and chlorine shortages in North America and Europe.
Q3 mineral sands revenue was $A392M ($391.1M), amid rising zircon and rutile prices. The company says its Q4 zircon sales are fully committed and all rutile and synthetic rutile production to end-2021 is under contract.

Chilean major Antofagasta is predicting a significant fall in group production to 660,000-690,000t for FY2022 due to the worsening drought. CEO Iván Arriagada says no more rain is expected until June 2022, and the new desalination plant at Los Pelambres is not due for completion until the second half of the year.
Despite ongoing drought, global supply chain challenges, energy crisis and higher input costs, Antofagasta lifted its Sept qtr (Q3FY2021) production to 181,100t copper, from 178,400t in the previous period, 66,800oz gold (Q2: 61,400oz) and 2,600t molybdenum (2,800t). Higher energy and diesel costs increased net cash costs to $US1.16/lb ($1.13/lb).
Arriagada says Antofagasta remains on track for its FY2021 guidance of 710,000-740,000t, while net cash costs are expected to be below its original $1.25/lb guidance.

The increasing pace of the recovery from underground flooding of two mines and a major plant failure is supporting the decision by Russian mining giant Norilsk Nickel to maintain its FY2021 guidance despite falls of up to 23% in production for the first nine months of the year.
Nornickel says the Octyabrsky mine is again operating at full capacity and Taimyrsky mine at 85%, heading towards full capacity by the beginning of December. The Norilsk concentrator is back at 93% and is also due to reach full capacity by December.
Total Q3 group saleable metals production was 50,575t nickel (Q2: 32,644t), 115,617t copper (81,400t), 598,000oz palladium (548,000oz) and 145,000oz platinum (134,000oz).
Norilsk Nickel Group FY2021 guidance remains 190,000-200,000t Ni, 335,000-355,000t Cu, 2.35-2.41Moz Pd and 580,000-640,000oz Pt.

Canadian miner Noront Resources has recommended shareholders accept the takeover offer by BHP after the global mining leader trumped its rival bidder, Australian entrepreneur Andrew Forrest’s Wyloo Metals, with a new all-cash offer valuing Noront at $C443M.
Noront has reversed its previous support for Wyloo’s revised $0.70 per share bid, saying the decision by BHP to exercise its option to match the rival offer and increase it to $0.75 delivers compelling value to its shareholders.
It notes the BHP offer can succeed without the support of Wyloo, a 37.5% shareholder in the company.
CEO Alan Coutts says the transaction delivers certainty of value to Noront shareholders.