Sunday 20th May 2018

Resource Clips


Posts tagged ‘BHP Billiton Ltd (BHP)’

Emulating success

May 2nd, 2018

Margaret Lake follows Kennady’s playbook in the quest for NWT diamonds

by Greg Klein

With fresh financing and a rig en route, Margaret Lake Diamonds TSXV:DIA has drilling about to begin on its namesake project in the Northwest Territories. As with any outfit in similar circumstances, the company’s optimism has been buoyed by the performance of an illustrious neighbour, in this case Kennady Diamonds. But more objective encouragement comes from the extensive geophysics that determined the targets for Margaret Lake’s maiden drill program. Additionally, the project operator will be the same group that helped deliver success to Kennady.

“Aurora Geosciences acts as project operator for us and also for Kennady,” points out Margaret Lake president/CEO Paul Brockington. “So we’re using the same people who have done all the Kennady work for the last six years.”

Margaret Lake follows Kennady’s playbook in the quest for NWT diamonds

Public tribute came to Yellowknife-based Aurora at Mines & Money London 2016, when Kennady co-won (with NexGen Energy TSX:NXE) the Exploration Company of the Year award. Noting that Aurora had designed and carried out all of the property’s exploration since 2012, Kennady president/CEO Rory Moore said, “Gary Vivian, [then president, now chairperson of Aurora], and Chris Hrkac, [Aurora’s] senior project manager for the Kennady North project, together with their team deserve the lion’s share of credit for the successes that Kennady has enjoyed to date. Their innovative, systematic and dedicated approach to a technically challenging project has resulted in new and unique discoveries, and earned Aurora the respect of its peers in the industry.”

A further testament to their work came just last month as Mountain Province Diamonds TSX:MPVD closed its acquisition of Kennady in an all-share deal valued at $176 million. An MOU between Mountain Province and De Beers considers incorporating Kennady North into the joint venture that comprises their Gahcho Kué mine.

The 23,199-hectare Margaret Lake property sits about nine kilometres north of Gahcho Kué and two kilometres northwest of Kennady North’s Kelvin and Faraday deposits. The Gahcho Kué winter road passes through Margaret Lake.

Aurora’s participation in the project will be nothing new. The company ran the geophysics that brought Margaret Lake to the drill-ready stage and Aurora will return very shortly, this time with a rig. Financing will begin with a $495,000 first tranche that Margaret Lake closed last month, out of a private placement offered up to $2.2 million.

Results from airborne and ground EM, along with airborne gravity/gradiometry pioneered by BHP Billiton NYSE:BHP, show six initial targets. Each features either a gravity low, a bedrock conductor or both, possibly indicating kimberlite. “Our first objective is to see if these targets represent kimberlite and, if they do, the objective then would be to get sufficient kimberlite to analyze it for microdiamonds and indicator minerals,” Brockington explains. “We’ll try to drill as much as we can before spring break-up.”

But while encouraged by his successful neighbour, he’s not basking in reflected glory. Margaret Lake is “a science project,” Brockington emphasizes. “We’re very much relying on these gravity/EM anomalies to help us deliver the goods.”

It’s very clear that when De Beers was there they did not recognize all the kimberlite. They were drilling mag targets but we went in and did ground gravity and EM, and we can see other targets that very strongly suggest more kimberlite.—Paul Brockington, president/CEO
of Margaret Lake Diamonds

Farther north, in the Lac de Gras field hosting the NWT’s Ekati and Diavik diamond mines, Margaret Lake also has work planned for Diagras, where the company holds a 60% stake in a JV with 40% partner Arctic Star Exploration TSXV:ADD. This property hosts 13 kimberlites found by De Beers in the 1990s. Brockington thinks there’s more to be found.

“It’s very clear that when De Beers was there they did not recognize all the kimberlite,” he says. “They were drilling mag targets but we went in and did ground gravity and EM, and we can see other targets that very strongly suggest more kimberlite. We’re definitely going to do more geophysics there in the next few weeks. We hope to get a ground program going to look at other areas that weren’t covered in last year’s program and I think we’ll have a number of drill targets.”

The winter road to Diavik passes through the northwest corner of the 18,699-hectare property.

Looking forward to a busy and prospective period, Brockington says, “We’ve got a lot coming up and, when you look at the activity in the diamond patch, I think we’ve got about as much as anyone.”

Copper crusader

December 29th, 2017

Gianni Kovacevic sees even greater price potential for the conductive commodity

by Greg Klein

Evangelist he may be, but Gianni Kovacevic’s hardly a voice crying in the wilderness. His favourite metal displayed stellar performance last year, reaching more peaks than valleys as it climbed from about $2.50 to nearly $3.30 a pound. But Kovacevic believes copper has a long way to go yet. That will be a function of necessity as the metal shows “the strongest demand growth of any of the major commodities.” Especially persuasive in his optimism, Kovacevic brings his message to the 2018 Vancouver Resource Investment Conference on January 21 and 22.

Gianni Kovacevic sees even greater price potential for the conductive commodity

Increasing copper demand will unlock
lower-grade resources, says Kovacevic.

As a researcher, commentator and investor who’s also the CEO/chairperson of CopperBank Resources CSE:CBK, co-founder of CO2 Master Solutions Partnership and author of My Electrician Drives a Porsche, he brings new approaches that link topics of energy demand, commodity supply and environmental stewardship.

Kovacevic sees a new paradigm driving copper’s future. “The invisible hand in commodities during the last cycle was China,” he says. “Its economic growth just came out of nowhere. This time the invisible hand is this pervasive use of copper in everything that’s electrified. That means even the smallest village in Africa, which per capita has negligible copper consumption, is becoming a line item. When you create, transfer and utilize greener and cleaner energy, it takes more copper by a power of magnitude. For example to establish a megawatt of windpower it takes five times more copper than it does a megawatt of conventional thermal-generated energy.”

Then there’s the battery-powered revolution and the attention it’s brought to lithium, cobalt and graphite. Saying “I like anything in electric metals,” Kovacevic stresses the importance of nickel as well. Still, “copper wins because the interconnectivity will always be copper and copper plays a role in each battery as well.”

That leads to a supply problem that can have only one solution. “I believe we’re going to have to make uneconomic deposits economic. And there’s only one way to do that—with a higher copper price.”

With no foreseeable hope of a copper mining “renaissance” comparable to the effect that fracking brought to oil and gas, the metal will simply require more money. “We’ve got the old legacy mines,” Kovacevic points out. “We’ve spent a lot of money on exploration in the last cycle and didn’t find a lot. What we do have is lower-grade resources. They are simply not economic at a low copper price.”

Gianni Kovacevic sees even greater price potential for the conductive commodity

Kovacevic: Electrical generation, storage and
connectivity put copper at the top of energy metals.

Apart from diminishing grades, the business of putting new mines into operation is “taking longer with water, electricity and permitting issues, and it’s getting into funkier places,” he continues. “The Elliott Wave [technical/fundamental analysis] on copper is $7.50 a pound. I find that very interesting. All the buy-out action in the copper space happened for the most part between 2006 and 2012. The mean price for copper during that time was about $3.50 a pound. The all-time high was about $4.50 for a short while, but the mean was $3.50.”

Copper’s 2017 performance makes that figure look viable again. Kovacevic, however, cites analysis from BHP Billiton NYSE:BHP stating that 75% of future projects will require more than $3.50. “Could we see a scenario in which the copper price goes past the old all-time high and stays there for a while? And will the buy-outs in the next wave, if they occur, be higher on average than those in the previous 2006-to-2012 cycle? I believe the answer will be yes. But if you look at the average grade that went through the top 15 copper producers’ mills in 2010, it was 1.2% copper. In 2016 it was 0.72% copper. So if you were mining 30 million tonnes a year, now you have to mine 40 or 45 million tonnes for the same metal yield. And without higher copper prices, that doesn’t make much of a business case.

“So the first question is, are we going to need more copper in the next five, 10, 15 years? The answer in my opinion is yes. In fact it has the strongest demand growth of any of the major commodities. And where will that copper come from? Well, it’s going to come from a mix of places but we’ll have to make these projects economic. That should bode well for people who have invested in the copper junior space.”

Addressing the topic of how investors might look at the energy revolution in 2018 and beyond, Kovacevic speaks at the 2018 Vancouver Resource Investment Conference, to be held at the Vancouver Convention Centre West from January 21 to 22. Click here for more details and free registration.

Visual Capitalist: Nickel, secret driver of the battery revolution

October 30th, 2017

by Jeff Desjardins | posted with permission of Visual Capitalist | October 30, 2017

Nickel, the secret driver of the battery revolution

 

Commodity markets are being turned upside down by the EV revolution.

But while lithium and cobalt deservedly get a lot of the press, there is another metal that will also be changed forever by increasing penetration rates of EVs in the automobile market: nickel.

This infographic comes to us from North American Nickel TSXV:NAN and it dives into nickel’s rapidly increasing role in lithium-ion battery chemistries, as well as interesting developments on the supply end of the spectrum.

Nickel’s vital role

Our cells should be called nickel-graphite, because primarily the cathode is nickel and the anode side is graphite with silicon oxide.—Elon Musk,
Tesla CEO and co-founder

Nickel’s role in lithium-ion batteries may be under-appreciated for now, but certainly one person familiar with the situation has been vocal about the metal’s importance.

Indeed, nickel is the most important metal by mass in the lithium-ion battery cathodes used by EV manufacturers—it makes up about 80% of an NCA cathode and about one-third of NMC or LMO-NMC cathodes. More importantly, as battery formulations evolve, it’s expected that we’ll use more nickel, not less.

According to UBS, in its recent report on tearing down a Chevy Bolt, here is how NMC cathodes are expected to evolve:

Cathode Year Nickel Manganese Cobalt
NMC Present 33% 33% 33%
NMC 2018 60% 20% 20%
NMC 2020 80% 10% 10%

The end result? In time, nickel will make up 80% of the mass in both NCA and NMC cathodes, used by companies like Tesla and Chevrolet.

Impact on the nickel market

Nickel, which is primarily used for the production of stainless steel, is already one of the world’s most important metal markets, at over $20 billion in size. For this reason, how much the nickel market is affected by battery demand depends largely on EV penetration.

A shift of just 10% of the global car fleet to EVs would create demand for 400,000 tonnes of nickel, in a two-million-tonne market. Glencore sees nickel shortage as EV demand burgeons.—Ivan Glasenberg,
Glencore CEO

EVs currently constitute about 1% of auto demand—this translates to 70,000 tonnes of nickel demand, about 3% of the total market. However, as EV penetration goes up, nickel demand increases rapidly as well.

The supply kicker

Even though much more nickel will be needed for lithium-ion batteries, there is an interesting wrinkle in that equation: most nickel in the global supply chain is not actually suited for battery production.

Today’s nickel supply comes from two very different types of deposits:

  • Nickel laterites: Low-grade, bulk-tonnage deposits that make up 62.4% of current production

  • Nickel sulphides: Higher-grade, but rarer deposits that make up 37.5% of current production

Many laterite deposits are used to produce nickel pig iron and ferronickel, which are cheap inputs to make Chinese stainless steel. Meanwhile, nickel sulphide deposits are used to make nickel metal as well as nickel sulphate. The latter salt, nickel sulphate, is what’s used primarily for electroplating and lithium-ion cathode material, and less than 10% of nickel supply is in sulphate form.

Although the capacity to produce nickel sulphate is expanding rapidly, we cannot yet identify enough nickel sulphate capacity to feed the projected battery forecasts.—Wood Mackenzie

Not surprisingly, major mining companies see this as an opportunity. In August 2017, mining giant BHP Billiton NYSE:BHP announced it would invest $43.2 million to build the world’s biggest nickel sulphate plant in Australia.

But even investments like this may not be enough to capture rising demand for nickel sulphate.

Although the capacity to produce nickel sulphate is expanding rapidly, we cannot yet identify enough nickel sulphate capacity to feed the projected battery forecasts.

Posted with permission of Visual Capitalist.

Finland’s Arctic welcome

August 2nd, 2017

Arctic Star finds the Scandinavian north an hospitable place for diamond exploration

by Isabel Belger

Update: On November 21, 2017, the company announced Scott Eldridge’s appointment as president/CEO, while Patrick Power became executive chairperson.

Isabel Belger

Isabel Belger

Isabel: I would like to introduce the CEO and president of Arctic Star Exploration TSXV:ADD, Patrick Power. Hi Patrick, it is a pleasure to talk to you again.

To give the readers a chance to get to know you a bit, would you be so kind as to tell more about your background and your experiences in the mineral exploration business?

Patrick: I started in the business as a floor trader in 1984. I did that until 1990. In that period I met someone who became soon very prolific in the diamond world, Chuck Fipke. He found the Ekati mine, the first diamond mine in Canada and he got my interest up in diamonds and the exploration for diamonds. When I finished with the floor in 1990, I joined up with a company called Kelco Resources and I became a director there. That is how I got involved with the diamond world in Canada. Subsequent to that, I worked with a company called Montello Resources, and became the president and CEO. We did a lot of diamond exploration with that company from 1993 to 2000, primarily in Alberta.

We found the Legend field in Alberta with our venture partner Canaccord Canada, which is a Rio Tinto company. We didn’t have the numbers in the pipes that we wanted to. So my partner Tom Yingling and I started our own company called Arctic Star Exploration. We started with a diamond project in Manitoba with Rio Tinto. It kicked off with that project. We never did intersect in kimberlites. Shortly after that, we managed to encourage Buddy Doyle to leave Rio Tinto and he joined us on the Arctic Star board. That happened in 1996. Buddy Doyle brought over a project with him that we called Credit Lake. We spent about $25 million on Credit Lake over a period of seven to 10 years I believe. It was a long time. It just ended recently.

Isabel: Interesting! That tells already a bit of the history of Arctic Star itself. Congratulations on the news on a new member of the board and your new project in Finland. What made the connection to Finland?

Arctic Star finds the Scandinavian north an hospitable place for diamond exploration

Patrick: Thank you, we are very excited and happy about both. It was about 2006 when Buddy Doyle looked at this project we just took into the company. We made an offer for a percentage of it. But they wanted €12.5 million for 25% of it, which we didn’t have the ability to do back then. Then 2008 came and everything became really difficult for all resource companies, specifically for diamond companies. It became very, very difficult.

Roy Spencer, who you could call the father of the Cinnamon project, found the Grip pipe, 450 kilometres east in Russia as the president of Arctic Angel in 1996. That turned out to be a mine, which started producing about two years ago. But as usual in Russia, he got kicked out before it became productive. He traced chemistry trails to the Finnish border and all those trails originated in Finland somewhere.

Isabel: What makes you so excited about this project?

Patrick: No exploration was done there in historical terms. You cannot tell the quality of the diamonds from the chemistry, but usually you can tell the amount of diamonds. All that chemistry was flooding in over 80 kilometres with no answers as to the sources. In 2007, Roy drilled first in this new field. The important part of this is that fields usually have a minimum of 30 and a high of 300 pipes. The upside potential is that it is the first pipe in a new field and that is extremely important because it has good chemistry. It is a great jurisdiction, Finland. A couple of years ago, the Fraser Institute made Finland the number one mining jurisdiction in the world. Mining and exploration friendly!

Infrastructure-wise, the Black and White Wolf, which were the two first pipes discovered—they might actually be one, because they are only 48 metres apart, we will know more about this after further geophysics being done—are only two miles away from a bus stop. Compared to Canada this is amazing infrastructure and that translates right into that you would need far less grade to become a mine. You can have a lot less compared to the north of Canada in order to be still productive. That is a big point! Also it is a very stable country since it is rated a great jurisdiction to be in. We have got Roy on the board now, the man who found this particular discovery when he was with a different company. Another interesting fact: Roy was Buddy Doyle’s first boss at Rio Tinto. They were in the outback of Australia together for two years looking for diamonds. That was more than 30 years ago. And now they are reunited. So the team is back together again. This is one of the prime reasons we got this project because of this relationship between Buddy and Roy; Roy wanted Buddy to lead the project.

Isabel: What is the plan of the re-united team now?

The project offers everything if you are looking for diamonds. Great jurisdiction, great infrastructure, it is a new field, and it has got history in the same craton with productive mines in Russia.—Patrick Power

Patrick: We are going to get out there. We will go back to the Black and the White Wolf, the two pipes that he found in 2006/2007. We will do some geophysics on top of it that wasn’t done 10 years ago. We want to see if they join, get bigger, have multiple phases, do some more drilling, etc. With those two pipes, or maybe it is one, we can potentially make a mine. So there is work to do on the first two pipes of a new field. We expect to find a lot more pipes and that is exciting because the chemistry going into them is dynamic. The project offers everything if you are looking for diamonds. Great jurisdiction, great infrastructure, it is a new field, and it has got history in the same craton with productive mines in Russia.

Isabel: Let me interrupt you for a moment. Could you explain what a craton is?

Patrick: Sure. A craton is a thick, old chunk of continental plate where diamonds form. Kimberlite pipes are created when magma bubbles up through a craton, expanding and cooling on its way up.

I am really glad that we have got all that exceptional expertise within Arctic Star…. Roy was part of the team that found Orapa, the second-largest producing mine in the world that is in Botswana. So we have got lots of positive diamond experience with the two guys, plus they work together and like each other. Their records speak for themselves. They are probably the two most awesome diamond guys with that combined experience and mine-finding ability. They are pretty amazing. We’ve got the best people in the world.

Isabel: Yes, it sounds like it! So the next step is to do more work on your new project. Will you drill, and how deep will you have to drill?

Patrick: The two pipes are very close to the surface, so it is not that deep at all. We have two phases of two programs here. The first program will be carried out on Black and White Wolf, the two existing kimberlites. We will do geophysics on the ground, to determine whether they get larger, whether they come together and whether they have multiple phases. We will also put more drill holes into it to get more samples to get a better diamond count. Buddy thinks we need about 1,000 kilograms before he can make a judgement if we go ahead with it or if we drop it, so we only have a very small amount of material so far. We will take a lot more tonnage out of these drill holes.

Arctic Star finds the Scandinavian north an hospitable place for diamond exploration

Arctic Star VP of exploration Buddy Doyle collecting
float samples at the Timantti project in Finland.

And then out of a bigger concept, we have 250 hectares of mineral claim permitted; 140,000 square kilometres around it. So on that bigger puzzle we could encompass the entire field. We are going to fly EM and mag first and then we want to fly a gravity survey, which is quite expensive. It costs probably about three to four million dollars to get the gravity survey done, but it will be a tool that will be very useful. It has not been used that much in the diamond world; it is only a few years old. Gravity is a very difficult thing to produce on the ground. There are a lot of factors involved with that. This new tool that was developed by the U.S. military was re-developed into a commercial application by BHP and has been on the market for just a few years. Very expensive!

So that is what we plan to do on the big package, not just the claims we acquired, but the much bigger exploration permits that we are in the process of acquiring from the government. We think that this would give us the entire field picture. We will be able to prospect for the pipes in that field. That will be a big thing! We think there are a lot of pipes in this area. If the chemistry is good, it is suggested to have a lot of diamonds. But I repeat to state that it doesn’t tell you the quality of diamonds, but the quantity of diamonds.

Isabel: What is the time frame for that? This is not going to happen this year, is it?

Patrick: The only thing that is restricting us up there is the darkness. The latitude is pretty high, but it is not as cold as in northern Canada. So there is no temperature issue and again the infrastructure is great. It is just within the dark months that we can’t really do much.

Isabel: What is going on at your Cap property in northeast B.C.?

Patrick: In 2008 we diversified a bit from diamonds. We picked up a project from Zimtu [TSXV:ZC]. It is Jody Dahrouge [of Dahrouge Geological Consulting] who has been doing all the work on it for us. We spent only about $1 million developing a really nice niobium and rare earth target. It is probably in carbonatite; we are drill-testing as we speak. It has really good niobium numbers on surface and it is prospective. We decided with a million dollars into it, we need to drill it right now and we are crossing our fingers. It could be something really interesting. If we are successful, we are probably going to spin it out into a new company. We don’t want to mix niobium and diamonds. It will benefit the shareholders with a new share in a new company and we will staff it with people that know a lot about niobium.

Isabel: That sounds like a good plan! How much money do you have in the bank?

Patrick: We are planning to finance soon.

Isabel: How much of Arctic Star is held by the management?

Patrick: That sums up to be 25% by now.

Isabel: What do you like about the mineral exploration business?

Patrick: It is a difficult business, but it can be explosive on the upside. That is the thrill I like about it, which makes the difficult part worthwhile.

Isabel: What is your favourite commodity and why?

Patrick: Definitely diamonds! The reason for that is because it is so hard to find an economic deposit. It is very challenging.

Isabel: Good luck with the ongoing drilling in B.C. and with the new project in Finland. Thank you so much for your time and your insights. It is always a pleasure to talk to you.

Patrick: Thanks for having me, Isabel.

Patrick Power

Patrick Power, president/CEO
of Arctic Star Exploration

Bio

Patrick Power is a seasoned venture capitalist and financier with over 20 years of experience as a stock market professional and as director of public companies. He has been president and CEO of Arctic Star since its inception in 2002. Additionally, Mr. Power serves as a director of other mineral exploration companies. Arctic Star benefits from Mr. Power’s wealth of experience as a shrewd dealmaker, an adept financier and a tireless, results-driven leader of dynamic public companies. The company enjoys Mr. Power’s large network of contacts within the industry, his enthusiasm and his efforts as a member of the audit and remuneration panels.

Fun facts

My hobbies: Travelling and horse racing

Sources of news I use: Internet

My favourite airport: London Heathrow

My favourite tradeshow: PDAC in Toronto

My favourite commodity: Diamonds

With this person, I would like to have dinner: My wife

If I could have a superpower, it would be: Power for peace

Read more about Arctic Star Exploration here and here.

Robert Friedland’s favourites

July 28th, 2017

Unprecedented demand calls for unparalleled grades, the industry legend says

by Greg Klein

For all that’s being said about lithium and cobalt, Robert Friedland argues that the energy revolution also depends on copper and platinum group elements. Of course he has a stake in them himself, with Kamoa-Kakula and Platreef among his current enthusiasms. Still, whether motivated by self-interest or not, the mining titan whom Rick Rule calls “serially successful” presented a compelling case for his favourite metals at the Sprott Natural Resource Symposium in Vancouver on July 25.

We’re living in “an era of unprecedented change,” said Ivanhoe Mines’ TSX:IVN founding chairperson. China’s the main cause. That country’s “breeding mega-cities prodigiously.” But one result is “incredibly toxic air… with a whole suite of health effects” from heart attacks to stroke, asthma to Alzheimer’s.

Unprecedented demand calls for unparalleled grades, the industry legend says

A crew operates jumbo rigs to bring
Ivanhoe’s Platreef mine into PGM production.

China’s not alone. Friedland pegs current global population growth at 83 million a year, with a projected 8.5 billion people populating the planet by 2030. Five billion will inhabit urban areas. Forecasts for 2050 show 6.3 billion city-dwellers. But China, notorious for its poisoned atmosphere, “is on an air pollution jihad.” It’s an all-out effort to turn back the “airpocalypse” and, with a command economy, a goal that shall be achieved.

The main target will be the internal combustion engine, responsible for about 60% of urban air pollution, Friedland said. China now manufactures 19 million cars annually, he adds. The country plans to increase output to 60 million, a goal obviously contrary to the war on pollution unless it emphasizes electric vehicles.

Like others, Friedland sees massive disruption as the economics of EVs overtake those of internal combustion engines, a scenario he expects by 2022 or 2023.

Demand for lithium-ion batteries (comprising 4% lithium, 80% nickel sulphate and 15% cobalt) has sent cobalt prices soaring. But bigger EVs will likely rely on hydrogen fuel cells, he pointed out. They’re already used in electric SUVs, pickup trucks, double-decker buses in London, trains in Germany and China, and, expected imminently, autonomous air taxis in Dubai.

Hydrogen fuel cells need PGMs. If only one-tenth of China’s planned EV output used the technology, demand would call for the world’s entire platinum supply, Friedland said.

“I would rather own platinum than gold,” he declared. Additionally, “there’s no platinum central reserve bank to puke out platinum.”

Ivanhoe just happens to have PGMs, about 42 million ounces indicated and 52.8 million ounces inferred, at its 64%-held Platreef project in South Africa.

Unprecedented demand calls for unparalleled grades, the industry legend says

Underground development progresses at the Kansoko mine,
part of the Kamoa copper deposit and adjacent to Kakula.

Electricity for the grid also ranks high among China’s airpocalyptic priorities. A study produced for the United Nations Environment Programme credits the country with a 17% increase in renewable electricity investment last year, most of it going to wind and solar. Almost $103 billion, China’s renewables investment comes to 36% of the world total.

Just as EVs remain more copper-dependent than internal combustion, wind and solar call for much more of the conductive commodity than do other types of electricity generation. Friedland sees additional disruptive demand in easily cleaned copper surfaces now increasingly used in hospitals, care homes, cruise ships and other places where infectious diseases might lurk.

He sees a modest copper supply deficit now, with a crisis possibly starting as soon as 2019. The world needs a new generation of copper mines, he said, repeating his unkind comparison of today’s low-grade, depleting mines to “little old ladies waiting to die.” The world’s largest producer, the BHP Billiton NYSE:BHP/Rio Tinto NYSE:RIO Escondida mine in Chile, is down to a 0.52% grade.

Copper recently hit a two-year high of about $6,400 a tonne. But, citing Bernstein data, Friedland said new mines would require a $12,000 price.

Not Kamoa-Kakula, though. He proudly noted that, with an indicated resource grading 6.09%, it hosts “the richest conceivable copper deposit on this planet.”

I’ve never been as bullish in my 35 years on a project.—Robert Friedland

A JV with Ivanhoe and Zjin Mining Group each holding 39.6% and the DRC 20%, Kamoa-Kakula inspires “a plethora of superlatives.” The veteran of Voisey’s Bay and Oyu Tolgoi added, “I’ve never been as bullish in my 35 years on a project.”

The zillionaire likes zinc too, which his company also has in the DRC at the 68%-held Kipushi project. With a measured and indicated grade of 34.89%, the Big Zinc zone more than doubles the world’s next-highest-grade zinc project, according to Ivanhoe. There’s copper too, with three other zones averaging an M&I grade of 4.01%.

“Everything good in the Congo starts with a ‘K’,” he said enthusiastically.

But recklessly, in light of the DRC’s controversial Kabila family. In June Ivanhoe was hit by reports that the company has done deals with businesses held by the president’s brother, Zoe Kabila, although no allegations were made of wrongdoing.

The family has run the country, one of Africa’s poorest, since 1997. Current president Joseph Kabila has been ruling unconstitutionally since November, a cause of sometimes violent protest that threatens to further destabilize the DRC.

As the New York Times reported earlier this month:

An implosion of the Democratic Republic of Congo, a country almost the size of western Europe, could spill into and involve some of the nine countries it borders. In the late 1990s, neighbouring countries were sucked into what became known as the Great War of Africa, which resulted in several million deaths.

Friedland’s nearly hour-long address made no mention of jurisdictional risk. But the audience of hundreds, presumably most of them retail investors, responded warmly to the serial success story. He’s the one who, after Ivanhoe languished at five-year lows in early 2016, propelled the stock more than 300% over the last 12 months.

Diamond anniversary

November 4th, 2016

After 25 years, the Ekati discovery still rocks the NWT, mining and the world of diamonds

by Greg Klein

This is the first of a two-part feature. See Part 2.

“You know, there’s something fishy going on around Lac de Gras.”

Tom Hoefer remembers hearing that from a local mining guy who dropped by his Yellowknife office one autumn day in 1991. “At the time nobody really cared about Lac de Gras because that was granite country,” Hoefer explains. But a visit to the mining recorder’s office showed someone staked “a huge block of ground, abnormally large. Doubly suspicious, I think it was registered to Norm’s Manufacturing or Norm’s Mattress Company or something. It was so bizarre. Someone was hiding something.”

After 25 years, the Ekati discovery still rocks the NWT, mining and the world of diamonds

Hoefer’s friend offered an explanation. “The only thing I think this could be for is diamonds.” He had previous experience with Monopros, De Beers’ Canadian exploration company. He was also an habitué of the Miner’s Mess, a YK cafe where industry rumours circulated as thickly as the cigarette smoke.

The buzz was confirmed on a date variously given as November 6 or 7, 1991. That’s when the secretive Chuck Fipke stopped pretending to be a gold explorer and faxed a Dia Met news release reporting Northwest Territories diamond recovery, some of it gem quality. It was the first significant find in Canadian history.

“Of course it just went crazy,” recounts Hoefer, now executive director of the NWT and Nunavut Chamber of Mines. “We saw the entire Slave province staked in around two years.”

That may well be the biggest staking rush the world’s seen. As crews fanned out across northern and not-so-northern Canada, suppliers couldn’t provide claim posts fast enough. Helicopters couldn’t keep up with demand. Work continued through the winter, despite hostile weather, despite darkness that restricted flying time to six hours or less.

“It just kept getting bigger and bigger,” Hoefer says. But for many people it couldn’t have happened at a better time.

“The junior exploration sector was just about dead,” he recalls. “I think the juniors saw the news as a life preserver. Whether it was real or not, something was going on and they wanted to grab onto it. I think people scraped money from wherever they could, whether they mortgaged houses or borrowed, just to get into this play. They were on their last legs anyway—if you’re going to go down, you might as well go down in flames.”

Competition was all but cutthroat, as recounted in books like Treasure Under the Tundra by L.D. Cross and Matthew Hart’s Diamond: The History of a Cold-Blooded Love Affair. Readers learn of stakers wearing camouflage clothing to evade detection by rivals, of efforts to foil geophysical espionage from enemy aircraft, and of a diplomatic incident provoked by Thor, Diavik-discoverer Eira Thomas’ supposed bodyguard, said to be 50% dog, 50% wolf and 100% chickenshit.

After 25 years, the Ekati discovery still rocks the NWT, mining and the world of diamonds

Ekati co-discoverers Chuck Fipke and
(inset) Stewart Blusson. (Photos: BHP)

Staking wasn’t all that went crazy. Once a penny stock, Dia Met passed $8 less than three months after the announcement, according to Hart. In other examples, he noted that pre-discovery Aber Resources shot from 25 cents to $1.35, and later to $2.34. An ex-Dia Met employee started SouthernEra Resources at a penny a share. Within months the company hit $1.90. Speculative fever eventually cooled off but, as Aber approached discovery at Diavik in late 1994, its shares shot from $4 to $6 in one day.

Ekati and Diavik, of course, went on to become NWT diamond mines, joined later by De Beers’ Snap Lake. But as the territory’s other mines closed due to depletion or commodity prices, and Snap shut due to technical challenges, Gahcho Kué began operations. That continues Lac de Gras’ status as the world’s third-largest supplier of diamonds by value.

Fipke and Ekati co-discoverer Stewart Blusson succeeded where De Beers had thus far failed. They also helped bring down the giant’s near-monopoly. Dia Met partner BHP, like Aber partner Rio Tinto, couldn’t be intimidated by De Beers, then a company with a reputation for muscling in on much smaller diamond hopefuls. Lac de Gras hastened a process that began when a Rio predecessor started mining diamonds at Western Australia’s Argyle in the early 1980s. De Beers went from controlling about 80% of global rough in the early 1990s to 34% in 2015.

Hart suggested an additional factor to the giant’s decline. The rush “happened in Canada, where the mineral exploration scene is dominated by a host of small, unruly companies, called ‘juniors’…. The idea of yoking such a promoter-driven and combative group to some larger purpose, such as commodity price control, would be laughable.”

Lac de Gras also helped restore confidence in the ethical standards of gems. Holding among the world’s highest environmental and corporate social responsibility standards, Canada guaranteed consumers a source of conflict-free stones. Canadians played a strong role in launching the Kimberley Process, an organization that guards the global diamond market from illicit supply, Hoefer says.

Here at home, diamond miners emphasize community engagement, community responsibility and community benefits, he adds. Lac de Gras mines constitute the NWT’s largest private sector employer, creating 29% of the territory’s GDP. Indirect benefits bring that up to about 40%, according to the Chamber’s data.

“If you look back at where we’ve come from and what we’ve achieved, it really is a cause to celebrate,” he emphasizes. “Now we’re looking forward to the next 25 years. It doesn’t come without challenges, so we have to ask what we can do to have another strong 25 years.”

This is the first of a two-part feature. See Part 2.

Equitas Resources appoints advisers for its new Brazil gold producer

May 2nd, 2016

by Greg Klein | May 2, 2016

Days after acquiring a Brazilian gold operation, Equitas Resources TSXV:EQT announced a new advisory board to help develop the project further. Last week the company announced its takeover of Alta Floresta Gold and a large portfolio including a modest gold operation. The Cajueiro project’s Baldo zone produces approximately one kilogram of gold a month, an amount Equitas hopes to improve through greater recovery.

Equitas Resources appoints advisers for its new Brazil gold producer

A sample from the Cajueiro operation offers
evidence of additional near-surface gold potential.

Michael Bennett and Jon Coates comprise the new advisory board.

Bennett has spent 23 of his 30-year geologist career in South America, where he’s credited with three gold discoveries, Cajueiro and Coringa in Brazil, as well as Puquio North in Bolivia. A Brazilian resident who speaks Portuguese and Spanish, Bennett also serves as general manager for Brazil Manganese and a director and officer of Equitas subsidiary Alta Floresta Gold Mineracao.

Coates’ 36-year career encompasses mining geology and business development on five continents. He spent much of that time with BHP Billiton NYSE:BHP, where he held positions including regional manager Latin America, VP of business development China and chief geoscientist, exploration. Until recently he acted as executive geoscience adviser for the Saudi Arabian mining company Ma’aden.

In addition, Equitas announced filing an updated 43-101 technical report that recalculates data from a 2013 resource estimate, providing new numbers for four zones of sulphides and oxides. Sulphides now total 214,100 gold ounces indicated and 203,500 ounces inferred. Oxides total 78,400 ounces inferred.

An upcoming program of drilling, bulk sampling and trenching will seek additional oxide resources at Baldo.

Sulphides for Cajueiro’s four zones show:

Crente zone

  • indicated: 8.64 million tonnes averaging 0.771 g/t for 214,100 gold ounces

  • inferred: 5.83 million tonnes averaging 0.628 g/t for 117,700 ounces

Baldo zone

  • inferred: 1.32 million tonnes averaging 0.777 g/t for 33,000 ounces

Matrincha zone

  • inferred: 1.6 million tonnes averaging 0.797 g/t for 40,900 ounces

Marines zone

  • inferred: 785,000 tonnes averaging 0.472 g/t for 11,900 ounces

Total sulphides

  • indicated: 8.64 million tonnes averaging 0.771 g/t for 214,100 gold ounces

  • inferred: 9.53 million tonnes averaging 0.664 g/t for 203,500 ounces

Oxides for the four zones show:

Crente zone

  • inferred: 381,000 tonnes averaging 1.482 g/t for 18,200 ounces

Baldo zone

  • inferred: 309,000 tonnes averaging 3.029 g/t for 30,100 ounces

Matrincha zone

  • inferred: 155,000 tonnes averaging 2.717 g/t for 13,500 ounces

Marines zone

  • inferred: 529,000 tonnes averaging 0.977 g/t for 16,600 ounces

Total oxides

  • inferred: 1.37 million tonnes averaging 1.775 g/t for 78,400 ounces

Equitas sees near-surface oxide expansion potential in all four zones, as well as exploration potential in five other anomalies.

Read more about Equitas Resources.

Pay as you go

April 28th, 2016

New gold producer Equitas Resources sees revenue for incremental expansion

New gold producer Equitas Resources sees revenue for incremental expansion

Equitas Resources meets Alta Floresta during due diligence in Brazil.

 

Negotiations with minority shareholders dragged out longer than expected but on April 27 Equitas Resources TSXV:EQT officially made the transition from Labrador nickel explorer to Brazil gold producer. On closing its acquisition of Alta Floresta Gold, Equitas now takes over a modest gold operation with the intention of increasing production—and cash flow—incrementally. Should all go to plan, that would bring a step-by-step payback for each new stage of the operation, as well as funding for further exploration.

That certainly contrasts with the traditional exploration model, with which investors can be quick to show impatience. Equitas experienced that first hand after just one season of drilling its Garland project, despite its compelling nickel-cobalt-copper story south of Voisey’s Bay.

New gold producer Equitas Resources sees revenue for incremental expansion

In operation since June, the Cajueiro project holds potential
for greater recovery, as well as expansion of near-surface oxides.

Looking for alternative financing, then-president/now-chairperson Kyler Hardy learned about Alta Floresta’s Cajueiro project through a friend in the company. Hardy not only liked its potential. He also recognized a good fit between the two companies’ teams.

Alta Floresta brings to Equitas its 100% interest in six gold properties with four production licences, part of a portfolio covering more than 184,410 hectares in Brazil’s central states of Mato Grosso and Para. The flagship Cajueiro project’s Baldo zone has been in operation since June, producing around a kilogram of gold a month. That amounts to recovery of only about 30% to 35%, achieved by running alluvium and saprolite through a sluice box.

Equitas hopes to see considerable improvement within months by installing a gravity plant, then about 85% recovery with carbon-in-leach processing that could begin early next year. Full open pit production would be a longer-term goal.

We expect the payback for each stage in less than a year, much less for the gravity plant. We’re derisking it that way, by building in stages.—Chris Harris, president/CEO
of Equitas Resources

The plan is to “develop the project in stages and each stage has to pay for itself,” explains new president/CEO Chris Harris. “We expect the payback for each stage in less than a year, much less for the gravity plant. We’re derisking it that way, by building in stages. That could also provide cash flow for a sustaining exploration program which we hope would then beget further development.”

Of course these are perilous times for Brazil, now undergoing serious recession, a wide-ranging corruption scandal and impeachment proceedings against President Dilma Rousseff. Compounding the problems are their effect on the Brazilian real, which contrasts with currently high gold prices. “But what that’s doing to our project is creating huge cost compression,” Harris says. “That benefits both capex and opex.” The company has already selected a nearly new gravity plant in the region for purchase. Its price has sunk to less than half of what he projected last year.

Exploration will focus on near-surface oxides, where Equitas sees the greatest potential for resource expansion and low-cost extraction.

Except for one property slightly north, the entire portfolio sits on the Juruena gold belt, which has historic estimates of seven to 10 million ounces of artisanal output. Straddling the border between Para and Mato Grosso states, the 39,053-hectare Cajueiro property’s near-term agenda could include bulk sampling and trenching, as well as diamond and rotary air blast drilling. Exploration will focus on near-surface oxides, where Equitas sees the greatest potential for resource expansion and low-cost extraction.

A just-filed 43-101 technical report recalculates data from a 2013 resource estimate to allow for different gold price and opex numbers. The new study bases a cutoff of 0.25 grams per tonne on a near-surface deposit that can be processed by cyanidation or gravity processing. The report provides separate numbers for four zones of sulphides and oxides.

Total sulphide zones:

  • indicated: 8.64 million tonnes averaging 0.771 g/t for 214,100 gold ounces

  • inferred: 9.53 million tonnes averaging 0.664 g/t for 203,500 ounces

Total oxide zones:

  • inferred: 1.37 million tonnes averaging 1.775 g/t for 78,400 ounces

All four zones show near-surface oxide expansion potential, Equitas states. Five other anomalies offer additional encouragement.

The project has road access to the city of Alta Floresta, 95 kilometres north. A hydro dam now under development should bring electricity within two years, if not sooner.

The arrangement combines talent from both companies. Harris casts a close eye on the accounts, having 30 years’ experience in energy, commodity trading and mining finance with companies like Ernst & Young, CIBC, Enron UK and BHP Billiton NYSE:BHP.

Hardy, through 16 years as a resource sector entrepreneur and executive, demonstrates a facility for operating remote, logistically complex exploration projects. Director Alan Carter, who also sits on the board of Eric Friedland’s Peregrine Diamonds TSX:PGD, brings 30 years’ exploration experience with the likes of Rio Tinto NYSE:RIO, BHP, and ECI Exploration and Mining, among others.

Equitas Resources closes acquisition of Brazilian gold operation

Cajueiro’s alluvial lure suggests
expansion potential to Equitas.

Co-director David Hodge also serves as president of Zimtu Capital TSXV:ZC, a project generator that supports several juniors with acquisitions and advisory services. VP of exploration Everett Makela began his career with Inco, eventually retiring as Vale’s (NYSE:VALE) principal geologist for North America. His international experience includes Brazil.

Mike Bennett, a local resident and director of Equitas subsidiary Alta Floresta Mineração, has spent 23 of his 30 exploration years in South America where he took part in three gold discoveries, Puquio North in Bolivia, as well as Coringa and Cajueiro in Brazil.

Also residing locally, Portuguese/English-fluent Richard Crew acts as operations consultant for Alta Floresta Mineração. His 30 years of experience includes positions as operations manager and COO for numerous companies worldwide. Another nearby resident, project manager and exploration geologist Elvis Alves knows the community as well as the minerology.

The deal has Equitas issuing 103.65 million shares to former Alta Floresta shareholders and 5.28 million options, exercisable at $0.15 for three years, to former Alta Floresta option holders. A 1.75% NSR applies to licences acquired two years ago from a former minority shareholder of Alta Floresta.‎

Earlier this month Equitas closed the final tranche of a private placement that totalled $1.5 million from 30 million units. Insiders bought 10.4 million units.

“We’ll be talking about implementing the gravity plant very shortly,” Harris says. “We’ll also be talking about starting our drilling plan, the drill results and possibly a revised 43-101. We’ll have a steady news flow.”

Another overwhelming election victory for the Saskatchewan Party

April 4th, 2016

by Greg Klein | April 4, 2016

Updated results:

  • Saskatchewan Party 51 seats, 62.63% of the popular vote
  • New Democratic Party 10 seats, 30.36%

Pollsters must be as happy as Saskatchewan Party supporters to see Brad Wall’s group win a predicted third consecutive landslide. The results might suggest a continued status quo for a province that’s held second place for two years in the Fraser Institute’s most important index of mining jurisdictions globally. Saskatchewan has stayed in the top six for the last five years.

Another overwhelming election victory for the Saskatchewan Party

Mining-friendly Saskatchewan once
again carried Brad Wall to victory.
Photo: Saskatchewan Party

The province’s Athabasca Basin region hosts the world’s highest uranium grades, while potash resources farther south also rank among the world’s most important. According to the Saskatchewan Party, the province’s mineral sales rose more than 90% from $4.4 billion in 2007 to an estimated $8.3 billion in 2015.

During the campaign, the party credited itself with promoting the province’s uranium to China and India. The latter country resumed imports last year after Ottawa lifted a previous ban on sales to that country.

Wall has said he’d support federal legislation that would allow foreign companies to hold a majority stake in Canadian uranium mines. But in 2010, his party successfully lobbied Ottawa to block BHP Billiton’s (NYSE:BHP) attempted takeover of Potash Corp of Saskatchewan TSX:POT.

Wall opposes resource revenue-sharing for natives, saying “that money belongs to everyone equally.” But the opposition NDP hasn’t supported such a policy either.

Meanwhile there’s speculation that the supposedly “arch-conservative” Wall might avoid new taxes by launching a post-election deficit budget for a province hit hard by the oil downturn. There are also rumours, according to the National Post, that he’s studying French.

Could that mean an enthusiasm for the French cuisine of Swift Current? An effort to incorporate existentialism into Saskatchewanian political discourse? Or, as the NP wonders, does Wall harbour federal ambitions?

Diversifying opportunity

January 15th, 2016

Equitas Resources looks to Brazil gold production as well as Labrador nickel exploration

“How do we add value in such a difficult resource market?” A problem vexing many ambitious explorers, for Equitas Resources TSXV:EQT “it kept coming back to cash flow, cash flow, cash flow,” says president Kyler Hardy. But another question followed: “How do we get that and not abandon our vision” of a Voisey’s Bay-type nickel discovery in Labrador?

The answer may lie in a small-scale gold producer with considerable expansion potential. Under a binding letter agreement announced January 15, Equitas would acquire Alta Floresta Gold, a privately traded British Columbia company with interests in six Brazilian gold properties, one already undergoing modest production. The parties see opportunity to ramp up output to complement an aggressive drill program 30 kilometres south of Voisey’s.

Equitas Resources looks to Brazil gold production as well as Labrador nickel exploration

The takeover target has an approximately 60% stake in Alta Floresta Gold Mineracao Ltd, which holds the six properties, five with production licences, covering over 184,410 hectares in western Brazil’s Mato Grosso state and Para state to the north. Straddling the border of both states is the 44,768-hectare flagship Cajueiro project.

Its Baldo zone now churns out about 100 gold ounces a month, Hardy says. Modest to be sure, but “you look at some of the legends of the business, they built massive companies off of small cash flows. Placer Dome was founded off a very similar project in Papua New Guinea.”

While not necessarily envisioning similar grandeur, the parties have a three-part plan for Cajueiro, where a 2013 resource estimate defined four zones as follows:

Crente zone, 0.5 grams per tonne cutoff

  • indicated: 4.53 million tonnes averaging 1.2 g/t for 168,000 gold-equivalent ounces

  • inferred: 3.02 million tonnes averaging 1 g/t for 100,300 ounces

Crente zone, 0.3 g/t cutoff

  • indicated: 7.4 million tonnes averaging 0.9 g/t for 203,000 ounces

  • inferred: 5.26 million tonnes averaging 0.8 g/t for 127,400 ounces

Baldo zone, 0.3 g/t cutoff

  • inferred: 1.41 million tonnes averaging 1.3 g/t for 61,100 ounces

Matrincha zone, 0.3 g/t cutoff

  • inferred: 1.56 million tonnes averaging 1.1 g/t for 52,900 ounces

Marines zone, 0.3 g/t cutoff

  • inferred: 1.17 million tonnes averaging 0.7 g/t for 27,200 ounces

All four zones have potential near-surface oxide expansion, Equitas stated, while five additional anomalies offer additional encouragement.

A three-phase plan for Cajueiro would begin with installing a small gravity plant to process Baldo’s saprolite mineralization. In production only since June, the alluvial operation currently languishes at about 35% recovery. Phase II would call for a carbon-in-leach plant between the Baldo and Crente zones, less than one kilometre apart. Initial metallurgical tests suggest gravity separation and cyanide leaching could push recovery above 85%. Phase III would use operating cash flow to ramp up Cajueiro into open pit production.

Hardy foresees a fast-paced timeline, with the CIL plant in place within six months and commissioning complete over another two months. The gear has already been sourced with “everything we need within 50 kilometres of us,” he says. The weak Brazilian real helps lighten costs.

Also on the agenda are 12 to 20 shallow drill holes for an updated resource. The 43-101 will also provide figures for production and costs. A PEA would follow within months.

Infrastructure’s good, Hardy points out, with road connections to nearby towns where staff live, rendering a camp unnecessary. The Juruena belt has a longstanding mining history and good community relations, he adds.

The deal would bring together a strong management team from both companies. Key Equitas figures would stay on—Hardy as chairperson, Zimtu Capital TSXC:ZC president Dave Hodge as director and Voisey’s veteran Everett Makela as VP of Exploration. Joining them would be president/CEO/director Chris Harris, with 29 years’ experience in mining finance, energy and commodities. New director Alan Carter’s 30-year career includes service with Rio Tinto NYE:RIO, BHP Billiton NYE:BHP and Peregrine Diamonds TSX:PGD. Technical adviser Michael Bennett’s CV shows 24 years’ experience in South America, where he’s credited with three gold discoveries.

While the new plan puts the Garland nickel project on hold pending revenue from Brazil, Equitas still has aggressive drilling in store for Labrador.

The share swap would leave Alta Floresta Gold as a wholly owned subsidiary of Equitas, with the latter being held approximately 50% by Alta’s former shareholders. Among other requirements, Equitas must raise $2.5 million. That could come at least partly through a private placement but possibly through a debenture or equipment financing as well, Hardy says. Prior to closing, Alta Floresta Gold “will use commercially reasonable efforts” to increase its stake in Alta Floresta Gold Mineracao from 60% to 100%.

The parties hope to sign a definitive agreement by January 31 and close by February 19 or soon afterwards.

“I’m excited,” enthuses Hardy. “It’s a cash-flow opportunity for the company and we’re gonna rock this.”