Image: Grange Resources.
BY CAMERON DRUMMOND
GROWTH projects are underway across many of Tasmania’s larger operations, but greenfields exploration has remained stagnant. Now, the State Growth Department is investing $2m over four years in a drilling grant initiative, a move it hopes will help encourage a new minerals exploration boom.
Tasmania’s mining industry is starting to rebound, with several potential projects now in the pipeline.
Mining is the Island State’s largest export industry, accounting for more than 50 per cent of earnings, or nearly $2 billion in the 2017 financial year.
Tasmania’s three large operating mines include Rosebery (zinc, lead, gold, copper and silver), Savage River (magnetite, which is converted into iron ore pellets at Port Latta) and the Renison joint venture – a major tin producer.
With a number of proposed projects – such as the significant tailings operations of Rentails and Hellyer, tin mining at Zeehan and Luina, and a resumption of copper mining at Mount Lyell – the mining industry is starting to show signs of rejuvenation.
However, a lack of exploration spending that has consistently declined since its peak in 2012-13 has meant greenfields exploration is falling behind.
The Australian Mining Review spoke with Tasmania State Growth Mineral Resources director of mines Brett Stewart about the current and future prospects of the State’s mining sector.
Q: How important is mining to the State economy?
The mining and mineral processing industries remain one of the pillars of the Tasmanian economy and consistently generate between 50 and 60 per cent of the state’s mercantile exports.
The industries contribution to Tasmanian jobs and revenue has rebounded over the last 12 to 18 months, with mining jobs increasing from 2200 in May 2015 to average over 4000 for the last three quarters.
Income from royalties per year for 2016-17 and 2017-18 is forecast to be $38 million – up 160 per cent compared with 2015-16.
Increased employment levels and economic activity in regional areas will result in higher payments to Government, including rates, fees and rentals and payroll tax.
Tasmania is well placed to provide some of the commodities required to meet increasing global demand for electric cars and solar and wind generation infrastructure.
I believe Tasmania is well positioned to benefit from the energy minerals boom, both in terms of contributing to the increased levels of production and in providing the metals required to support the new economy.
Although Tasmania lacks lithium resources, we are well endowed with other commodities, such as tin.
A recent Rio Tinto-MIT study indicated tin as the metal whose demand will be most positively impacted by the new economy.
Q: Are there any new or upcoming projects you are excited about?
In addition to projects aimed at increasing the productivity and the life of existing mines, there is a well-established development pipeline for new projects covering a range of commodities, from coal to tin and tungsten.
One exciting area for new developments is the retreatment of tailings and slags and there are currently five projects in the varying stages of development.
The most advanced is the NQ Minerals project to re-treat the Hellyer mine base and precious metal tailings, which is on track to produce the first concentrate in August this year.
The largest project in terms of capital expenditure is Rentails, which will re-treat the tailings from the Renison tin (and copper) mine.
This type of project is attractive as it creates value from what are now waste products and has the potential to improve environmental outcomes at the sites.
A feasibility study has been completed for this project and a notice of intent has been submitted to the State Environmental Protection Authority as part of starting the approvals process.
Q. Tasmania was significantly disadvantaged by the Australian mining boom several years’ back – largely due to the stronger currency. Can you provide some commentary on this?
Although Tasmania was affected by the high exchange rates, a larger effect was felt from the additional costs of labour, services, and consumables which pushed up production, exploration, and resource definition costs significantly.
Since the boom many operations have slimmed down and with lower service costs and a lower dollar the profitability of some sites has improved, even at lower commodity prices.
Q. In a 2017 interview economist Saul Eslake said the remaining mineral resources in Tasmania were “more or less fully exploited”. Do you agree?
While we’d agree that it is probable that most of the exposed or near surface ore deposits have now been found, there is still potential at depth and under cover.
We think the issue is not the presence of more mineral resources, but minimising the risk to explorers who are looking for these more difficult-to-find ore deposits.
To this end we are working on providing new pre-competitive geoscience data, improving the currency and completeness of our legacy exploration databases, and contributing to initiatives such as UNCOVER and the recently announced MinEx CRC which aim to provide the ideas and techniques to improve the success rate of exploration under the cover of younger, often un-mineralised rocks.
Q. What is Government doing to encourage the next wave of greenfields exploration?
According to ABS figures exploration expenditure is on the decline.
Although exploration, as measured by expenditure, declined dramatically from a peak in 2012-13 and was at relatively low levels, it has now increased with expenditure for the 2017 calendar year to $21.2 million. This is 57 per cent higher than the previous year.
This increase has mostly been the result of exploration around known mineral deposits; greenfields exploration has remained at relatively low levels and is yet to respond to improving markets.
For this reason the Government recently committed to a four year, $2 million Exploration Drilling Grant Initiative commencing in 2018 to encourage exploration and in particular greenfields exploration in Tasmania.
MINE DEVELOPMENTS: SNAPSHOT
Renison Tin Operations
METALS X announced the construction of an ore sorting circuit at its 50:50 Renison JV was on track to be finished in the June quarter, increasing tin production by between 15 and 20 per cent.
A third diamond drill rig was introduced late last year to cater for the extra production, and a new tailings dam is also near completion.
“At the Renison tin operations, the JV partners have just completed another phase of capital injection for the future of the project, spending over $30m to establish a new tailings dam and installing a new crushing and ore sorting plant,” Metals X managing director Warren Hallam said.
“Commissioning of the crushing and ore sorter plant will commence in June and it is anticipated that this will result in a 15-20 per cent expansion and place the operation in a strong position on the global cost curve.
“The operation, after having being closed and abandoned when we acquired it, is now in the best shape it has ever been in, with over seven years of reserves and almost 18 years of resource.
“With the past and recent investments, the mine has a much more secure future.”
Rentails Expansion
The Rentails expansion project is aimed at producing tin and copper from tailings, and would increase Renison’s mine life to 11 years.
“The Rentails project has been through a feasibility study which shows very robust economics and we are currently seeking Environment Protection Authority (EPA) approval, which is a mandatory 12 month process,” Mr Hallam said.
Metals X said it expected studies and assessments required by the EPA would be completed and the environmental management plan lodged early in the December 2018 quarter.
If approved, Rentails is expected to create about 330 direct and indirect employment opportunities during operation, with a workforce peaking to between 400 and 500 during the construction period.
The all-in sustaining cost (AISC) for expanded operations at Renison are estimated at less than $17,000 per tonne (t), and could be extremely profitable on the back of the perceived future high demand for tin.
The projected AISC already compared favourably to the current tin price of about $26,000/t.
Traditional uses for the soft metal include solder, chemicals, tinplate and lead-acid batteries, and more modern uses in electronics and next-gen battery technologies.
In recent years, a lack of investment in new production capacity has tightened global supplies, with stocks at multi-decade lows pushing up the commodity price.
The Rentails tailings expansion is currently awaiting environmental approval. Image: Metals X.
Hellyer Gold Mine
Shuttered in 2002, the Hellyer gold mine in Tasmania’s North West will again open its doors as a tailings operation after NQ Minerals acquired the project from Keen Pacific for $20m in 2017.
NQ stated that Hellyer had life of mine revenues of more than $US1.3 billion.
In April, the company secured a $US10m loan facility to start early works on restarting the mine.
NQ chairman Brian Stockbridge said Hellyer would be a flagship project for the miner.
“First work will involve the refurbishment of the existing operating facilities in order to extract and treat the large high-grade tailings deposit on site and produce three marketable concentrates (lead, zinc, gold/silver/pyrite),” Mr Stockbridge said.
By early May, the miner announced that refurbishment was “well underway” and on schedule for commissioning in the September quarter this year.
“It is exciting for NQ to see the momentum of the refurbishment build up and seeing the plant moving rapidly towards commissioning,” Mr Stockbridge said.
“We are clearly looking forward to commencing production at Hellyer.”
Once up and running, the tailings operation is expected to produce between 80,000oz and 90,000oz each year for the next decade.
Savage River Magnetite
As production continued at the North Pit of Grange Resources’ Savage River magnetite iron ore pellet operation, work was progressing on feasibility studies for the nearby Centre Pit and Long Plains deposits.
Grange stated that the two deposits had potential as additional ore sources for blending, supporting extended life and providing risk mitigation against any wall instability in the North Pit.
“Investigation has also commenced into the ability to access the ore body in North Pit through underground development,” the miner stated in a March corporate strategy update.
“Conceptual studies have indicated that an underground block cave may be a suitable method to extract ore at greater depth.
“The board has approved expenditure of $10m for the first stage of a feasibility study to define the extents of the orebody and locate the position of an exploration decline.”
Phase 1 of a diamond drilling program to investigate accessing the underground ore body in the North Pit has already commenced.
It consists of nine holes for about 8700m, combined with downhole geophysics, hydrogeological assessments, and laboratory testing for the feasibility study.
Work was also progressing on the feasibility study for Centre Pit.
A surface diamond drilling program has been planned in order to enable the conversion of resource to reserve, and to inform the geotechnical parameters within the ore zones and planned mining areas.
Grange was also pursuing strategic investments for its Southdown Magnetite JV, of which SRT Australia owns a 30 per cent stake.
“The JV partners continue to monitor all ongoing project requirements to ensure that the current status of the feasibility studies allow the full recommencement of the project once Grange is able to secure an equity partner for a strategic share of the company’s interest in the project,” the company stated in April.
