Tasmania has enjoyed a comeback in the mining sector over the past two years. Ewen Hosie speaks to experts in the state to find out why.
Tasmania is no upstart when it comes to mining. It is home to Australia’s longest-operating mine, Mount Lyell in Queenstown, which changed hands across myriad owners from 1893 to 2014 before being shuttered following a tragic incident.
Mount Lyell is tied symbolically to a resurgence of interest among explorers in the state.
The mine is tipped for a restart next year under the banner of Indian mining major Vedanta Resources.
The Mt Lyell field has an estimated non-JORC resource as high as 311Mt at 0.97 per cent copper and 0.31g/t of gold.
In January 2017, Diversified Minerals’ Henty gold mine in western Tasmania achieved first pour under new owners Diversified Minerals, who brought the mine back from the brink after having been on care and maintenance since late 2015. It has a JORC resource of 2.8Mt of gold at 12.5g/t.
Likewise, London-based company NQ Minerals has breathed new life into the Hellyer gold mine with a new tailings processing project.
Shut by previous owner Bass Metals in 2012, NQ Minerals plans to reprocess an estimated $1.5 billion of gold, lead, silver, pyrite and zinc tailings over a 10-year project life.
While mining in Tasmania is not as tied to the state’s image as Western Australia or Queensland, it’s still critical to its economy. The Tasmanian mining sector employs over 6300 people and accounted for 55 per cent of state exports in 2016–17.
According to Wayne Bould, chief executive officer of the Tasmania Minerals and Energy Council (TMEC), the mining industry in the state never really died.
“There were certainly some issues at the time of the global financial crisis and I think that impacted any smaller mining opportunities around the world generally,” he says.
“That’s very much turned a corner. What we’re starting to see now is the fruition of plans and strategies put in place up to three or four years ago.”
While best known for the mining of gold and tin, Bould says Tasmania is also a highly metalliferous area full of complex polymetallics.
He believes the state offers a burgeoning opportunity for explorers of rare earth ores that may not have been as attractive to investors a decade ago.
“With changes in technology and changes in the requirements for metals like vanadium — because of their uses for electric cars, batteries and high tech gear — people are far more interested in coming and having a look at them than they were 10 to 15 years ago, when you had to have a deposit that would take 25 dump trucks before anyone would start,” says Bould.
Accelerate Resources is one junior company hoping to capitalise on this at the early-stage Mt Read cobalt project after spotting an opportunity to meet the demands of the electric vehicle (EV) market in a Tier 1 jurisdiction.
Mt Read is a considerable change of pace for the Perth-based company, which is best known for its gold sites in Western Australia.
The company has identified promising returns for cobalt, copper, nickel and gold at Mt Read’s two prospects — Thomas Creek and Henrietta. Like Henty and Mt Lyell, Accelerate’s project is in the highly metalliferous Mount Read volcanic belt.
Accelerate began its work at Mt Read in earnest in October 2017. Its recent drilling at the Thomas Creek deposit has shown evidence of a large porphyry system with high potential for multiple cobalt and copper targets.
Managing director Yaxi Zhan says Tasmania has been underexplored and provides a unique investment opportunity.
“I think across the board there’s definitely been more confidence and activities in the industry,” she says. “If you look at the deals that are occurring in Tasmania that’s on the upper trend as well.
“There’s a lot of activity going on in the southwest of Tasmania and on the other side of the Tassie there’s more focus on gold exploration, with the government putting in policy to encourage and attract more explorers.”
Tasmania’s Will Hodgman-led Liberal Government is trying to stimulate the local mining economy.
In May, Tasmania Resources Minister Guy Barnett announced the Mining Exploration Grants Program, a $2 million injection intended to cover helicopter and drilling costs for explorers.
The Mt Lyell restart, which requires significant work, has also been made possible in part due to subsidisation, with the Hodgman Government having committed around $9.5 million so far to the project in cash and kind.
Bould believes the Tasmanian Government has taken a more streamlined approach to mining regulation in recent years.
“The government has become less of a policeman and more of a facilitator to some degree — albeit in the bounds of the laws that prevail at the time — but they’ve also understood that some of the approval processes were draconian and a little bit out of date,” he says.
Ray Hazeldene, chief geologist of Stellar Resources, echoes this sentiment, saying the government has been quite encouraging.
Stellar is responsible for the in-development Heemskirk project near Zeehan in the northwest of Tasmania.
The project, which focuses on cassiterite tin, is close to the Renison underground tin mine, a joint venture between Metals X and Yuunan Tin Group that is the largest active tin mine in Australia (24.5Mt at 1.4 per cent tin).
“There hasn’t been a lot of new discoveries made in the last 20 years so getting some greenfield exploration going is important I think,” Hazeldene says.
“There’s a lot of activity leftover from majors in the 60s and 70s that haven’t been drilled so there’s a lot of potential, but the exploration costs in Tasmania are higher than most companies would be used to in Western Australia or even the eastern states.”
Geographically, Tasmania has benefits too. Due to its small size compared to other Australian states — a surface area roughly equivalent to Ireland — Tasmanian mining operations don’t require fly-in, fly-out (FIFO) workers.
It also offers energy advantages. Tasmania generated 100 per cent of its energy needs from renewable energy sources (primarily hydroelectric dams) in the September 2018 quarter at an average price of $43.46 per Megawatt hour (MWh), around half the cost per MWh of New South Wales and South Australia.
Overall, the signs are looking increasingly positive for a boost in greenfields exploration to complement Tasmania’s abundant brownfields operations.
“The co-operation investors can get from organisations like TMEC and Mineral Resources Tasmania provides people with a pathway that helps them to navigate issues reasonably well,” says Bould.
“We have excellent access to government decision makers and the like and can assist people like Hellyer in having the appropriate discussions in a timely manner.
“That’s one of the values of being in a small state where we all know each other pretty well.”
This article originally appeared in the November 2018 issue of Australian Mining.