Every miner worth their excavation equipment wants to be a major player eventually. Here is some news from three locals at different stages along that path: De Grey Mining, OZ Minerals and Sandfire Resources.
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After Chalice’s Julimar finds near Perth, De Grey Mining’s (ASX: DEG) Hemi gold discoveries in the Pilbara region of Western Australia continues to attract considerable interest as it emerges as a prospect with major potential.
In an update De Grey fleshed out previous releases on drilling in the Hemi area of the Mallina prospect in the Pilbara.
In doing so De Grey has significant expanded the potential resource area at Hemi which now seems to have six defined areas of interest – Falcon, the subject of the latest report, Aquila, Brolga, Crow, Diucon and Eagle.
De Grey says its drilling campaign will extend to further work on other areas from the June quarter onwards.
Resource drilling (as well as work to test extensions of the mineralisation) in the Falcon zone of the Hemi deposit has returned broad sections of mineralisation near surface and at depth.
De Grey said the ‘extensional’ drilling has realised a further 300 metres of mineralisation below the scoping study design (at 300 metres) proving Falcon’s potential extends at depth to at least 600 metres below ground. level
“The mineralised intrusion at Falcon has now been intersected to approximately 1km along strike and 600 metres below surface. Mineralisation remains open at depth and to the south,” De Grey told the ASX.
The company said the gold mineralisation at Falcon shows similar alteration and sulphide development as seen at the adjacent deposits at Mallina called Aquila, Brolga, Crow, Diucon and Eagle.
De Grey said that drilling in the Falcon zone has demonstrated a north–south trending structure creating east and west zones. The east and west intersections are respectively approximately 140 metres and 200 metres below the scoping study open pit design at Falcon.
Resource definition drilling for the Pre-Feasibility Study will continue into the first quarter of 2022. “Resource extension drilling at Diucon and the other zones at Hemi will continue throughout 2022,” De Grey said.
Two drill intersections within the east zone have suggested mineralisation at 140 metres and 200 metres below the scoping study design. One hole returned a hit of 52 metres at 1.2 grams a tonne (g/t) of gold while another intercepted 43.8 metres at 1 g/t of gold.
“Resource definition and extensional drilling at Falcon are respectively increasing the confidence level of the resource and extending mineralisation below the scoping study open pit design,” De Grey CEO Glenn Jardine said in the ASX statement.
“This drilling aims to increase the prefeasibility study (PFS) production target above the scoping study production target of 4.3 million ounces (Moz) and to increase the PFS evaluation period beyond the scoping study evaluation period of 10 years.”
In October of last year, De Grey released its Mallina PFS which suggested a projected average production of approximately 473,000 ounces of gold a year annum at an average grade of 1.6 g/t across the mine’s first five years.
The PFS demonstrated Mallina’s potential to produce approximately 427,000 ounces across 10 years at an average grade of 1.4 g/t, suggesting a 4.3-million-ounce operation in total.
Mr Jardine said recent drilling had been focused on maximising the PFS’s production target.
From the March quarter, De Grey says it will start work to complete resource and extensional drilling spanning all of Hemi’s six main zones.
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Meanwhile OZ Minerals (ASX: OZL) has moved closer for a third copper (and this case, nickel as well) mine in the shape of its West Musgrave prospect in Western Australia which means it remains inside the state’s Covid firewall with the rest of Australia and a start-up could be delayed.
OZ says it has received WA Environmental Protection Authority (EPA) approval for the West Musgrave copper-nickel mine in Western Australia, as the company approaches a final investment decision.
The project proposes to develop two deposits (Babel and Nebo) near the intersection of the borders of Western Australia, South Australia and the Northern Territory, 1300 kilometres north-east of Perth.
The operation would have a mine life of 26 years as OZ Minerals seeks to produce about 26,000 tonnes of nickel and 32,000 tonnes of copper per year.
In the company’s quarterly report for December 2021, CEO Andrew Cole said the project was increasing in cost as OZ targeted a final investment decision.
“The West Musgrave study progressed well during the year with many aspects of the project well advanced and technically de-risked. The team continues to work through a range of value opportunities for inclusion into the project base case albeit we are also seeing capital escalation in a number of areas, with full costings yet to be concluded,” Cole said.
“The project remains on track for a final investment decision in H2 2022, however, uncertainties also remain in relation to ongoing border restrictions, labour availability and the potential impact on project schedule and costs.”
The EPA recommended development of up to 20,852 hectares (ha) with no more than 3,830 hectares of native vegetation cleared.
The recommendation also stated 1.465 billion tonnes of waste rock was suitable for permanent waste rock dumps and a tailings storage facility (or Nebo pit void) would need to contain up to 315 million tonnes (Mt) of tailings.
The project is proposed to be powered by a range of renewable energy sources, as OZ Minerals attempts to operate the site with net-zero emissions by 2040.
With no emissions mitigation measures, the project would produce about 9.48 million tonnes of Scope 1 carbon emissions over its 26-year life. This is equivalent to 364,675 tonnes a year.
With the proposed mitigation measures of wind turbines, solar power and a battery energy storage system, plus a greenhouse gas management plan, the project will begin operating at 196,500 tonnes of Scope 1 emissions per annum – almost halving the potential for Scope 1 emissions.
From 2033, the project will not produce more than 75,000 tonnes of carbon emissions per year, with carbon neutrality projected for 2040, according to OZ.
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And local copper group Sandfire Resources (ASX: SFR) (which OZ Minerals once eyed off as a takeover target) has concluded its bid to grow up quickly via a huge takeover in Spain.
Sandfire has bought the MATSA mining copper complex in southern Spain for $US1.865 billion ($A2.61 billion).
The MATSA mining complex is a large-scale copper operation comprising three underground mines and a 4.7 million tonne-per-annum processing facility.
It also contains a 2,450-square-kilometre exploration portfolio surrounding the complex, which will allow Sandfire long-term growth opportunities.
Sandfire funded the transaction through existing cash reserves, a $A1.2 billion fully underwritten equity raise along with proceeds from a $US650 million MATSA syndicated debt facility and $200 million corporate debt facility.
Sandfire expects MATSA to be a long-life and low-cost operation, with around 12 years of mine life remaining based on resources and exploration potential.
“Today marks the beginning of an exciting new era for Sandfire, with our business expanding to an organisation with a workforce of around 3800 direct employees and contractors around the globe,” Sandfire CEO Karl Simich said in the statement to the ASX.
The Spanish mines will see Sandfire become one of Australia’s largest copper producers and adds the company’s established DeGrussa copper operation in Western Australia.
DeGrussa produced 18,675 tonnes of copper in the December quarter and has a production guidance of between 64,000-68,000 tonnes of copper for the June 30, 2022 financial year.
Other Australian miners have gone down this offshore route (besides the big ones like Rio Tinto and BHP)
Newcrest will soon close its $A3.7 billion takeover of Pretium of Canada. Newcrest has previously bought into the Red Chris mine, also in Canada. Evolution Mining and North Star have bought mines or interests in mines in Canada and Alaska.
Newcrest is due to release its December half year figures next Thursday while Evolution Mining is also due to report on Wednesday. Analysts are watching Evolution’s report closely for signs of an improvement in performance at its Red Lake mine in Canada.
Morgans said in late January after the December quarterly report from Evolution that “Red Lake’s result was particularly soft with both tonnes and grade below expectation […] the market is beginning to question when the long-promised turnaround of grade (along with gold production and costs) will begin at Red Lake.
Management has talked the long game at Red Lake from day one, with three- and five-year targets for improving production.”
