Another mining evolution emerges in Western Australia’s Goldfields

As the gold industry hits its latest milestone in Kalgoorlie-Boulder, new opportunities have also arrived in the famous mining region. Ben Creagh writes.

Gold mining has consistently overcome the challenges of time in the Goldfields region of Western Australia.

The city of Kalgoorlie-Boulder marked the 125th anniversary of its first gold discovery by Irish trio Paddy Hannan, Thomas Flanagan and Daniel Shea in June.

Last year the 60 millionth ounce of gold was produced from the Golden Mile.

The Kalgoorlie Consolidated Gold Mines (KCGM) joint venture also delivered its 20 millionth ounce around the same time.

It’s fair to say the precious metal is as important as ever to the region.

The famous mining region, born during a period of depression, has been one of the few global mining districts that has worked continuously for the past 125 years despite the ups and downs of a volatile industry.

This includes the latest downturn, which mining has gradually recovered from over the past two years.

As was the case 125 years ago, a new mining sector has emerged from a difficult economic period in the Goldfields, driven by demand for materials used in batteries and electric vehicles (EVs).

Western Australia’s lithium sector has grown significantly from one operating mine in 2016 to potentially seven by the end of this year.

Mt Marion, 70km from Kalgoorlie-Boulder, is one of the operations guiding this growth.

The joint venture between Neometals, Mineral Resources and Jiangxi Ganfeng Lithium marked its first shipment of lithium concentrate from the Port of Kwinana near Perth in February last year.

Neometals, which owns 13.8 per cent of Mt Marion, is proposing to give Kalgoorlie-Boulder a bigger piece of this evolving sector in the coming years.

The company executed an option agreement and memorandum of understanding (MoU) with the City of Kalgoorlie-Boulder for development of a lithium hydroxide refinery near the city in June.

Neometals’ agreement covers a 40-hectare sub-lease 5km from the Kalgoorlie township for the refinery, while the MoU provides assistance for procuring utilities and infrastructure. The Kalgoorlie refinery, part of Neometals’ plan to bolster further value from its lithium supplies in the wake of the battery boom, is proposed at an initial 10,000 tonnes a year (t/y) capacity.

Lithium would be delivered via Neometals’ portion of the Mt Marion operation, as well as other assets the company has in the pipeline.

Neometals managing director Christopher Reed says a range of sites were assessed for the refinery, including Kwinana.

“Ultimately, we chose Kalgoorlie as a location as it offered a number of very compelling benefits,” Reed tells Australian Mining.

“The major draws for Kalgoorlie included proximity to the mine, the generous size of the site for future expansion, distance to rail, services and the major highway and also the significant support of the City of Kalgoorlie-Boulder.”

Kalgoorlie’s proximity to Mt Marion delivers cost savings to Neometals that are not only limited to transport, shipping and taxation advantages.

Reed says Neometals also expects much stronger margins associated with chemical conversion in Kalgoorlie. There are also important environmental considerations by choosing the Goldfields site.

“The reduction in transport equates to a reduced environmental footprint which is important in terms of achieving the values set by Neometals, but it is also a material consideration for lithium chemical end users who account for the full life cycle of their materials and must meet stringent material sourcing and disposal obligations,” Reed says.

The proposed refinery may also provide opportunities for other lithium miners in the region. Reed says Neometals’ is fairly confident it is in the right region to access feed from other lithium operations if it is needed.

However, he admits the company’s intention is to rely on its own assets, including the Mt Edwards and Mt Holland prospects. The company completed its acquisition of Mt Edwards, a new brownfields lithium exploration project 40km from Mt Marion, in June.

Neometals has exposure to the tenement package at Mt Holland, which adjoins the Kidman Resources/SQM’s Earl Grey lithium package in the nearby Yilgarn region, through a 36 per cent share in junior company, Hannans.

The Goldfields region is, of course, also known for its vast nickel reserves, which have surged in value for their owners in recent times, partially due to expected demand for batteries and EVs. Independence Group (IGO), which reached its first anniversary since launching production at the Nova nickel-copper mine in the Fraser Range last month, has flagged its intentions to target this demand.

With Nova running at its nameplate 1.5 million tonnes per annum mining rate, and output on track for another boost in the June quarter, IGO is progressing next generation projects to drive additional value from the mine’s potential.

IGO is studying opportunities for downstream processing to produce nickel and cobalt sulphate, which would deliver higher payabilities, premium prices and improved concentrator recoveries. The company is progressing metallurgical testwork to confirm findings from a scoping study it delivered this year.

“We are pleased with the results to date from this testwork and expect to progress to a prefeasibility study, which would be completed by the end of the 2018 calendar year,” Bradford tells Australian Mining.

A successful move into downstream processing of nickel and cobalt sulphates would be timely for IGO as demand increases, something Bradford is confident will give the company a strong long-term outlook.

Bradford says the impact of this demand has already been witnessed on cobalt pricing and, in time, he also expects the same will happen for nickel and copper.

“The market is forecasting a large deficit in the availability of high-quality nickel for use in EVs and other minerals used in metals for batteries and energy storage and distribution technologies,” Bradford says.

“We think nickel will be a big winner from the EV demand disruption, as we continue to see deficit in supply being eroded for stockpiles.”

IGO’s ambitions at Nova also include introducing greater underground automation, which would be a significant development for the region’s nickel sector.

“Nova is relatively unique in that most of the underground capital infrastructure is already in place and the mine design is well suited to accommodate autonomous mining and haulage,” Bradford said.

“We are currently expanding our fibre optic backbone underground to facilitate the potential transition to a greater amount of autonomous mining.” IGO’s other major asset is a 30 per cent stake in the Tropicana gold mine joint venture with AngloGold Ashanti.

World-class gold mines like Tropicana continue their significant contribution to the Goldfields region’s production profile, with 102,000oz in the March 2018 quarter.

The region is also seeing an uptick in new output, including Dacian Gold’s 180,000oz–210,000oz a year Mt Morgans operation near Laverton.

In 2019, another 270,000oz of average annual production is on track to be added through the Gruyere joint venture between Gold Fields and Gold Road Resources. Surbiton Associates gold consultant Sandra Close believes the gold sector in the Goldfields region has been traveling well, supported by a stable price for the precious metal.

“When you look at new mines like Dacian’s, and then that Gruyere will start in 2019 and then build up, you can see what is in the pipeline and that there is quite a lot of activity there,” Close says.

“It is the combination of things that looks good.

“The overall stability to the average gold price has been good for quite a while and that has been reflected in the lift in activity. That’s why we saw a really superb quarter in the last quarter of 2017.”

With the gold sector strong, and the battery metals sector emerging (rapidly), the start of the next 125 years in the Goldfields looks promising.

This story originally appeared in the August 2018 issue of Australian Mining.