IN terms of output, mining is the largest industry in the Northern Territory, accounting for about 17.4 per cent of the gross state product in the 2010 to 2011 financial year. According to the Department of Resources, this is the second highest proportion of all Australian jurisdictions.
The NT is home to mining ventures targeting minerals ranging from bauxite to uranium, in addition to oil and gas.
The NT Government’s Bringing Forward Discovery initiative, originally a four-year plan, has been extended to seven years and will now be in place until 2014. Under the plan, the Government will inject $25.8 million into the resources industry, to encourage mineral exploration and attract the attention of international investors.
“The initiative has particularly focussed on encouraging exploration in underexplored greenfields areas of the Territory,” NT Department of Resources chief executive Richard Galton said.
“[The plan is] designed to stimulate exploration activity in the Territory through new geoscience programs, a program of collaborative funding of exploration drilling and geophysics, and promotion of the Territory’s resource potential.
“A major component is the acquisition and delivery of new geoscience data. The team responsible for this is the NT Geological Survey [NTGS]. The NTGS is aiming to build a comprehensive 3D understanding of the Territory’s geology.
It is focussed on those areas with high potential to yield new discoveries, especially where the prospective geology is poorly understood or buried under cover. Much of the data gathered by NTGS is already available online and at no cost, with more and more becoming available online all the time.”
In the past year, the initiative has made available geoscience products that have added to the resources available to uranium explorers in the region. Meanwhile, the NTGS has released new maps and an accompanying report of the geology of Western Arnhem Land, which Mr Galton said had resulted in an entirely revised and simplified geological framework for explorers in the Territory’s premier uranium field.
“[The] NTGS also released the results of two major collaborative programs with CSIRO and industry: one on characterisation and mineral system modelling of the Ranger ore body [operated by Energy Resources of Australia] and one on the sandstone-hosted uranium systems of the Ngalia Basin. These studies have applied state-of-the-art techniques to characterise and understand the controls on these uranium mineral systems. The findings of these studies have broader applicability for regional targeting for exploration for these styles of mineralisation,” Mr Galton said.
“The Bringing Forward Discovery initiative has contributed to the Territory’s record levels of exploration, and has coincided with an increase in the Territory’s share of Australian mineral exploration expenditure (excluding coal) from 5.9 per cent to 8.1 per cent. There has also been an increase in proportion of exploration expenditure in greenfields areas (away from known deposits) to levels well above the Australian average.
This increase in greenfields exploration is critical for the discovery of new deposits and sustaining and growing the industry into the future.”
The Bringing Forward Discovery initiative is complemented by the International Investment Attraction Strategy, which has significantly raised the NT’s profile in Eastern Asia.
According to Mr Galton, it had led to more than $150 million in publicly-announced investments.
“This investment is important in providing valuable funds to progress exploration and mining projects, particularly given the difficulties in raising funds on the domestic market,” he said.
One foreign company taking advantage of the resources that the NT has to offer is Canadian Stock Exchange-listed Crocodile Gold, which in the last two years has begun mining from four deposits in the region. The new mines have helped the company triple its production in the June 2012 quarter, producing more than 36,000oz of gold.
Crocodile Gold has an extensive exploration program under way at several of its key tenements in the NT.
Its focus is the Cosmo mine, Union Reefs and Maud Creek projects.
The figures
Mineral exploration in the Territory reached record levels in 2011, with $228.4 million spent in search of new deposits: an increase of almost 40 per cent on the 2010 level of $166.7 million and a 3450 per cent increase during the past decade.
The majority of the money invested in 2011 was for gold exploration: up 57 per cent on 2010 to $73.8 million. The next most sought-after mineral was uranium,
with companies investing $40.1 million. Investment for iron ore exploration surged more than 100 per cent during 2011, up to $30 million, while companies
spent $14.9 million searching for copper: an increase of 107 per cent.
The amount of money invested in exploring for zinc, lead, nickel, diamonds and cobalt was lower in comparison, while exploration for rare earths, phosphate, manganese, vanadium and tungsten rose 22 per cent to $47.6 million.
During 2011, the NT Government granted 1377 exploration licences, compared to 1254 in 2010. It also granted 1216 exploration applications in 2011, compared to receiving 432 and granting 339 the previous year.
“The Territory is forecast to collect $117.7 million in mining royalty revenue in 2012 to 2013,” Mr Galton said. “Forecasts are based on advice from royalty payers. Profitability and royalty payments are expected to be lower than for the 2011-2012 financial year, due to expected continued strength in the Australian dollar and lower relevant commodity prices.
“The royalty regime operating in the Territory is largely profits-based rather than charging an ad valorem scheme. In other words, rather than charging a fixed rate on a mine’s output, royalty applies to profits derived from the production of a mineral. Expenditure essential to the production of the mineral commodity are
allowable as deductions against gross revenue from the sale of the commodity.
“While revenue under the Territory’s profits-based royalty regime is more volatile than it would be under an ad valorem arrangement, its key advantage is that by being sensitive to the profitability of a mine, it encourages the exploration and development of the Territory’s resources while at the same time compensating the community for allowing the private extraction of its non-renewable resources,” Mr Galton said.
Major players
McArthur River Mining Wholly-owned by Xstrata (which has numerous subsidiaries including Xstrata Zinc Australia), McArthur River Mining operates the McArthur River zinc mine, focussed on the Here’s Your Chance ore body: one of the world’s largest zinc and lead deposits.
Underground operations began at the project in 1995. The NT Government approved a $110 million open pit development in 2006 that, combined with an expansion of the concentrator, extended the mine’s life by an estimated 21 years to 2027. The open pit operation has approval to mine 43 million tonnes.
In early August this year, Xstrata approved a US$360 million investment to more than double capacity at the mine, taking it to 5.5mt per annum from 2014. The MRM Phase 3 development project will increase zinc production to 380,000 tonnes per annum and lead production to 93,000tpa, while advanced processing technology on site will enable the company to produce a separate zinc concentrate from its bulk zinc-lead concentrate that, for the first time, will be acceptable to all smelters.
“The minister for Natural Resources, Environment and Heritage has sanctioned that the Phase 3 expansion can commence, subject to a normal set of recommendations,” Xstrata Zinc Australia chief operating officer Brian Hearne said.
“We now await the relevant approvals from the minister…prior to starting construction on the project this year and commencing mining at the increased rate in January 2014. We are standing by our commitment to invest 75 per cent of the capital expenditure and 100 per cent of operational expenditure for the project with Northern Territory suppliers and industry.
“We expect the MRM Phase 3 development project to generate a 67 per cent increase in jobs on site to 735 positions by 2020; sustain a high level of indigenous workforce participation (currently 23 per cent); and boost industry output by $8.4 billion within the Northern Territory economy and $9.3 billion nationally over the life of mine.”
According to Mr Galton, the project was still undergoing environmental assessment processes that were expected to be completed by the end of 2012. Construction was scheduled for 2013, with full commissioning and production predicted for 2014.
Australian Ilmenite Resources Owned by Maxwealth International Invest, Australian Ilmenite Resources (AIR) is developing the SILL80 deposit on the Blackwater Creek lease in the Roper River region. First explored in2001, the project area is the largest surface ilmenite deposit in Australia resulting from an eroded dolerite sill. In addition, AIR is targeting iron, titanium and vanadium.
“This project is a little behind schedule due to delays in the environmental assessment process, which is expected to be completed in the next few months,” Mr Galton said.
“The project is authorised to undertake a 10,000 [tonne] bulk sample in Q3 [third quarter] 2012 for export to China for metallurgical testing. Subject to completion
of the environmental assessment process, full-scale mining approvals are expected to be issued in Q4 [fourth quarter] 2012, with mining operations and production
commencing in late 2012 or early 2013. “Production of ilmenite will initially commence at a rate of approximately 150,000 tonnes per annum and rapidly expand to 300,000 tonnes per annum by 2014.”
Western Desert Resources
Currently undergoing a feasibility study, the Roper Bar iron ore project is Western Desert Resources’ flagship venture. If approved, it will involve the development
of an open pit operation 60km south of Ngukurr (331km southeast of Katherine) with a production output of 1.5mtpa in its first year, increasing to 3mtpa by its third year.The proposed associated infrastructure will include a 165km private haul road to transport direct shipping ore to an existing loading facility, on-site workers’ accommodation and processing facilities. Mr Galton deemed this the most “noteworthy” major development in the NT.
“This project is currently undergoing environmental assessment through an Environmental Impact Statement (EIS).
The draft EIS has been on public review since June 23, 2012 and [the] public comment period [closed] on July 20, 2012.
It is expected that the environmental assessment process will be completed by Q4 2012, and that construction activities will commence soon after,” he said.
“Mining and ore production is expected to commence by mid 2013.
The project has been granted major project status by the Northern Territory Government. Approximately 3 million tonnes per annum (of direct shipping ore) will be mined from the Roper Bar mine site and trucked approximately 160km to Bing Bong Port for barging to offshore freighters for export.
“Capex [capital expenditure] for Stage
1 of the project is $160.5 million. The project has a direct shipping ore resource of 32.1mt grading 56.8 per cent Fe [iron] and a global resource of 402mt grading
40per cent Fe.”
Under the project’s mining lease application, up to 24mt of iron ore will be produced during a nine-year period.
Exploration and development
According to the Mining Developments in the Northern Territory document produced as part of the Bringing Forward Discovery initiative in September 2011, there were four pending projects expected to enter production within 12 months: Aard Metals’ Warrego Tails iron and gold tailings project; Matilda Zircon’s Lethbridge South zircon deposit; Minemakers’ Wonarah phosphate mine; and new pits and plants at Redbank Mines’ Redbank copper operation.
It listed a number of potential projects expected within 12 to 36 months of publication by companies including Tanami Gold, Thor Mining, Newmont, Korab, Arafura Resources and Energy Metals, for commodities ranging from rare earths, uranium and vanadium to gold, iron, zinc and lead.
Mr Galton said there were a numberof other significant exploration projects being undertaken in the region, including: “Emmerson Resources at Tennant Creek, who have utilised HeliTEM geophysical technology to make new copper-gold discoveries in the Gecko mine corridor, which has the potential to revitalise the Tennant Creek mineral field; Kentor Gold at Jervois, who are proving up a significant copper-silver-gold resource; Rum Jungle Resources at their Ammaroo project
east of Barrow Creek, where they have discovered a large near-surface phosphate resource 80km from the railway; Cameco Australia in Western Arnhem Land, who have discovered high-grade uranium mineralisation at their Angularli prospect; [and] Mithril Resources in the Harts Range east of Alice Springs, where they have
discovered a number of new copper-gold prospects at surface”.
The re-opening of three mines (Thor Mining’s Molyhil, Vista Gold’s Mt Todd and Tanami Gold’s Tanami Central) was also expected to significantly impact both the regional and greater Territory economies.
“The three mines are expected to involve a capital expenditure of around $700 million, and create an additional 700 jobs in construction and about 650 jobs in operations,” Mr Galton said.
“All three projects have endured some delays due to revisions to, or fine tuning of, their feasibility studies and definitive feasibility studies. All three projects are also subject to funding.
“Molyhil and Tanami have their environmental clearances and only require mining approvals. Mt Todd has commenced the environmental approvals processes, the outcomes of which will be incorporated into the mining approvals process,” he said.
“Subject to funding and mining approvals, all three projects could commence construction activities in 2013.”