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De Grey Mining and gold explorer Kalamazoo Resources have entered an exclusive option agreement regarding Kalamazoo’s Ashburton gold project (AGP).
Situated on the southern edge of the Pilbara Craton in Western Australia, the AGP was acquired by Kalamazoo from Northern Star Resources in 2020.
Luke Reinehr, Executive Chair of Kalamazoo, expressed satisfaction with the agreement, stating, “We are pleased to have reached this agreement with De Grey for the future sale of the Ashburton gold project.”
Reinehr highlighted the substantial value added to the project since its acquisition in 2020 and outlined the terms of the agreement, which include a potential total payment of $33 million to Kalamazoo in cash and/or De Grey shares should De Grey exercise the option to acquire the AGP.
The agreement grants De Grey a 12-month option, extendable for an additional six months, to purchase the Ashburton project, boasting 1.44 million ounces (Moz) of gold resources along with all associated mining and exploration licenses and applications.
During the option period, De Grey plans to conduct metallurgical drilling and test-work, remodel geological domains for processing and mining purposes, and conduct open pit optimizations at the AGP's Mount Olympus resource.
De Grey is obligated to invest a minimum of $1 million in exploration and assessment activities at the AGP and share all results with Kalamazoo.
Glenn Jardine, Managing Director of De Grey Mining, discussed the strategic significance of the proposed 10Mtpa gold plant at Hemi, including a 0.8Mtpa POx circuit, as a regionally strategic asset capable of processing gold ore and concentrates from other regional gold projects.
De Grey sees the AGP as an opportunity to enhance the regional opportunities surrounding the Hemi gold project, potentially increasing Hemi’s annual gold production rate, economic returns, and project life.
Silver Lake Resources and Red 5 are set to merge, forming a diversified mid-tier gold company projected to produce around 445,000 ounces per year.
Silver Lake acquired 11% of Red 5's shares in September 2023. Shareholders of Silver Lake will receive approximately 3.434 Red 5 shares for each Silver Lake share they own.
Upon completion of the merger, the combined company will rank just behind Regis Resources in annual gold production, solidifying its position as a mid-tier player in the industry.
The merger process is expected to begin with a court hearing in mid-to-late April, aiming for implementation by June.
Following the merger, the company will control four gold projects: King of the Hills (KOTH), Deflector, and Mount Monger in Western Australia, as well as Sugar Zone in Ontario, Canada.
According to the presentation, the merger will offer shareholders of both companies the chance to be part of a stronger entity, providing benefits that would not be attainable independently.
The management team of the merged entity will be led by Luke Tonkin from Silver Lake as the managing director and chief executive officer, supported by Richard Hay from Red 5 as chief operating officer, and Struan Richards from Silver Lake as chief financial officer.
Following a review of its Cosmos nickel mine in WA, IGO has opted to transition the site into a state of care and maintenance. The closure is projected to be finalized by the end of May of this year, while IGO evaluates the potential value of continuing select exploration initiatives in the vicinity.
This decision coincides with IGO's announcement regarding the endurance of the current downturn in lithium prices, coupled with a reduction in production at its Greenbushes lithium joint venture in WA.
In the words of IGO's managing director and chief executive officer, Ivan Vella, "This outcome is not what anyone at IGO desired. However, the operational and financial risks of further development at Cosmos in the present climate cannot be overlooked." Vella further emphasized the company's belief in the intrinsic value of Cosmos but stressed the necessity for disciplined capital allocation amidst the nickel market's challenges, while maintaining the flexibility to resume operations if market conditions improve.
In its December 2023 quarterly report, IGO revealed reductions in both net cash and group nickel production, reflecting the broader industry challenges and uncertainties amid downturns in the nickel and lithium sectors.
As a consequence of the closure, redundancies are anticipated, yet IGO is dedicated to supporting its workforce during this transition. Vella expressed gratitude to the on-site team for their exceptional efforts in navigating challenges and advancing the project. He reiterated the company's commitment to prioritizing the welfare of its employees and pledged to provide comprehensive support to those affected by the transition.
Silver Lake Resources and Sandfire Resources released their quarterly results for December 2023, highlighting robust production of gold and copper.
Silver Lake Resources
During the December 2023 quarter, Silver Lake Resources achieved a gold production of 56,629 ounces (oz) and a copper production of 236 tonnes (t).
The Australian gold producer reported the sale of 57,360oz of gold and 239t of copper at an average price of $3025/oz, with an all-in sustaining cost (AISC) of $1868/oz.
Year-to-date production for Silver Lake totaled 121,699oz of gold and 541t of copper, with sales reaching 122,781oz and 534t respectively, at an average sales price of $2986/oz and an AISC of $1791/oz.
The company's cash and bullion position at the end of the quarter stood at $284.1 million.
Silver Lake expressed satisfaction with its operating performance during Q2 FY24, emphasizing strong free cash generation in Western Australia. Plans for Q3 FY24 include the commencement of open pit mining at the Santa Complex and development projects at Stage 2 Santa open pit and Flora Dora, holding 285,000oz in ore reserves.
Sandfire Resources
Sandfire Resources reported a five percent increase in group copper equivalent (CuEq) production during the December 2023 quarter, totaling 32,400t.
The company achieved a record production rate of 4.6 million tonnes per annum (Mtpa) at its underground mines at MATSA in Spain during the first half of FY24, resulting in 13,700t of copper, 24,200t of zinc, and 23,100t of CuEq.
Additionally, Sandfire signed a framework agreement with the Yugunga-Nya Traditional Owners to address cultural heritage protection at the DeGrussa operation in WA.
Sandfire's managing director and CEO, Brendan Harris, emphasized the decision to retain and rehabilitate the DeGrussa operation, ensuring a sustained presence in the region and aiming for meaningful, sustainable outcomes for the community.
Sandfire reaffirmed its FY24 production, cost, and capital expenditure guidance, aiming for over 50 percent growth in copper equivalent production from continuing operations by the end of FY25.
IGO has unveiled strategies to navigate the current downturn in lithium prices.
Together with Tianqi Lithium, IGO holds a 51 percent stake in the Greenbushes lithium project situated in Western Australia. The remaining 49 percent is under the ownership of Albermarle Corporation.
Discussions are ongoing between the involved parties regarding spodumene offtake volumes and pricing arrangements concerning spodumene concentrate sales from Greenbushes.
A novel pricing mechanism will be implemented for spodumene concentrate offtake volumes, resetting monthly based on the average of the previous month, drawing reference from four price reporting agencies: Fastmarkets, Asian Metals, Benchmark Minerals Intelligence, and S&P Platts.
IGO anticipates that sales for the latter half of the 2023–24 financial year (FY24) will be around 20 percent lower than production due to inventory accumulation at Greenbushes.
To align with the inventory build, the company is likely to reduce production at the site, leading to a revision of its slated FY24 production guidance for Greenbushes to between 1.3 million tonnes per annum (Mtpa) and 1.4Mtpa of spodumene concentrate, down from the previously forecasted 1.4Mtpa–1.5Mtpa.
Furthermore, Talison – the mine's operator – is currently progressing with the construction of a third chemical-grade processing plant (CGP3) at Greenbushes, as scheduled.
While there is no immediate alteration to its cash production cost guidance, IGO anticipates these costs to exceed the upper limit of its guidance.
Ivan Vella, Managing Director and Chief Executive Officer of IGO, expressed satisfaction with the new arrangements, emphasizing their ability to address short-term market challenges while maintaining the superior status of the Greenbushes asset and committing to the development of CGP3.
Vella also highlighted the collaborative efforts with industry leaders and their shared vision to realize the full potential of the asset within the burgeoning lithium industry.
This week witnessed the temporary shutdown of Wyloo's Cassini, Long, and Durkin nickel mines, along with BHP pausing a segment of its Kambalda processing operations, responding to recent nickel price declines in Australia.
The nickel market downturn has impacted various nickel miners in Australia, including Chalice Mining, First Quantum Minerals, IGO, and Panoramic Resources. This situation raises the crucial question: What is the optimal path forward for Australian nickel?
Given BHP's recent decision, the Association of Mining and Exploration Companies (AMEC) is urging the Federal Government to offer support to the nickel sector. Neil van Drunen, the acting CEO of AMEC, emphasized the need for government intervention to stimulate downstream processing, stating, "The commercial challenges faced by the nickel industry in Australia warrant some form of government intervention to encourage downstream processing. If the current nickel and lithium price downturn persists, the government should explore all options to reassure the sector, including potential royalty relief."
As part of its proposal, AMEC, set to participate in a minerals-focused roundtable with Federal Resources Minister Madeleine King on January 25, suggests introducing tax incentives to bolster Australia's critical minerals sector. Drunen explained, "AMEC is advocating for the implementation of a production tax credit (PTC) to support critical minerals producers, making Australia 10 percent more competitive in downstream processing. Including a PTC in the upcoming Commonwealth budget plans would send a powerful message to the industry, investors, and global markets that Australia remains a significant player."
The proposed PTC, inspired by a similar US Government initiative under the Inflation Reduction Act, would grant miners a 10 percent reduction in their tax obligations for producing refined critical mineral products.
Wyloo's CEO, Luca Giacovazzi, views the 10 percent production tax credit as one aspect of the solution and advocates for additional measures to provide relief to the critical minerals sector. Giacovazzi calls for incentivizing Australian nickel production through the introduction of the production tax credit, revising the royalties scheme, and facilitating access to funding support for capital investment.
Furthermore, Giacovazzi proposes the establishment of a 'green nickel price premium,' differentiating Australian-produced nickel adhering to robust environmental, social, and governance (ESG) standards from 'dirty' nickel produced in countries like Indonesia. He stresses the need for structural changes in nickel pricing to recognize the ESG credentials of nickel products and safeguard Australia's position as a supplier of low-carbon nickel under the United States' Inflation Reduction Act.
The push for pricing reform has garnered support from Minister King and Andrew Forrest. On January 25, WA nickel miners, including BHP, Glencore, IGO, and Wyloo, will convene for the roundtable to discuss potential solutions and the future of the Australian nickel industry.
Lynas Rare Earths characterized the fourth quarter of 2023 as a period marked by significant progress in various facets of the business.
The construction of the rare earths processing facility in Kalgoorlie, Western Australia, saw substantial completion during the quarter, accompanied by the comprehensive commissioning of the entire plant.
After finalizing kiln heating and other commissioning activities, the initial batch of material from Mount Weld was introduced into the Kalgoorlie facility in December 2023.
Lynas anticipates the gradual introduction of mixed rare earth carbonate (MREC) from the Kalgoorlie facility to the Lynas Malaysia plant, commencing in the latter part of the first quarter of 2024.
The Mount Weld expansion project remains on schedule, with early-stage activities progressing as outlined in the plan. This encompasses Stage 1 structural, mechanical, and piping (SMP) works in the thickener and filter circuit, as well as the initiation of electrical works in December. The company is in advanced negotiations with potential contractors for Stage 2 SMP works, and the tender for the construction of the tailings storage facility has been issued.
The Western Australian Environmental Protection Authority concluded its evaluation of the Mount Weld life-of-mine proposal, recommending environmental approval—an essential milestone in securing full project approvals.
In financial terms, Lynas recorded $112.5 million in quarterly sales, a decrease from the preceding quarter's $128.1 million. The company attributed this decline to lower production levels, the product sales mix, and persistently low rare earth prices, with the average NdPr market price at $US60/kg during the quarter.
The improvement in rare earths market prices is contingent upon China's economic recovery, according to Lynas.
Furthermore, Lynas successfully concluded its exploration drilling program into fresh carbonatite beneath the current Mount Weld open pit mine. The program, consisting of 165 reverse circulation (RC) holes covering 31,754 meters, yielded promising results, with assays indicating rare earth oxide concentrations averaging up to 3.3 percent in fresh carbonatite.
Amanda Lacaze, Managing Director and Chief Executive Officer of Lynas Rare Earths, expressed optimism about the Mount Weld resource's future, stating that the drilling results confirm extensive rare earth element mineralization below and around the current mine pit floor. This newfound understanding enhances opportunities for Lynas to develop a more targeted mine plan, taking into account specific elements in addition to grade considerations.
Pantoro is set to initiate underground mining at the Scotia open pit within the Norseman gold project ahead of the originally projected schedule. This decision stems from a comprehensive review of Scotia, revealing "significant improvements" in the project's gold production and cost profile.
As a result of the review, Norseman's all-in sustaining costs (AISC) are anticipated to be less than $1850 per gold ounce (oz) in the 2024–25 and 2025–26 financial years, with Scotia underground AISC estimated to be below $1700/oz.
The revised mine plan aims for an annual production of 100,000–110,000oz per annum, with upcoming resource definition drilling focusing on production upgrades in the medium term.
Underground operations at Scotia are poised to commence early in the June 2024 quarter, approximately four months earlier than initially planned. Concurrently, ongoing Scotia open pit works are scheduled for completion during the December 2024 quarter.
Pantoro clarified that the Scotia South open pit will adhere to its original planned depth, while the Scotia Central open pit will progress to the 140mRL (metres relative level), approximately 30m above the previously envisaged pit floor.
This adjustment in Scotia Central pit depth leads to a substantial reduction in the remaining open pit stripping ratio. Additionally, the early onset of underground mining facilitates faster access to the Scotia North orebody compared to the originally planned cutback in that area.
The conclusion of Scotia open pits by the final quarter of 2024 will result in ore stockpiles of approximately 800,000 tonnes of medium and low-grade ore, available for processing in the ensuing years to complement underground ore production when required.
Pantoro is presently soliciting bids for underground works, noting "strong interest" from numerous Tier-1 underground contractors. Selections will be made by February, with contract awards scheduled for March.
Ongoing open pit mining at Scotia is anticipated to resume in late 2025 at the Princess Royal and Gladstone Everlasting mining centers.
During the December 2023 quarter, Pantoro achieved a gold production of 18,185 ounces, of which 18,074 ounces were sold at an average gold price of $3054.
Notably, December witnessed a production surge of 6113 ounces compared to November. Overall, Pantoro's gold production for the December quarter soared by 275%, marking significant growth since the first quarter of 2023.
This production update follows Pantoro's strategic decision to sell the lithium, nickel, copper, and cobalt rights at its flagship Norseman gold project to Mineral Resources in November. Paul Cmrlec, the Managing Director of Pantoro, emphasized that this sale enables the company to focus on the production and exploration of its gold assets, reinforcing the balance sheet with $49.7 million in cash and gold by the end of the December quarter.
Expressing satisfaction with the Norseman project's progress, Paul Cmrlec stated, "We are pleased with the progress that the Norseman project is now making." He highlighted the expected grades in the Scotia open pit, emphasizing the positive impact on production, cash flow, and positioning Pantoro strongly for the upcoming year.
Currently, Pantoro has substantial ore stockpiles available at the Scotia open pit, a crucial component of the Norseman project, ready for transportation to the processing plant.
The Norseman processing plant is operating above its nameplate capacity, achieving a quarterly throughput of 271,893 tonnes at 2.24 grams per tonne and an impressive 92.8% recovery rate.
Looking ahead to the 2024 calendar year, Pantoro anticipates a continued increase in grades at the Scotia open pit as depth progresses, further enhancing its production outlook.
