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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 June 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

Archer Exploration

www.archerexploration.com.au

The latest K1 and K2 drilling program at Archer Exploration’s Ketchowla cobalt manganese project has been completed and most assay results received, confirming the potential for Ketchowla to host significant cobalt and manganese deposits (ASX release 5 June 2017). Latest results are consistent with earlier drilling results (ASX release 8 May 2017) and show that K1 mineralisation is open to the north over a strike length of 5 km and K2 mineralisation open to the south.

With the positive results at Ketchowla and recent success at the Blue Hills copper project, the North Burra Project area is now a major focus for Archer. Best results include:

  • K1RC1701, 13 m at 12.4% Mn, 0.06% Co, 0.17% Cu, 0.17% Ni and 0.14% Zn, including 2 m at 29.3% Mn, 0.1% Co, 0.3% Cu, 0.34% Ni and 0.27% Zn
  • K1RC1705, 5 m at 9.6% Mn, 0.11% Co, 014% Cu, 0.12% Ni and 0.09% Zn, including 3 m at 13.4% Mn, 0.17% Co, 0.17% Cu, 0.17% Ni and 0.11% Zn.

The following week significant copper mineralisation was reported at Blue Hills (ASX release 7 June 2017). Best results include:

  • BHRC 1701, 23 m at 0.3% Cu from surface
  • BHRC 1704, 12 m at 0.5% Cu from surface.

Based on the release of further results later in the month Archer announced that Blue Hills was shaping up as a potentially significant copper discovery (ASX release 27 June 2017). Best results include:

  • 11 m at 0.32% Cu from surface, including 2 m at 1.4%
  • 15 m at 0.15% Cu from 2 m, including 2 m at 0.9% and 18 m at 0.16% Cu from 1 m.

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BHP

www.bhp.com

At the Copper to the World conference in Adelaide BHP announced that production from Olympic Dam’s Southern Mine Area (SMA) was imminent (BHP presentation 27 June 2017). The company reported spending in the order of $250 million over the last 4 years developing the Southern Mine Area, which represents 70% of the available Olympic Dam orebody. Underground expansion into the SMA commenced in financial year 2015, with development being accelerated 12 months ago using a dedicated team of around 180 people.

By being able to better target the higher copper grade areas BHP stated it will increase the tonnes mined over the coming years, while importantly increasing the percentage copper in every tonne of dirt moved.

The company put the SMA expansion into perspective with the scale of development and investment in infrastructure and essential services (such as power, ventilation, telecommunications and facilities) for each new mining block being equivalent to five new standalone underground mines.

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Boss Resources

www.bossresources.com.au

Boss Resources has achieved another important milestone with the completion of planning and design activities for a field leach trial at its Honeymoon uranium project (ASX release 19 June 2017). The trial, which includes an ion exchange pilot plant, forms a key component of the definitive feasibility study.

The trial will be carried out in an area of the Honeymoon mining lease that lies within the approved operational area of the existing program for environment protection and rehabilitation (PEPR). Boss expects to commence the operation of the well field and ion-exchange plant in late July, for completion in October 2017. The well field will be operated for a minimum of 3 months and the ion-exchange plant for approximately 7 weeks. These time frames are dependent on approval by the South Australian Government, currently under consideration.

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Havilah Resources

www.havilah-resources.com.au

Gold production at Havilah Resources’ Portia gold mine dropped by approximately 44% for May 2017 compared to April due to continued processing of lower grade ore and stabilisation of processing plant operations after the recent plant modifications (ASX release 27 June 2017). However, plant throughput increased by 5% and this trend continued into June with production 65% higher compared to May. The June increase has been attributed to higher plant throughput and mining of higher grade saprolite ore. Further processing plant enhancements to increase gold recovery from the Knelson concentrators are being evaluated.

A major milestone has been achieved for the Kalkaroo copper–gold project with an in principle agreement reached with the Adnyamathanha people on compensation and other terms for the Kalkaroo Native Title Mining Agreement (NTMA; ASX release 28 June 2017). A mutually acceptable formal NTMA is being drafted.

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Iluka Resources

www.iluka.com

Mining and concentrating activities at the Jacinth-Ambrosia mineral sands mine will recommence in December 2017 following an improvement in the mineral sands markets (ASX release 21 June 2017). Iluka Resources said that the decision to restart reflects the continued tightening of the zircon market and follows the substantial drawdown on heavy mineral concentrate inventory over 2017.

Around 40 employees and 60 contractors will be recruited to support the restart. Restart costs for Jacinth-Ambrosia (two of six Iluka deposits in the Eucla Basin) are expected to be about $7 million, with cash production costs of around $6 million in 2017.

Jacinth-Ambrosia remains the primary source of zircon for Iluka. At this stage the company expects total group zircon production to be approximately 300 kilotonnes (kt) in 2018. Iluka also expects to have the ability to drawdown zircon inventory over the course of 2018.

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Magnetite Mines

www.magnetitemines.com

In May Magnetite Mines announced that the South Australian Magnetite Consortium had achieved three major infrastructure milestones – the signing of a memorandum of understanding with Beijing Engineering Corp.; issuing a request for expression of interest for the provision of train operations; and signing an agreement with coastal landowners in the Mypone Point area (ASX release 24 May 2017). The consortium has recently entered into a formal contract with the Calibre Group to provide lead engineering services (ASX release 5 June 2017). The first stage, scheduled to be completed in 6 weeks, involves delivery of a comprehensive narrative setting out the Olary-Ward project configuration combined with a preliminary engineering assessment of the project.

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OZ Minerals

www.ozminerals.com

OZ Mineral’s joint venture partner Cassini Resources has announced promising results from recent drilling of the Nebo-Babel deposits within the West Musgrave Project in Western Australia (adjacent to WA–SA border; ASX release 8 June 2017). A massive sulfide zone containing 3 m at 1.80% Ni, 0.21% Cu, 0.06% Co and 0.21 grams per tonne (g/t) platinum group elements coinciding with an electromagnetic conductor within the host gabbronorite (drillhole CZC0166). This demonstrates that mineralisation continues outside the current Nebo resource and highlights the potential for near-mine extensions and the discovery of new deposits.

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Terramin Australia – Evolution Mining

www.terramin.com.au
www.evolutionmining.com.au

Terramin Australia’s solely owned subsidiary Menninnie Metals has entered into a joint venture agreement with Western Australia based gold producer Evolution Mining for exploration in the South Gawler gold–copper project (ASX release 22 June 2017). Exploration will primarily target iron oxide – copper–gold (IOCG) breccia deposits that have seen limited modern exploration. The joint venture aims to accelerate exploration of breccia-style targets with similar characteristics to Olympic Dam, Carrapateena, Prominent Hill and IOCG deposits elsewhere.

Evolution has stated that ‘The South Gawler joint venture is a rare opportunity to secure a significant land position in an emerging area of this mineral province’.

Key terms of the joint venture agreement are:

  • Evolution can earn 70% equity in the project for $4 million exploration spend over 4 years.
  • Terramin to manage during the first earn-in phase.
  • Terramin may then elect to contribute, otherwise Evolution can earn an additional 10% (total 80%) by spending a further $2 million over 2 years, after which a pro-rata period will operate.
  • Evolution can withdraw from the project after a minimum spend of $500,000 within the first year.

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Tyranna Resources

www.tyrannaresources.com

Tyranna Resources, as manager of the Western Gawler Craton Joint Venture, which includes WPG Resources, has announced the completion of Phase 1 drilling at the Typhoon and Monsoon gold prospects that form part of the larger Jumbuck gold project (ASX release 8 June 2017). The two prospects are located approximately 39 km south of WPG’s Challenger gold mine.

Final assay results for Typhoon show a number of high-grade gold intercepts including:

  • 17TYRC012, 13 m at 3.88 g/t Au from 47 m, including 4 m at 10.18 g/t
  • 17TYRC013, 5 m at 2.55 g/t Au from 70 m, including 1 m at 7.5 g/t.

Further drilling at Typhoon is proposed in July 2017 and will focus on the northeast and southwest strike extensions of the mineralised zone.

Final assay results from the Monsoon drilling are yet to be received.

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WPG Resources

wpgresources.com.au

In an ASX release on 1 June 2017 WPG Resources released an updated mineral resource estimate for the Challenger gold mine. The 31 March 2017 estimate stands at a total of 1,401,401 t at an average grade of 7.62 g/t Au containing 343,299 ounces (oz) of gold. This represents a 27% increase in the contained gold compared to the previous resource estimate as at 30 June 2016 (ASX release 25 October 2016). The March 2017 estimate does not include the latest results from exploration of the SEZ and M3 shoots (ASX releases 11 April 2017, 17 May 2017 and 22 May 2017) and the Challenger Deeps area (ASX releases 29 May 2017).

In an ASX release on 13 June 2017 WPG announced that it had completed a $7.2 million placement, which was heavily oversubscribed. The funds raised will be used primarily for the Challenger mill expansion, mine development and underground exploration. The company further reported that by spending funds to remove the current processing bottleneck, annualised production is expected to increase to approximately 90 koz of gold per annum. WPG has subsequently advised that it will be seeking additional funds to further support the mill expansion, mine development and underground exploration (ASX release 19 June 2017).

In an ASX release on 22 June 2017 WPG reported encouraging gold results from the final six holes of the Challenger Deeps drilling (17CUD2079 to 17CUD2084) with values ranging from <0.01 to 52.54 g/t Au. Intercepts on the target structures are:

M1

  • 17CUD2081, 0.51 m (true width) at 37.65 g/t Au from 47.70 m
  • 17CUD2082, 0.24 m (true width) at 33.83 g/t Au from 55.96 m
  • 17CUD2083, 0.64 m (true width) at 14.00 g/t Au from 87.00 m

M2

  • 17CUD2080, 0.16 m (true width) at 6.41 g/t Au from 40.70 m
  • 17CUD2084, 0.45 m (true width) at 5.52 g/t Au from 55.42

Aminus

  • 17CUD2079, 0.06 m (true width) at 23.08 g/t Au from 136.7 m
  • 17CUD2080, 0.16 m (true width) at 15.67 g/t Au from 88.00 m
  • 17CUD2082, 0.57 m (true width) at 23.38 g/t Au from 96.46 m
  • 17CUD2083, 0.29 m (true width) at 52.54 g/t Au from 120.49 m

Challenger West

  • 17CUD2082, 0.79 m (true width) at 6.83 g/t Au from 138.00 m.

In the Tarcoola region drilling has commenced at the Warrigal prospect, a high-priority exploration area close to the Tarcoola gold mine (ASX release 21 June 2017). The drilling program, originally scheduled for the third quarter, has been brought forward with the timely availability of a drill rig.

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Ministerial news releases

Certainty for Whyalla as Arrium sale agreement signed

Premier Jay Weatherill
05 July 2017


Treasurer Tom Koutsantonis has welcomed the signing of a binding agreement to sell the Arrium companies, including the Whyalla operations, to London-based GFG Alliance (Liberty House). The sale is still subject to approval by the Arrium Committee of Creditors and the Foreign Investment Review Board, however the process is anticipated to be complete by August this year. GFG Alliance, led by Gupta Family Group Executive Chairman Sanjeev Gupta, submitted a modified offer last night after the exclusivity period granted to the South Korean consortium Newlake expired on Friday with no deal reached. Premier Jay Weatherill said the signing signalled the beginning of the end of the 15 months of uncertainty for Whyalla and heralded a new future for the state’s steel city.

Bornite named as South Australia's official state mineral emblem

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


Bornite, a distinctive purple and blue copper mineral, has been chosen as the official state mineral emblem. Known as peacock ore due to its iridescent colouring, bornite has a strong historic connection with the development of South Australia’s mineral resources industry.

Selection of South Korean consortium as preferred Arrium bidder welcomed

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


The state government welcomes the administrator’s decision to select NewLake as the preferred bidder of the Arrium business. The two short-listed bidders were both high-quality, proven candidates. The state government will now begin detailed negotiations with the administrator, federal government, workers, unions and the South Korean consortium to support the final sale of the business.

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.

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