Category Archives: Exploration

The Next Gold Mine in Tropical Paradise Obtains $40 Million Financing

Lion One Drill Pad, Tuvatu

Two projects on a mining-friendly tropical island are moving forward, one in the final ramp-up to production and one at a very early stage.

Streetwise Reports  | 12 June 2018

Thoughts of Fiji conjure up the tropics, beaches and sunshine, but the island nation is also noted for its mineral production. The Vatukoula mine, in operation for over 80 years, has produced more than seven million ounces of gold.

Vying to join its ranks on the politically stable and mining friendly island are Lion One Metals Limited  and Thunderstruck Resources Ltd., two companies at opposite ends of the spectrum.

Thunderstruck Resources is an early stage exploration company with an extensive portfolio of properties on Viti Levu, the main island of Fiji. The company is conducting exploration activities at its large land package—covering 4% of Viti Levu—of “100% owned high grade zinc, copper and gold assets,” it reported in mid-May. According to Thunderstuck, it is “building on extensive prior results that point to the potential for large mineralized systems.”

At the end of May, Thunderstruck closed an oversubscribed private placement, raising over $200,000, selling 2.2 million units at $0.09 each. Each unit contained one common share and one share purchase warrant, with the option to buy a common share for $0.15 until May 2021.

Lion One’s 100%-owned Tuvatu project is at a much more advanced stage and is on track to put into production Fiji’s next mine. The company just announced a US$40 million debt financing package to develop the mine and build a processing plant for its fully permitted project. The financing is with Sinosteel Equipment & Engineering Co. Ltd. and Baiyin International Investment Inc. Sinosteel will be the EPC (Engineering, Procurement and Construction) contractor for the project, and Baiyin will be the gold doré offtaker.

The agreement is for a five-year term at a 7.5% interest rate. There will be a principal holiday and capitalized interest for either the earlier of two years from first draw, or three months after achieving commercial production. There also will be a Net Smelter Return (NSR) royalty of 2.25% on the first 350,000 ounces of gold produced. There is also an option to increase the financing by US$10 million.

Analyst Derek Macpherson of Red Cloud Klondike Strike Inc. noted on June 4 that with the debt financing in place, Tuvatu construction is expected to ramp up and views this as “very positive.”

Macpherson also noted that the “PEA (2015) outlines initial capital investment (excluding working capital) for Tuvatu at US$48.6M. With exploitation permits in-hand and C$21.6M (US$16.6M) in cash, the company is well positioned to continue on the path to construction and production.”

Analyst Mike Niehuser of Scarsdale Equities wrote on June 6, “The PEA assumed modest capital costs and efficient mining of high-grade gold resources, resulting in significant cash flow, which may rapidly repay capital and fund mine development and additional exploration of prospective gold targets.”

Niehuser also stated, “We expect that Lion One will announce an updated capital cost budget that should be within expected variances of the PEA. It appears that the facility should be adequate to cover the construction and capital costs with cash on hand. The terms appear to be competitive and do not include hedging or prepayment fees. Lion One continues exploration activities for which we believe could be a long-lived mine.”

Scarsdale Equities maintains a Buy rating and a target price of CA$1.40 on Lion One, which is currently trading at around CA$0.63.

While Lion One has been securing financing for the project, it also has continued exploration activities. Following the release of an off-the-charts surface sample of 502 g/t gold over 0.70 meters in February, on June 7, the company announced that follow-up work has mapped “more than 20 previously undefined mineralized structures at the Jomaki-Ura Creek prospect areas and identified potential geological extensions on the main mineralized zones inside the Tuvatu Mining Lease.”

Stephen Mann, Lion One’s managing director, stated, “In the Tuvatu resource area, approximately half of the 40 veins identified to date have sufficient sample data from drilling to merit inclusion in a resource estimate. We’ve now identified more than 20 mineralized veins at surface in the Jomaki-Ura Creek area where strong multi-element anomalism suggests potential scale and signature comparable and possibly larger than the main resource area at Tuvatu.”

Lion One has about 102 million shares outstanding, 109 million fully diluted. Management owns 22% of the shares and Donald Smith & Co owns 14%, Franklin Precious Metals Fund 9.99% and JP Morgan Asset Management UK 6%.

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Nautilus tests new rig but no money for further exploration

‘Once the trials are completed, Nautilus will deploy the rig on its South Pacific tenements subject to securing additional funding

Nautilus Minerals begins wet testing of new diamond drill rig

Mining Technology | 8 June 2018

Canada-based underwater resource exploration company Nautilus Minerals has started wet testing of its new seafloor diamond drill rig, which has been developed to relieve the drilling requirements of its future exploration programmes.

The move comes after the rig, which is nicknamed the Hobbit, was subjected to a series of land-based trials, focused on rod handling, functional drilling, and landing stability tests.

To be carried out over a period of two weeks, the wet test programme will expand the testing parameters to include submerged operations and mechanical endurance.

Nautilus Minerals CEO Mike Johnston said:

“According to our recently released preliminary economic assessment for Solwara 1, a single quarter’s production at steady state mining rates (around 3,200t/d) and at average Solwara deposit grades, adds around $110m in earnings before interest, taxes, depreciation, and amortisation (EBITDA).

Solwara 1 is the company’s copper-gold project, which is under development in the territorial waters of Papua New Guinea.

Johnston added:

“Hence forward exploration is a pivotal part of our business. Our pioneering teams are overcoming traditional functional limitations and high fees in seafloor drilling, with our new ‘Hobbit’ scout rig.”

During the testing period, the company will assess the operational functionality of the drill rig’s control systems, landing capability, hydraulic functions, video survey systems, and drilling cycle time versus performance, in a submerged environment.

Additionally, the testing will evaluate the system’s ability to sustain simulated offshore operations at optimal productivity levels.

The company’s personnel will be trained on all aspects of the equipment and operations.

The rig is designed to offer improved landing and drill cycle capabilities, as well as simplified control systems and launch and recovery requirements, which will allow deployment from cheaper vessels.

Once the trials are completed, Nautilus will deploy the rig on its South Pacific tenements subject to securing additional funding.

The company is focused on commercial-scale exploration of the seafloor for massive sulphide systems, which could potentially contain high grade copper, gold, zinc and silver.

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Canada’s Nautilus aiming to start marine mining in 2019 despite enviro concerns

Dylan Slater | Mining Weekly | 1 June 2018

Deep-sea mining is yet to become a major activity, and not much is known about undersea mineral deposits. However, some in the mining industry claim that the deep seafloor could be host to an abundant, untapped resource of highly sought-after commodities that may be relatively easy to access once machinery has been developed to operate under high pressures in submerged environments and salty water.

But environmentalists have issued strong warnings about the potential threats that could be posed to marine ecosystems and the long-lasting damage that could result from disturbing seafloors through dredging and cutting, as well as mining.

There has also been talk of would-be investors showing a reluctance – behind closed doors – to pour money into deep-sea mining projects because of the unknown feasibility of this type of activity and concern that they could potentially be deemed to be complicit in environmental degradation.

Potential sites for deep-sea mining are thought to be around large areas of polymetallic nodules or active and extinct hydrothermal vents (volcanically prevalent areas), which typically occur at depths of 1.4 km to 3.7 km below sea level. It is also believed that these vents create globular or sulphide deposits, which usually contain valuable metals such as silver, goldcopper, manganese, cobalt and zinc.

The prospect of deep-sea mining has had a patchy history, considering that one of the first major attempts to explore and mine the deep seas was a $500-million cover-up, the actual intent of which was to recover a sunken Soviet nuclear-armed submarine.

The K-129 submarine sank in 1968 about 1 400 km north-west of Hawaii, in the Pacific Ocean. The US was keen to find the submarine to obtain Soviet nuclear launch codes and other confidential information. It needed to conduct the operation under a veil of secrecy and, thus, could not simply send a salvage vessel to the area without attracting the attention of the Soviet Union.

Consequently, the US Central Intelligence Agency devised a plan – dubbed Project Azorian – to commission the Glomar Explorer as a deep-sea mining vessel targeting manganese nodules – potato-sized rocks lying on the ocean floor. In reality, the Glomar Explorer was used to lift the submarine off the ocean floor, about 4.9 km from the surface. The operation was only partially successful, as the submarine disintegrated while being lifted and only some of the nuclear missiles were recovered.

To make Project Azorian appear to be a legitimate deep-sea mining endeavour, a public relations campaign ensued in the 1970s, with a determined effort to paint it as the scheming of reclusive billionaire inventor Howard Hughes.

Few other attempts at deep-sea mining have been made, with only a handful of countries having been involved in deep-sea prospecting activities.

MAKING WAVES
One mining company that seems to be making headway as a major role-player in deep-sea mining is Canada-headquartered Nautilus Minerals.

The company is developing and commissioning deep-sea mining equipment, which it calls seafloor production tools. The tools comprise three primary pieces of equipment – an auxiliary cutter, a bulk cutter and a collecting machine.

To supplement this submerged machinery is a surface vessel, which Nautilus has labelled a production support vessel (PSV) and will be tethered to the seafloor production tools.

Nautilus Minerals CEO Mike Johnston believes that mining the seafloor will be a cost-effective and “environment  friendly” way of obtaining high-grade gold and silver.

The company launched its PSV – the Nautilus New Era – in March. The PSV was designed by SeaTech Solutions and built at Mawei Shipyard, in China, in cooperation with Mawei, Nautilus Minerals and Marine Assets Corporation. The vessel will be used by Nautilus and its partner, Eda Kopa (Solwara), a subsidiary of oilgas and minerals company Petromin PNG Holdings, at the Solwara 1 Project site, in the Bismarck Sea, off Papua New Guinea (PNG).

The PSV provides a stable platform for operations using dynamic positioning technologies to ensure it stays on location at Solwara 1, irrespective of wind and wave conditions.

Nautilus Minerals has reported that the PSV, designed for use in offshore construction and seafloor mining industries, is about 75% complete, with final delivery scheduled for March 2019.

Johnston adds that Nautilus Minerals differentiates itself from other companies by having a “first-mover advantage”, which is protected by intellectual property and 20 patents. “Once our new vessel is delivered, and subject to final funding, mining operations at water depths of 1 600 m are expected to start in late 2019.”

Nautilus Minerals announced the successful completion of submerged trials in February for its seafloor production tools in PNG, which, Johnston explains, were undertaken to ensure that all three machines met the requirements of their respective functional design specifications in submerged conditions.

“Results, to date, indicate that they do.”

The trials also assisted Nautilus Minerals in collaborating with its partner, oil and lubricants company Petromin, as well as officials from various government regulatory agencies and representatives of the provincial governments of New Ireland and East New Britain.

Community leaders from coastal villages closest to the Solwara 1 site were afforded the opportunity to witness the trials of the equipment.

ENVIRONMENTAL CONCERNS
Deep-sea mining is hotly contested by environmentalists, who are concerned that irreversible, long-term damage could result from industrial-scale mining of seafloors worldwide, especially near sensitive marine environments.

According to environmental nongovernmental organisation (NGO) Greenpeace, researchers recently concluded that most mining-induced loss of biodiversity in the deep seas was “likely to last forever” in terms of human time scales, as a result of the very slow natural rates of recovery in affected ecosystems.

Another organisation opposed to the activity, the Deep Sea Mining Campaign, states that there is a high level of uncertainty about the risks that deep seabed mining poses to marine environments and communities.

The Deep Sea Mining Campaign is an association of NGOs and citizens from the Pacific islands, AustraliaCanada and the US.

The organisation notes that many countries – including Japan, China, Korea, the UK and the US, Canada, Germany, Australia and Russia – are waiting to see if Nautilus Minerals can successfully bring metals from the seafloor to smelters before “taking the plunge themselves”.

It also claims that extensive exploration licences have been applied for by various companies, covering more than 1.5-million square kilometres of the Pacific Ocean floor. “In addition, exploration licences now also cover vast areas of the Atlantic Ocean and the Indian Ocean.”

However, more worrying is the deep-sea mining ‘exploration frenzy’ occurring in the absence of regulatory regimes or conservation areas to protect the unique and little-known ecosystems of the deep seas, says Deep Sea Mining Campaign.

“[This] is also occurring without meaningful participation the decision-making process by the communities who will be affected by deep-sea mining.”

Further, the limited scientific research conducted to date provides no assurance that the health of coastal communities can be guaranteed and that the fisheries on which affected coastal communities depend will not be impacted on.

Three forms of deep-sea mining have attracted the attention of companies – the mining of cobalt crusts, polymetallic nodules and deposits of seafloor massive sulphides (SMS), also known as polymetallic sulphides. With high grades of zinc, copper, silver, gold, lead and rare earths, the Deep Sea Mining Campaign says it is SMS mining which is arguably the most alluring to miners.

“The mining of SMS is also likely to be the most contentious, as it will cause the greatest environmental impact,” the organisation avers.

Meanwhile, Greenpeace states that deep-sea mining could “wipe out marine species and ecosystems before we even know them”, as a result of the vast majority of the deep seas – about 50% of the earth’s oceans – being underexplored.

“Different types of seabed mining involve different extraction methods and technologies, but, whatever the approach, severe impacts can be expected. Sediment plumes, the potential release of toxic chemicals, habitat destruction, increased temperature and noise all threaten the deep sea’s precious and as-yet untouched environment,” states Greenpeace

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RTG using medical supplies to win hearts and minds in battle over Panguna

Arawa town. Photo Radio New Zealand

RTG Mining Inc. Announces Donation of Medical Supplies for New Arawa District Hospital in Bougainville

RTG Mining via Stockhouse | 30 May 2018

RTG Mining Inc. is pleased to announce that together with the Special Mining Lease Osikaiyang Landowners Association (“SMLOLA”), the company has donated much needed medical supplies to the new Arawa District Hospital, which is soon to be officially opened in Bougainville by the Australian High Commissioner and leading Government officials from both the Autonomous Bougainville Government and Papua New Guinea Government. 

RTG has been working with the SMLOLA team, who represent the Customary Landowners who own the minerals at the old Panguna Mine and is thankful for the opportunity to work with the team on this project.  Good healthcare is one of the central tenets of life, that should be available to all and we are proud to be able to help the local communities in this way.  Livelihood programs have always been an important part of our philosophy, with the RTG Management Team having won awards around the world for its social and environmental programs, having successfully developed and operated 7 mines in 5 different countries.

RTG remains committed to working with the SMLOLA, its members and the Autonomous Bougainville Government to progress the redevelopment of Panguna.  We thank the SMLOLA and its members for their continued support and nomination as their preferred development partner should they be successful in securing an exploration licence for Panguna.

ABOUT RTG MINING INC.

RTG Mining Inc. is a mining and exploration company listed on the main board of the Toronto Stock Exchange and Australian Securities Exchange Limited.  RTG is focused on a proposal with a landowner lead consortium to secure an exploration licence at the high tonnage copper-gold Panguna Project in Bougainville PNG and the high grade copper/gold/magnetite Mabilo Project in the Philippines, while also identifying major new projects which will allow the Company to move quickly and safely to production.

RTG has an experienced management team which has to date developed seven mines in five different countries, including being responsible for the development of the Masbate Gold Mine in the Philippines through CGA Mining Limited, and has B2Gold as one of its major shareholders in the Company. B2Gold is a member of both the S&P/TSX Global Gold and Global Mining Indices.

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Australian miner loses bauxite licence in Solomons

NASA picture of Nende in Solomon Islands’ Temotu province. Photo: NASA

Radio New Zealand | 30 May 2018 

An Australian company wanting to mine bauxite in Solomon Islands has had its exploration licence rescinded.

AU Capital Mining was exploring in Nende in the remote eastern province of Temotu, but it has been notified by the Mining Minister, Bradley Tovosia that their prospecting to date has been unsatisfactory.

The minister went on to say that the company had failed to establish amicable relations with the local communities in Nende – something that is required under the agreement.

AU Capital Mining obtained an initial provincial business licence a year ago but it has been confronted by significant opposition in Nende ever since.

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Court hearings in Port Moresby and Melbourne over future of Bougainville’s Panguna copper mine

The abandoned Panguna copper mine. Credit Sydney Morning Herald

Kevin McQuillan | Business Advantage | 8 May 2018

Two court hearings on May 17, one in Port Moresby and the other in Melbourne, will help determine the future of the exploration licence for the Panguna copper mine in Bougainville. Business Advantage PNG looks at the ongoing competition for the rights to exploit the resource.

The decision to refuse an extension of Bougainville Copper Limited’s exploration licence and to impose an indefinite moratorium over the Panguna resource, followed a statutory Warden’s meeting in December 2017.

There was ‘a narrow divide between those supporting the mine to be opened by Bougainville Copper Ltd (BCL) and those that oppose it’, according to Bougainville President John Momis.

BCL has successfully sought leave to apply for a judicial review of the decision to refuse its licence extension, citing legal and procedural concerns.

‘While the moratorium has been gazetted, it has no impact on existing exploration licences or applications for extension, lodged prior to the moratorium,’ BCL Company Secretary, Mark Hitchcock, tells Business Advantage PNG.

‘BCL remains the holder of the exploration licence (EL1) until the matter is ultimately determined,’ he says.

BCL has held the licence since the mine closed in 1989. The company is now owned by the PNG national government (36.4 per cent), the Autonomous Bougainville Government (36.4 per cent), European shareholders (four per cent) and 23.2 per cent through the Australian Securities Exchange (ASX). Rio Tinto gave away its stake in 2016.

Those opposing BCL’s involvement are led by Philip Miriori, who claims chairmanship of the Special Mining Lease Osikaiyang Landowners’ Association (SMLOLA).

He has thrown his support behind a bid by Perth-based junior miner, RTG Mining, to gain the exploration licence, setting up a joint venture company, Central Exploration, of which RTG owns 24 per cent.

One of RTG’s major shareholders holds another 32 per cent, and the SMLOLA retains 44 per cent.

Miriori’s chairmanship of the SMLOLA remains in dispute. The 367 authorised customary heads of the 510 blocks of land within the special mining lease area of Panguna say they do not recognise Miriori as the Chairman of the SMLOLA and support the extension of BCL’s exploration licence.

Melbourne hearing

On the same day as the Port Moresby hearing, BCL will be in court in Melbourne, seeking disclosure about the relationship between RTG Mining and the SMLOLA.

Miriori and other supporters admit they are being paid by RTG, but Miriori has told the ABC that the payments are legitimate salaries, not inducements.

‘That is always a normal part of anything, nothing is free,’ he says.

The action seeks disclosure from RTG Mining and Central Exploration about any compensation or benefits paid to the SMLOLA.

One analyst close to the proceedings says any disclosure could determine the possibility of ‘unlawful interference’ with BCL’s exploration licence.

For his part, Momis says his government believes it would be ‘untenable under current circumstances’ for any developer to develop the mine.

‘We have some problems with RTG right now,’ Momis tells RNZI.

‘In fact, they are causing a lot of confusion and division in the community and we are not prepared to go ahead while this situation prevails.’

Exploration data

Should RTG Mining or any other company win the exploration licence, the next battle will be over the data about the location and extent of resources.

‘BCL has an extensive database of historical data and project information from the mine operations prior to closure in 1990,’ says Hitchcock. ‘This data remains the intellectual property of the company.’

Even if that data is not protected by intellectual property law but is only considered confidential information, it will still require cooperation from BCL to access, according to Alexandra George, Senior Lecturer at the University of New South Wales, who specialises in international intellectual property law.

She tells Business Advantage PNG it might be expensive and time-consuming to obtain.

She says under Australian copyright law, ownership of a database is not straightforward. Whether or not RTG Mining could access the data may depend on the terms of the exploration licence, any special legislation, and on the terms of any contracts or licence agreements that have been entered into.

‘If [the data] was not available, having to reinvent the wheel would add significant costs,’ says George.

‘Perhaps the safest way of assessing value is what the market is prepared to pay.’

‘We estimate it would take any other company or entity at least two-to-three years to replicate the BCL database through exploration activities and would cost in excess of A$200 million (K400 million),’ says Hitchcock.

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Indochine intends to review court ruling

Cedric Patjole | Loop PNG | May 4, 2018

Indochine Mining Limited and its subsidiary, Summit Development Limited, are planning to appeal a National Court decision upholding a Ministerial decision to refuse the granting of a mining exploration licence to them.

Justice Leka Nablu delivered her ruling on April 27th 2018 following a judicial review sought by Indochine and Summit, on the former Mining Minister, Byron Chan’s decision not to grant Summit the exploration licence (EL 1093) over the Mt Kare Au-Ag Project area.

In a statement, Summit says it respects the Court process that gave rise to the decision, but intends to immediately review the published judgement when available to determine the appropriate grounds for appeal.

The Company’s and Summit’s view is that an appeal is the only way for Summit to secure its rightful tenure of the exploration licence and undertake the development of the Mt Kare project.

The company says it is financially solvent (it is not under any form of external administration), has a strong technical team in place and is fully capable of performing its obligations under the existing, or any further, exploration licence that is granted in respect of the Mt Kare area.

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