< PreviousTHE AUSTLIAN MINING REVIEW20FEBRUARY 2018NEWS: EXPLORERS ON THE MOVENEWMONT Mining has pulled the plug on its exploration partnership with Greatland Gold at the Ernest Giles gold project in central WA as it focuses on other gold districts. Under the partnership, formed in May 2017, Newmont conducted Deep Sensing Geochemistry (DSG) survey at the site which defined several gold anomalies at the Meadows prospect, including an anomaly 5km long and 1.5km wide, which sits about 1km to the north of Greatland’s previous drilling. “The collaboration between Newmont and Greatland has successfully defined several additional gold anomalies, and we would like to thank Newmont for their efforts,” Greatland Gold chief executive Gervaise Heddle said.“The results of their survey have enhanced our understanding of the project and identified multiple new targets for further exploration work, reinforcing our view that the Ernest Giles project has the potential to host several multi-million-ounce gold deposits. “We are well financed to actively progress exploration at Ernest Giles and look forward to reporting progress through the year.” Greatland said it will soon lodge a Programme of Work with the WA Department of Mines and Petroleum, and subject to approval, anticipates to begin an exploration campaign in Q1 2018.GROWING interest in gold and lithium across WA has resulted in a 40 per cent increase in exploration applications submitted to the Department of Mines, Industry Regulation and Safety (DMIRS) in 2017.In its December quarterly report, the Department said it had received 2575 Programme of Work (PoW) applications in calendar year 2017 compared to 1799 the previous year.During the year, the department officers also finalised 98 per cent of exploration licence applications and 100 per cent of mining lease applications within 65 business days. DMIRS Strategic Projects senior advisor Graham Cobby attributed the uptick in exploration applications to increased interest in gold and lithium.“Interest in gold and lithium remained high throughout 2017 and is likely to continue into 2018,” Mr Cobby said.Association of Mining and Exploration Companies (AMEC) chief executive Warren Pearce said the increase in PoW aligned with similar statistics from the Environmental Protection Authority that a number of significant projects requiring assessment in 2017 were up by 50 per cent over the previous year.“The announcement reinforces a mounting body of evidence that the Western Australian mining and mineral exploration industry is growing and confidence is returning,” Mr Pearce said.“It is important the Government works with industry to build this momentum. “These statistics show that DMIRS has the capacity to reduce approvals timeframes, and support industry to create new jobs, revenues for local communities and royalties for the State.”Greenshoots for WA miningELIZABETH FABRIWAELIZABETH FABRIWANewmont exits Ernest Giles dealImage: Greatland Gold.Drilling works at the Ernest Giles Meadows target area.In 2017, the Department received 2575 Programme of Work applications. Image: Department of Mines, Industry Regulation and Safety WA.IN BRIEFNorthern Minerals doubles cap raising to $10mRARE Earths-focused Northern Minerals has extended the closing date of its share purchase plan to 12 February in the hope of raising $10 million for its Browns Range heavy rare earths project in the Tanami Desert, after it received initial applications for more than $5m. Northern Minerals managing director George Bauk said he was encouraged with shareholder support for the project. “We have received positive feedback from a number of shareholders, particularly with regards to the project enhancement initiatives have the potential to set up Browns Range as a globally significant heavy rare earths project,” Mr Bauk said.RARE EARTHSArtemis raises $4.5m to fast track projects ARTEMIS Resources has received firm “bought deal” commitments from London-based Global Investment Strategy UK to raise $4.5 million (before costs) through the issue of about 22.5 million fully paid shares at $0.20 per share.“This oversees institutional financing further increases our cash reserves as we head in to a very busy six month period of re-commissioning and upgrades at our Radio Hill treatment plant,” Artemis executive chairman David Lenigas said. “The additional funding will provide Artemis with the necessary working capital to commence early mining operations at a number of our proximal deposits in the Karratha area in order to have sufficient stockpiles pre-mined at the plant site available for processing.”GOLDBombora supersized ahead of maiden resourceNEWLY discovered gold lodes have upgraded the scale and economic potential of Breaker Resources’ 2.2km long Bombora gold discovery at the Lake Roe gold project in WA.Breaker executive chairman Tom Sanders said the results highlighted the potential for a single large 2.2km long open pit, while the “stacking” of the steep and flat lodes was likely to keep repeating at depth. “It generally takes at three years for a deposit to progress from a promising discovery hole to a potentially economic resource and it has only been two years since our first RC discovery drill hole,” Mr Sanders said. A maiden resource is due later this quarter.GOLD“The announcement reinforces a mounting body of evidence that the Western Australian mining and mineral exploration industry is growing and confidence is returning.”THE AUSTLIAN MINING REVIEW21FEBRUARY 2018COMMODITIES FOCUS: MINERAL SANDSILUKA Resources managing director Tom O’Leary said current robust market conditions could strengthen even further.By the March quarter last year, industry leader Iluka had reported a 130 per cent increase in total zircon, rutile and synthetic rutile sales volumes relative to the same period in 2016, due to its $389m acquisition of the Sierra Rutile mineral sands operation in Africa. “The most recent $130 per tonne [zircon price] increase, effective 1 October 2017, which I can confirm, has been accepted into the market, has been stated as effective through Q4 2017 and Q1 2018,” Mr O’Leary said.Mr O’Leary said the lack of significant, high grade discoveries would continue to drive pricing up.“In broad terms the quality of the deposits currently being investigated for development are lower grade, and lesser quality than those currently being exploited,” he said. “There’s less zircon, less rutile, less valuable chloride ilmenite and there’s more trash. “There have been no discoveries of significant higher-grade deposits in the last decade. “So projects like our fine minerals project and other higher cost projects are required. “This will, over time, drive pricing up.”A 40 per cent share price gain by March 2017 for Iluka has spurred juniors to accelerate the development of their respective projects, most of which are in WA. Projects On The HorizonEmerging mineral sands producers such as Strandline Resources are looking to take advantage of buoyant prices. Strandline has launched the hunt for a joint venture (JV) partner to oversee the funding, development and operation of its Coburn project in WA.Coburn is fully approved, development-ready and defined by a resource estimate of 979 million tonnes (mt) at 1.26 per cent heavy minerals (HM).Another WA developer, Sheffield Resources, has secured a $US200 million funding for its Thunderbird mineral sands project in WA’s Canning Basin, and pre-construction works are currently underway.Thunderbird has one of the world’s largest and highest grade zircon and ilmenite rich ore reserves, with a resource of 680.5mt at 11 per cent HM over a 42 year mine life.The project will provide between 200 and 300 jobs during construction later this year.Iluka has also approved the development of its Cataby project near Perth.Cataby has resource estimate of 13.8mt at 4.4 per cent HM over an 8.5 year mine life.Iluka is also looking to restart its Jacinta- Ambrosia mine in South Australia, which it mothballed in February 2016.SHIFTING SANDSA flurry of Australian mineral sands developments are being spurred by higher prices.Image: Iluka Resources.Image: Iluka Resources.IN BRIEFSheffield shakes off legal setbackDESPITE a legal stumbling block, Sheffield Resources’ $348m Thunderbird Mineral Sands Project is progressing toward development with 100 per cent of zircon concentrate and about 75 per cent of premium zircon for Stage 1 now secured under binding agreements.In December, the Federal Court upheld a native title appeal over the project. The company didn’t expect the appeal would have a material impact on Thunderbird’s development timeline, with a tribunal hearing scheduled for the current quarter.Financing arrangements to support development also advanced during the quarter withSheffield executing a $US200m debt financing mandate with Taurus Mining Finance Fund.WAFungoni, Coburn move closer to developmentSTRANDLINE Resources has continued to make strong progress on its HMS projects in Australia and Tanzania during the December quarter.This included completion of the Fungoni project Definitive Feasibility Study (DFS) in Tanzania, and initiation of a funding and development strategy for the large-scale Coburn project in WA.The company also announced that it had secured a binding take-or-pay offtake agreement for 100 per cent of the zircon-monazite product produced at Fungoni, which would pave the way for Strandline to finalise project funding.WA/TANZANIAKeysbrook Operating Plan producing resultsTHE benefits of MZI’s 5.25mtpa Operating Plan at the underperforming Keysbrook mineral sands operations in WA are expected to become evident in the second half of FY2018, the company has stated.“The ongoing trend of process improvements continued with better production and sales volumes being evident in the December half compared with the prior corresponding six-month period,” the company said in its December quarter report.In the December quarter, Keysbrook Heavy Mineral Concentrate (HMC) production was in line with the prior quarter at 26,570t. December half HMC output rose 9 per cent to 53,239t while saleable production increased 35 per cent to 39,251t. Sales volumes increased by 47 per cent to 29,750t compared with the prior corresponding half.WACAMERON DRUMMONDThe mineral sands industry has bounced back from low prices between 2013 and 2016, as a lack of new mines in recent years constrains supply. This is having a major impact on commodity prices and sales volumes.STRANDLINE – $300 million Coburn Project Looking for development partners.SHEFFIELD – $350 million Thunderbird Project 200-300 construction jobs — commencing later this year.ILUKA – $250m - $275m Cataby Project 220 construction jobs, 120 operational jobs — construction likely to start next year.THE AUSTLIAN MINING REVIEW22SPECIAL FEATURESMINING IN COBARFEBRUARY 2018IT’S been boom-and-bust for Cobar since first copper was discovered in the region in 1869. The town has witnessed great successes (at peak it had a population of 10,000) followed by incredible lows when commodity cycles took a dive. Just two years ago this was the case when one of the town’s major employers, CBH Resources’ Endeavor mine, made almost half of its workforce (116 people) redundant as a result of declining zinc and lead prices.It was a tough pill to swallow for the 5000-person town, and while not comparable to Ashanti Gold’s closure of the CSA mine between 1997 and 1999, sentiment was down — again.Then there was news that Glencore, the current owner of the CSA mine, had intentions to sell the $US400 million project to reduce its debt pile; creating an additional layer of uncertainty.The verdict was still out on whether Glencore will sell the CSA mine, but overall things were getting brighter for Cobar as commodity prices climbed.In early 2017, production began ramping up again at Endeavor mine, restoring jobs that were lost. A swarm of junior to mid-tier miners were also pouring capital into new and established projects in the region. And as commodity prices improve further, with copper fetching $US7270 per tonne in January, gold sitting at $US1342 an ounce, and zinc hitting 10-year highs at $US3423 a tonne, more green shoots were expected.The next step will be safeguarding the region against a future downturn, and the solution looks to be diversification beyond base metals to other commodities such as gold and silver.Recent activityAurelia Metals is the owner of the Hera-Nymagee project and soon to be owner of Peak Mines. Managing director and chief executive Jim Simpson said because Cobar has been base metal dominant throughout its history, it has been stung by the fluctuation of base metal prices.However, Mr Simpson said the region was beginning to see a shift towards gold, and his company was in a strong position to take advantage. In November, Aurelia Metals entered a binding agreement with New Gold to purchase the Peak mines for $US58 million which will close in the first quarter of 2018. The Peak mines are in close proximity to its Hera-Nymagee project, which collectively contain a mix of gold and base metals including copper, lead and zinc.“The leases adjoin the Hera/Nymagee leases which now span over 100km along the strike length of the Cobar Basin establishing Aurelia Metals with a strong foothold in the prospective Cobar Basin,” Mr Simpson said.“The key plan for Peak is to convert the extensive current resource base into ore reserves thereby increasing the life of the operation from its existing three year mine life.”Nearby, the $US87.1 million Nyngan scandium project was also in development, and is aiming for production in the first half of 2019, while Peel Mining was fast advancing exploration at its Mallee Bull and Wagga Tank projects. Peel Mining managing director Rob Tyson said Mallee Bull, a JV with CBH Resources comprising the highly prospective polymetallic discovery and historic May-Day gold-base metal deposit, was its most advanced project. “We are currently undertaking a feasibility study into development options,” Mr Tyson said.“It has been an iterative process and we are hoping to complete the study by end of March. “The project needs a considerable amount of exploration still, to define mineable reserves, so we are likely to pursue a staged exploration-focused development to enable deeper, cheaper underground diamond drilling.”Since late 2017, Peel Mining shares have risen considerably, increasing from $0.23 a share in early October to $0.56 a share mid-January on the back of positive drilling results at the high-grade Southern Nights discovery within the Wagga Tank polymetallic project. Gold miner St Barbara has also shown interest in the stock, purchasing an additional $1.5 million worth of Peel shares in November to increase its stake in the company from 9.6 per cent to about 10.8 per cent.The region’s existing mines were also showing promise.In November last year, CSA mine staff held a community consultation which gave an overview of the aging project’s mine operating plan (MOP) for 2018-2020.It confirmed over the next three years, it planned to mine at a rate of between 1.25 and 1.3 million tonnes per annum (mtpa) of copper ore, which could be sustained beyond its MOP until at least 2026.The company was in the process of ramping up exploration at CSA, spending about $6 million in 2017 and an estimated $10 million in 2018.Endeavor was also “recruiting strongly and the life of mine is extending,” Ms Shephard said.“There are new areas in the shire with good drilling results pointing to a strong mining future for the shire.”Regional Challenges“Cobar is a transient town – always has been,” Cobar Shire Corporate and Economic Development director Angela Shepherd said.ELIZABETH FABRIA TOWN DIVERSIFIEDIn the outback town of Cobar rising commodity prices are restoring confidence at existing operations, as fresh exploration signals a break away from the region’s reliance on base metals towards a gold-focused future. COBAR PROJECTSOPERATIONAL - PEAK MINES (Aurelia Metals) - CSA COPPER MINE (Glencore)- ENDEAVOR MINE (CBH Resources)- HERA-NYMAGEE PROJECT (Aurelia Metals)•UNDER DEVELOPMENT: - NYNGAN SCANDIUM PROJECT (Scandium International Mining Corp) •EXPLORATION: - MALLEE BULL (JV Peel Mining and CBH Resources)- COBAR SUPERBASIN (Peel Mining 60%): • WAGGA TANK (Peel Mining)• COBAR GOLD PROJECT (Helix Resources)• COLLERINA PROJECT (Helix Resources)THE AUSTLIAN MINING REVIEW23FEBRUARY 2018MINING IN COBAR“The mining industry is hugely important to the Cobar Shire with more than 40 per cent of the workforce employed directly in the mines, according to ABS figures.“Our biggest challenge, for all industries, is to attract and retain a workforce.”Due to the region’s remote position (710km from Sydney and 301km from Dubbo) there were still issues hanging over the town.This was exacerbated by Air Link’s decision in December to terminate its public transport air services between Cobar and Dubbo following the conclusion of working arrangements with local stakeholders.The air services provider, which had been operating air services between the towns since August 2015, said there were “no current plans to recommence services to Cobar”.The news sent shockwaves through the town, which in the past has struggled to attract professional workers due to its isolation.“This is a large blow for the community,” Ms Shephard said.“We have been fortunate to have a Regular Passenger Transport (RPT) service, however with Rex (Airlink) pulling out it places stress not only on the mining industry but also on the rest of the community, such as our ability to attract and retain doctors. “It has been one of our advantages over other towns, that we had a Sydney air service at least four days a week. “An air service reduces our isolation for business and personal needs of the workforce. “However, we have had similar hiccups in the past and once again we will work together to find a new operator for our town.” Ms Shephard said while the airport would still be used by charters, it was imperative that a new regular passenger transport operator would link to the town. “The Council is working with the mining companies to secure another provider,” she said. “This may take some time as any new provider will need to secure landing and leaving time slots at Sydney. “I believe there is a good sense of cooperation by everyone as we are all keen to see this happen.”Other issues facing the region were the availability and cost of power and water.“We are located a long way from a river with the Bogan 130km away,” Ms Shephard said.Peel Mining’s Southern Nights discovery at its Wagga Tank polymetallic project.(CONTINUED OVER)Fort Bourke Hill — the historic site of Cobar’s first gold mine, the New Cobar gold mine.Image: Peel Mining.“It is incredible how they are still discovering mineral deposits so narrowly missed by previous mining operations. The geology of the shire is quite amazing.”THE AUSTLIAN MINING REVIEW24FEBRUARY 2018MINING IN COBAR“Cobar relies on water supplies from Burrendong Dam, via an open 70km channel; the water is stored in weir pools before being piped to Cobar. “There are large losses from the system. “Expansion of the industry will require larger water licenses and access to more water.”Ms Shephard said the NSW Government was currently investing in this infrastructure, however the mining operations around Nymagee were not connected to the pipeline and instead relied on underground water, which was scarce in some parts. “In addition, we all know that power supplies are limited and the cost is rising significantly,” she said.“Cobar is located a long way from power generation sources, and while the Nyngan solar farm has changed that in part, Cobar needs an alternative power supply to be available closer to home – possibly on site for new mines that are not on the grid.“There is very limited power networks in the Nymagee area and Hera mine actually have their own source.” Aurelia Metals’ Mr Simpson said the decline in services over the years has also been one of the biggest challenges.“This makes it harder for mining companies to attract key personnel,” Mr Simpson said. A Bright OutlookMr Simpson said the outlook for Cobar looked positive, and Aurelia Metals “will certainly look at any opportunity that presents itself”.“There has been some very positive exploration in the Cobar region in recent years with some good prospects of new mines starting from this successful exploration,” he said.“I believe that this will continue.”Ms Shephard agreed, claiming the Cobar mining industry “has a very strong future, as long as international prices don’t collapse”.She anticipated the majority of the aging mines in the region (if not all) to still be producing in the medium term.“They are continuing to invest in exploration with strong results showing and development plans are being made,” she said.“I don’t believe anyone knows the extent of resources in the ground still and it is incredible how they are still discovering mineral deposits so narrowly missed by previous mining operations. “The geology of the shire is quite amazing.”Looking ahead, Ms Shephard said it was also important for the companies exploring the region to actively invest in its social fabric.One of the most topical issues at present was the town’s push for a Cobar Miners Memorial to commemorate the 172 miners that have lost their lives in the shire over the years.“Fundraising efforts are continuing, a design has been approved, a DA approved by Council, and all the research completed,” Ms Shephard said.“The aim is to have it constructed by our 150th anniversary in 2019/2020.”Cobar Miners Memorial Committee chairman, long-time Cobar resident and former miner Barry Knight said the committee needed $380,000 to build the memorial, and currently had $112,000 in the bank.“In October last year as part of Cobar’s annual Festival of The Miners Ghost we held our first memorial service to honour those who lost their lives ‘A Night To Remember Our Lost Miners’ which was attended by 250 people of which 50 were from out of town and travelled to Cobar just for the service,” Mr Knight said.“All the mining companies have been very supportive to date, and the Cobar community are right behind me on this project.”“Our biggest challenge, for all industries, is to attract and retain a workforce.”An aerial view of Aurelia Metals’ Hera project.Image: Aurelia Metals.THE AUSTLIAN MINING REVIEW25FEBRUARY 2018MINING IN COBARThinking ‘outside the box’ ESTABLISHED in 2011, Jemrok has quickly become a leader in underground mining and associated services in the Cobar region. Built on a strong foundation of working with integrity, intelligent and responsible engineering practices, the national company offers an extensive range of surface and underground equipment for hire.It is also a highly respected multi-specialist mining provider, with expertise in mine development and rehabilitation, vehicle and heavy equipment maintenance, light and heavy auto parts procurement, mine production activities and professional labour hire. “Jemrok is part of the Kyda Group and currently have five operational sites throughout Tasmania, NSW and Victoria which includes the management of automotive workshops for maintenance and repair of service fleet and customer vehicles,” Jemrok sales and marketing director Paul Sturzaker said.“While based from our operational sites our civil engineering and mining teams travel Australia wide, and we are dedicated to providing the highest possible level of service and customer satisfaction, with quality products and availability throughout our distribution network.”Parts available on demand include a full range of genuine, OEM and aftermarket parts, suitable for CV shafts, joints and axle components, exhaust systems, suspension, brakes, filtration, steering, cooling and more. More information on Jemrok can be found at www.jemrok.com.au.NATIONALTHE AUSTLIAN MINING REVIEW26FEBRUARY 2018BHP IRON ORE“WE are simpler, with half the assets we had before and a portfolio now focused on truly tier-one assets with common characteristics,” BHP chief Andrew Mackenzie said at the global miner’s November AGM.This focus on simplification and productivity is paying dividends; in FY17 all BHP-operated assets were free cash flow positive and delivered a total free cash flow of US$12.6 billion, the second highest on record. Net debt was also reduced by $US10 billion.At current prices most iron ore miners are in the black, but in January Macquarie Bank calculated that Rio Tinto ($US28) and BHP ($US31) boasted the lowest break even points of all iron ore miners monitored by some margin; well ahead of Brazil’s Vale and Fortescue Metals Group at $US43 and $US48, respectively.The December 2017 quarter saw BHP mark a record-high annualised production rate of 284 million tonnes (mt) (100 per cent basis) at Western Australia Iron Ore (WAIO) as prices remained robust.Total iron ore production for the December 2017 half was in line with the same period last year at 117 mt, or 136 mt on a 100 per cent basis. Guidance for the 2018 financial year remains unchanged at between 239mt and 243 mt, or between 275 mt and 280 mt (100 per cent basis), with volumes weighted to the second half of the financial year.CAMERON DRUMMOND REUBEN ADAMSLIFEBLOODOF THE PILBARABHP’s Western Australian Iron Ore operations remain on track after a strong 2017. This year, a final investment decision to proceed with the development of its $US3.2 billion South Flank project is set unlock thousands of construction jobs in the region.Image: BHP.(CONTINUED ON PAGE 28)SOUTH FLANK Approximate Project Value (CAPEX): $2 billion•Preliminary Enabling Works: commencing CY17•Final Investment Decision: Q1 CY18•Main construction and commissioning works: Q1 CY18 to Q1 CY21.THE AUSTLIAN MINING REVIEW27FEBRUARY 2018BHP IRON ORETHE AUSTLIAN MINING REVIEW28FEBRUARY 2018BHP IRON OREAt WAIO, record production at Jimblebar and Mining Area C was offset by the impact of lower opening stockpile levels following the fire at the Mt Whaleback screening plant in June 2017, and planned maintenance in the previous quarter. Volumes increased by 11 per cent from the September 2017 quarter with a record annualised rate of 284mt (100 per cent basis) achieved for the December 2017 quarter. The higher volumes reflect increased plant availability and improved rail performance. Port debottlenecking activities were completed in the December 2017 quarter and will support higher volumes in the second half of the financial year.BHP continues to work with the relevant authorities in relation to the necessary approvals to increase system capacity to 290mtpa (100 per cent basis).Sustaining ProductionTo sustain production levels as its Yandi operation reaches the end of its mine life over the next five to ten years, BHP WAIO will require the development of an additional ore deposit.The preferred replacement is the proposed $US3.2 billion South Flank project, a high-grade iron ore deposit that enables BHP to utilise existing infrastructure at Mining Area C, and will output 80 million tonnes of ore per annum.The proposed project is currently in study phase and is progressing through approvals, with a first production target of 2021.In August last year, BHP chose Fluor for construction management of the project after spending $184m on pre-commitment work, which includes the expansion of the existing Mulla Mulla accommodation village. In December, the project was approved by the Environmental Protection Agency, and it is expected BHP will make a final investment decision by mid-year.“The project is expected to be submitted for board approval in the middle of the 2018 calendar year, with first ore targeted in the 2021 calendar year and ramp-up timed to coincide with the ramp-down of Yandi,” BHP said.The capital cost for South Flank is expected to be in the range of $US30 to $US40 per tonne, with expenditure fitting within WAIO’s previously indicated average sustaining capital expenditure of $US4 per tonne over the next five years.Mr Henry said the capital efficient South Flank project was a compelling option to replace Yandi production and offered attractive returns.“The capital efficiency of South Flank is underpinned by the planned use of existing infrastructure at the Mining Area C operation, which would, if approved, become one of the largest standalone iron ore processing centres in the world, within reach of several billion tonnes of high-grade ore,” Mr Henry said.Image: BHP.(CONTINUED FROM PAGE 26)“The project is expected to be submitted for board approval in the middle of the 2018 calendar year, with first ore targeted in the 2021 calendar year and ramp-up timed to coincide with the ramp-down of Yandi.”THE AUSTLIAN MINING REVIEW29FEBRUARY 2018PILBARA MINERALSQ. How far into development is Pilgangoora, and what key components need finalising before production?It’s only in the last probably two to three months that we’ve really got into the major site works. Between now and June, 80 per cent of the balance of the site works will be completed and we will be into the commissioning period, with construction personnel to peak at over 500 people in the next few weeks. Our strategy from a commissioning point of view tends to be quite different from other projects that have proceeded us. We are very focused on the fines portion of the circuit using flotation, which is a relatively simpler commissioning process than dense media separation.We’ve also continued to work on Stage 2 in parallel to Stage 1, and are going through the pre-feasibility and definitive feasibility study processes primarily in the first half of this year, with an expectation that there will be a commitment to the project on or around mid-year. As a result we would be commissioning the second stage in the third quarter of 2019 and ramping up capacity leading into the end of that year. Stage 2 should be significantly cheaper as expansion will run off the back of Stage 1’s infrastructure platform.Q. The DSO arrangement with Atlas Iron is beneficial for its own diversification from iron ore. How does this benefit Pilbara Minerals?The demand for direct shipping ore (DSO) has never really gone away. The question for us was more about attracting the right type of customer that was prepared to work with us and not leave us high and dry in a sales arrangement. We are happy to progress a small DSO program which has the benefit to be able to bring forward more cash flow. What the demand for DSO tells you is that there is a critical shortage of lithium units in China, and people are prepared to pay a very healthy price for the DSO ore. I do genuinely believe that Chinese demand is being underestimated by the global investment community. They are moving much faster in the lithium sphere than perhaps they are being given credit for today, as well as with the application of downstream technologies.Q. Is the company actively looking for more offtake agreements?We have made no secret of our desire to build out our customer base, especially where it can work outside China. Hard rock sources of supply are really important for the future mix of batteries because of their ability to get into production faster than that of the brine operations.Perhaps more importantly, they are also a more stable, and in fact typically higher quality source of supply; and in that regard they are very well in line with the higher-grade battery demand segment that has emerged. The big global battery manufacturers can see that and we believe they are looking to position themselves to a hard-rock supply base, and we like to think that we can take advantage of that and be an important part of that supply base in the future.The North Pilbara’s combined production between Galaxy Resources, Altura Mining and Pilbara Minerals is going to be a significant portion of the global supply base, and could become the world’s lithium mining centre. I have no doubt that the scale in the resources will ultimately deliver significant production. In terms of cooperation, Both Altura and Pilbara Minerals were prepared to continue to invest in the projects when they were perhaps not considered so sexy. There is a healthy level of cooperation with both our companies in regards to infrastructure and sharing arrangements for our neighbouring projects. There are lots of reasons not to trip over each other and we value a continued, healthy relationship into the future.CAMERON DRUMMONDPILGANGOORAON THE HOME STRETCH(CONTINUED OVER)Pilbara Minerals’ managing director Ken Brinsden. All images: Pilbara Minerals.PILGANGOORAIN NUMBERS• Construction Cost of $236 million• 330,000tpa of 6% Li2O spodumene concentrate• Current Ore Reserve Estimate of 80.3mt @ 1.27% Li2O• 36+ year mine life• Stage 2 studies underway• $180m spent with WA suppliers“I do genuinely believe that Chinese demand is being underestimated by the global investment community.” Pilbara Minerals’ $234 million Pilgangoora lithium-tantalum project is ramping up to production. We spoke with the company’s managing director Ken Brinsden about its development and his thoughts on the lithium market. Next >