News

Today Yancoal Australia Ltd (“Yancoal”) anounced they have received confirmation from the Foreign Investment Review Board (“FIRB”) that the Commonwealth has no objection to Yancoal acquiring 100 percent of Coal & Allied Industries Limited (“Coal & Allied”) (“Transaction”), which owns an interest in the Hunter Valley Operations (“HVO”) mine and the Mount Thorley Warkworth (“MTW”) mines (together with associated assets), subject to compliance with existing governance conditions, which already apply to Yancoal’s current assets and standard tax conditions now applied to all FIRB approvals. Satisfaction of the FIRB condition precedent represents a critical milestone.
“Today’s FIRB approval is a positive step forward for Yancoal, its shareholders and the Hunter Valley, demonstrating the Australian Government’s support for continued investment into the local resources sector,” said Reinhold Schmidt, Chief Executive Officer. “Yancoal remains a key provider of employment, training and investment within New South Wales and we look forward to continuing to grow our operations.”
The Transaction remains subject to a number of further closing conditions, including Rio Tinto plc and Rio Tinto Limited shareholder approval and Yanzhou Coal Mining Company shareholder approval. The Transaction is expected to complete in the 3rd quarter of 2017

The acquisition of Cosmos from Glencore in 2015 is now paying dividends for Western Areas. Western Areas announced the results from the Cosmos Odysseus Pre‐feasibility Study, which demonstrates commercial viability of the Odysseus Project and the potential re‐start of nickel mining operations at Cosmos. With the successful completion of the PFS, the Western Areas Board has approved the Project to progress to the Definitive Feasibility Study stage.
The PFS base case findings indicate robust economic and nickel production metrics together with further significant upside opportunities, as well as a very low all‐in sustaining cash cost of operations.   The decision by the Board to commence a DFS underpins Western Areas’ strategy to develop a second operating region and thereby consolidate its position as a leading Australian nickel producer.  
Western Areas Managing Director Dan Lougher said that the PFS results demonstrate the healthy operational and financial characteristics of the Project.  
“The positive results from the PFS, combined with the recent drilling success achieved within 18 months of acquisition, demonstrate Western Areas’ ability to accelerate and deliver value from the Cosmos acquisition,” Mr Lougher said.
“Odysseus represents Western Areas’ next mining operation and the results presented today show that a significant nickel operation can be established for substantially less capital outlay than a stand‐alone greenfields development.”
“We are particularly pleased to have an operation that will have very low all‐in sustaining unit cost at US$2.77/lb, but also a project that does not require a significant capital investment over the next two years, which provides optionality and flexibility in development decisions.    Depending on market conditions, the Company also has the opportunity to complete early works where practicable and economic to do so.”
“We believe there are significant opportunities to drive further improvements in returns on this investment, including the potential for significant high grade resources below the existing deposit, as detailed in our announcement on 13 February 2017 of massive sulphide intersections of 5.3m at 15.2% nickel, including 3.4m at 22.0% nickel.    The assay from this intersection is the highest grade over a reasonable width ever recorded at Cosmos from 446,000 prior assays under different ownership.”
“Odysseus is a core growth asset for Western Areas with exciting upside potential and progressing this to DFS stage will ensure that Western Areas is ready to leverage an upswing in nickel prices.  Being a conventional underground nickel sulphide project, it is a great fit with our core skills and experience in hard rock underground mining and conventional nickel flotation at Forrestania,” Mr Lougher said.

What is happening to the iron ore price?
Fundamentals suggest, US$90 a tonne is a really good number and the iron ore producers have all suggested the $90 will not be supported for too long.
Supply continues to increase, particularly from Brazil and low cost sources and combined with higher production, and higher stocks at the ports, fundamentals all point down.
On the other hand, China's demand for higher grade iron ore continues to support these "high" prices.

Western Areas Ltd, was pleased to announce yesterday that the Company has intersected a new massive sulphide zone, including two super high grade results, immediately below the Odysseus North orebody at the Cosmos Nickel Complex (Cosmos).
The new intersections are 160m south of a high grade Inferred Mineral Resource of 0.05Mt @ 11.6% which forms part of the Odysseus North orebody. These intersections, when combined with results from geophysical surveys, represent a potentially significant extension to the high grade Resources at the broader Odysseus Project.
Key highlights include:

WAD002A intersected massive sulphide comprising 2.6m at 12.6% nickel, including 1.6m at 18.0% nickel;
WAD002W1W1W1 intersected massive sulphide comprising 5.3m at 15.2% nickel, including 3.4m at 22.0% nickel;
Down-hole electromagnetic (DHEM) surveys successfully completed in WAD002 identified two strong responses at downhole depths of 1,240m and 1,290m respectively. The 1,240m response is confirmed by drilling as mineralised massive sulphide; and
Potential to significantly extend existing high grade Resources at Odysseus North

Western Areas Managing Director, Dan Lougher, noted that the underexplored potential of the Cosmos Nickel Complex was one of the key drivers of the acquisition.
“On acquiring Cosmos, we had the clear view that the true potential of the project, both for more nickel near existing known orebodies and for new discoveries in a wider regional setting, had not been adequately tested,” Mr Lougher said.
“We’ve begun testing this view which has resulted in both strong potential for adding more high grade Resources near Odysseus North and some very promising exploration hits at Neptune, as reported recently. Additionally, we expect to convert more quantified Mineral Resources at Odysseus North to a higher confidence category and enhance our understanding of this significant deposit.
“Cosmos is starting to deliver on the opportunities we believe exist at the project, and we look forward to continuing this progress throughout the year,” Mr Lougher said.

Mount Gibson Iron Limited (Mount Gibson) advised today that it has commenced development of its Iron Hill iron ore mine in Western Australia’s Mid-West region following receipt of final statutory approvals.
Iron Hill is located 3km south of the Company’s recently depleted Extension Hill open pit and this close proximity enables the utilisation of Extension Hill’s substantial existing workshops, processing facilities, camp and transport infrastructure, as well as the Extension Hill workforce comprising approximately 160 employees and contractors.
As a result, negligible capital is required to be spent, and first product sales are targeted to commence in May 2017.
Mount Gibson Chief Executive Officer Jim Beyer said: “We are very pleased to gain the final approvals required for Iron Hill, which are the successful culmination of a huge effort by our permitting team since the initial application was made over two years ago. Obtaining these approvals in a large part reflects our proven record of, and ongoing commitment to, responsible resources development in the state’s Mid-West and Kimberley regions.  We now look forward to rapidly developing this attractive high value, low-capital production opportunity, thereby extending the life of our Mid-West business. It is also very pleasing to be able to deliver additional value for our shareholders while continuing to provide much needed economic activity in the Mid-West region by way of direct employment and the engagement of local business.”

The jobless rate in Western Australia increased from 6.5 per cent to 6.9 per cent last month, which is the highest level since 2002. The state Opposition leader blamed Premier Colin Barnett for the rise.
"6.9 per cent is catastrophic. The Government has its head in the sand," Mr McGowan said.“Mr Barnett thinks everything’s okay. It is clearly not okay. That’s why we need a change, we need a fresh start, we need a plan for jobs. They failed to diversify the economy, they failed to ensure there was significant financial capacity left from the boom times, for the lean times that followed.”
But the Western Australia's Chamber of Commerce and Industry (CCI) used the jobless figures to again call for changes to payroll tax.
“This unemployment rate is unacceptable,” CCI chief executive Deidre Wilmott said.“It’s the highest that it’s been since 2002 and it calls for urgent policy announcements by our political parties going into an election.The CCI wants the current $850,000 payroll tax threshold immediately indexed to the Consumer Price Index , and then increased by $50,000 each year to eventually reach $1.5 million." CCI fundamentally wants to put an end to payroll tax.

WPG Resources Ltd advised that the Tarcoola gold mine was officially opened yesterday at the South Australian minesite, located approximately 3km from Tarcoola.
On the 11th November WPG announced that a Decision to Mine had been taken and the project’s immediate development was progressed following the approval of the project’s Program for Environment Protection and Rehabilitation. Within 2 weeks of the Decision to Mine, work commenced on developing the Tarcoola pit.
The first ore from Tarcoola is anticipated to arrive at Challenger in the coming weeks.

Independence Group NL advised that the first nickel concentrate has been transported from the Nova Project to BHP Nickel West Pty Ltd in Kambalda. Peter Bradford, Managing Director and CEO of IGO said:
“The first shipment of concentrate is another important milestone for the Nova Project and this took place earlier than contemplated by the Feasibility Study and in line with the guidance we provided to the market in our ASX release of 26 October 2016.”
Two three-year off take agreements are in place for the nickel concentrate from Nova, each for 50% of production; the first with BHP Nickel West for delivery to Kambalda, and the second with Glencore, to be shipped offshore via the port of Esperance. All copper concentrate will be shipped offshore via the port of Esperance under a three-year off take agreement with Trafigura with the first shipments expected in the June 2017 quarter.
The next major milestones for the Nova Project will include; Complete drilling and resource estimation at Conductor Five, expected in the March 2017 quarter; First offshore shipments of nickel and copper concentrates, expected in the June 2017 quarter; and Ramp up to full production rate, expected by mid CY17.

Saracen Managing Director, Raleigh Finlayson today said the A$42m exploration budget had already made substantial inroads towards achieving the goal of growing group production and mine life.
“ We see outstanding potential to grow our gold inventory in the coming quarters, laying the foundations for future production growth above the 300,000oz pa production rate we anticipate by the June quarter,” he said.
Drilling continues at Thunderbox with two surface diamond rigs; the program is progressing well, to-date a total of 11,100m have been drilled with full results for 11 out of 14 completed holes.The results confirm that the Thunderbox mineralisation is consistent and persistent.
Significant results from the drilling include:

TBDD0101 – 52m @ 3.0 g/t (incl uding 19m @ 4.8g/t) 
TBDD0109w1 – 47m @ 2.3 g/t (incl uding 19m @ 3.2g/t) 
TBDD0109 – 28m @ 2.4 g/t (incl uding 14m @ 3.3g/t) 
TBDD0107 – 25m @ 3.0 g/t (incl uding 10m @ 5.8g/t 
TBDD107w1 – 25m @ 2.4 g/t (incl uding 11m @ 4.0g/t) 
TBDD114w1 – 23m @ 2.4 g/t (incl uding 11m @ 3.1g/t) 
TBDD125 – 14m @ 4.1 g/t. 

The new results are adding to the confidence and scale of the upside opportunity that is present at the Thunderbox operation, which is focused on the thicker, higher grade shoots.
Drilling at King of the Hills has been focused on grade control activities in the active mining areas, and near-mine extensions to the high-grade Lower Kingdom lode.

Flagship co-funding program encourages exploration investment
The EIS was established in 2009

The Liberal National Government announced today the 42 successful projects which will share up to $4.75 million under Round 14 of the Exploration Incentive Scheme’s (EIS) Co-funded Drilling Program.
Mines and Petroleum Minister Sean L’Estrange said the highly competitive drilling program, heading into its ninth year, provided companies with added incentive to drill in underexplored regions.
“Encouraging exploration is the key to the continuity of Western Australia’s vital resources industry, which will underpin the State’s economy for decades to come,” Mr L’Estrange said.
“This very successful program has already resulted in a number of major discoveries. Among the success stories is the Nova discovery east of Northam, supported by EIS geophysics data and co-funding in 2011-12, with production having commenced in November this year.”
Other EIS successful discoveries include the Camelwood nickel deposit 500km north of Kalgoorlie, Yeneena copper deposit in the Paterson Province, Millenium zinc in the East Pilbara, and Dusk Til Dawn gold discoveries north-east of Wiluna, as well as deep gold at Gruyere east of Laverton and the nickel discovery at Emily Ann near Lake Johnson.
The Co-funded Drilling Program refunds up to 50 per cent of direct drilling costs with caps of $150,000 for a multi-hole project, $200,000 for a single deep hole and $30,000 for a prospector’s project.
Refunds are made after completion of drilling and the submission of reports which are released publically on the Department of Mines and Petroleum’s WAMEX and WAPIMS databases, after a six-month confidentiality period.
The Minister said the information submitted added to the geological knowledge of the State, and helped reduce risks for subsequent explorers. An economic impact study released early in 2015 showed that every $1 million spent by the EIS generates $10.3 million of exploration activity and a longer term benefit to the State, in terms of higher Gross State Product, of $23.7 million