Established 1835 THE MINING INDUSTRY’S WEEKLY NEWSPAPER April 20, 2012

Focus on lithium and rare earths – p11

Rio Tinto guarantees Oyu INSIDE Bad weather Tolgoi financing with Ivanhoe hits iron-ore Ivanhoe’s Robert Friedland and other chiefs agree to step down giants page 4 By TANZEEL AKHTAR Robert Friedland RIO Tinto said it will guarantee (shown here US$3.3 billion of funding needed to speaking at Deal with complete the development of Oyu Mines and Tolgoi, the world’s largest undeveloped Money Hong African copper-gold project, after signing an Kong last Minerals agreement with Ivanhoe Mines Ltd, month) will owner of 66% of the Mongolian project. step down page 6 As part of the agreement, Ivanhoe as Ivanhoe founder Robert Friedland has stepped Mines’ CEO down as chief executive, along with chief financial officer Tony Giardini, as Ivanhoe well as a handful of other senior defers executives. Rio Tinto, which owns 51% of Ivanhoe, said it will nominate a new Mt Dore management team by the middle of next week. page 7 Following a rights issue, Rio Tinto could raise its stake in Ivanhoe to almost of which Ivanhoe has drawn down about the development of Oyu Tolgoi,” said 65%. Rio Tinto will provide a standby US$1.3 billion. Rio Tinto Copper chief executive Andrew Oyu Tolgoi in the first half of 2013. commitment for a US$1.8 billion rights Once project financing is in place, the Harding, adding that the agreement Kay Priestly, a director of Ivanhoe offering by Ivanhoe and provide bridge financing and the interim funding “provides future financial certainty for and CFO of Rio Tinto Copper, has US$1.5 billion of bridge financing. As facility will be repaid in full, Rio Tinto Ivanhoe and stability for the timely been appointed interim CEO and part of a funding agreement in said. development of Oyu Tolgoi”. Catherine Barone, vice president December 2010, Rio Tinto provided an “Since 2006, Rio Tinto has provided Rio Tinto said it is dedicated to of finance at Ivanhoe, has been interim funding facility of US$1.8 billion, funding of US$3.5 billion to Ivanhoe for starting commercial production from appointed interim CFO. Caledonia to keep calm and carry on in Zimbabwe CALEDONIA Mining Corp plans to By DAvID BANNISTER us,” he said. “That should allow people maintain cautious but steady growth to change their attitude towards at its Zimbabwe operations, the committee gave an opinion which said investment in Zimbabwe.” company said in a week when the the new regulation was not There has been recent speculation African nation announced that constitutional. So it remains to be about the health of Zimbabwe hundreds of miners would have to seen whether the ministry will President Robert Mugabe with some resubmit exploration licence continue to push forward with that.” reports saying he had been treated for applications. Zimbabwe previously grabbed the a serious illness in Singapore – a claim Zimbabwe’s ministry of mines said mining world’s attention when it rejected by Zimbabwean officials. 469 mining companies would need to announced that foreign firms would The Blanket gold mine Analysts at Numis Securities said resubmit detailed applications for be required to transfer 51% of their there is “no reason in our view for any prospecting rights within 30 days, Zimbabwe operations to local owners. government, for US$30 million to be optimism for the miners once Mugabe government-owned daily The Herald Last month, a stand-off between the repaid from later dividends. finally shuffles off. No-one has reported. It follows a decision earlier Zimbabwe state and platinum “We’re well advanced in terms of challenged his leadership meaning- this year to raise prices for pre- producer Impala Platinum Holdings the underlying transactions and fully in recent years and it seems exploration licences, in some cases Ltd was resolved when the company documentation, and we want to unlikely much will change with from hundreds to millions of dollars. agreed to hand over 51% ownership reduce risk as quickly as possible,” Minister of Defence Emmerson “There’s nothing wrong with a ‘use of its local subsidiary Zimplats. said Mr Learmonth. “Because once it’s Mnangagwa waiting in the wings.” it or lose it’ policy,” Caledonia vice Caledonia was among the first done, it’s done.” Caledonia said it would concentrate president Mark Learmonth told companies to negotiate an “If over the coming 18 months we on expanding output via a downward Mining Journal. “Historically, the cost indigenisation agreement with can show growth beyond 40,000oz/y, drilling programme at Blanket, and of holding exploration licences was Zimbabwe. A 51% stake in its Blanket given that we won’t need to raise any that it hoped to add 16,000-20,000oz/y ridiculously cheap. But last week the gold operation will be transferred to a money, then we will prove that the in production by early 2013 by government’s parliamentary legal number of stakeholders, including the indigenisation environment works for developing two satellite projects.

www.mining-journal.com

01MJ120420.indd 1 19/04/2012 18:31 COMMENT

Editor Julie Crust [email protected] Deputy editor Dealing with seasonality Dominic Mercer MSc, DIC, FGS [email protected] Features editor BRAZILIAN iron-ore producer Vale SA said it all this week under amount of rain fall in a single event,” it said. Gareth Tredway the ‘dealing with seasonality’ headline of its quarterly Last year, the mining insurance market was hit by [email protected] production report. BHP Billiton and Rio Tinto also mentioned US$2.7 billion in natural catastrophe losses and more than 60 Assistant editors Tanzeel Akhtar poor weather in their quarterly output reports to end-March, operational losses totalling US$835 million, global insurance [email protected] meaning that all three of the world’s largest iron-ore producers broker Willis Group Holdings said in its Mining Market Review. David Bannister [email protected] were affected by conditions out of their control. It said that the US$3.5 billion total estimate of losses facing Production editor “The summer season in the southern hemisphere was mining insurers had prompted a 30% fall in insurance capacity Tim Peters extremely rainy, hitting Brazilian mining districts such as the since the start of 2011 after some notable exits in late 2011. Sub editor Woody Phillips Iron Quadrangle in the southeast and Carajás in the north of “The key elements which are influencing the tightening of Editorial enquiries the country, where our iron-ore operations insurance terms and capacity availability Tel: +44 (0)20 7216 6060 Fax: +44 (0)20 7216 6050 are concentrated,” said Vale, the world’s top are: firstly the series of losses which have E-mail: [email protected] producer of the steelmaking ingredient. affected the industry over the past 12 Website: www.mining-journal.com BHP Billiton and Rio Tinto both months; secondly, natural catastrophe Advertisement, subscriptions and circulation director mentioned cyclone activity as a reason Julie exposure, especially flood and earthquake; Gareth Hector +44 (0)20 7216 6057 Advertisement manager behind lower iron-ore production for their Crust, thirdly, the aggregation of exposures Richard Dolan +44 (0)20 7216 6086 latest quarters versus the preceding three editor carried by insurers in regions such as the Display sales executives months, yet output was still higher than Pilbara in Western Australia (cyclone), Tom Peck +44 (0)20 7216 6085 Leon Walton +44 (0)207 216 6095 the year-earlier period, when operations in the Bowen Basin in Queensland (flood Supplement sales manager the Pilbara in Western Australia were and weather events) and Chile (earth- Richard Verth +44 (0)20 7216 6068 E-mail: [email protected] disrupted by tropical cyclones and quake); and, finally, the increased Advertising production widespread flooding. complexity of coverage for Contingent Sharon Evans Fortescue Metals Group also said Business Interruption (CBI) caused by the Subscription enquiries “Last year, the PO Box 1045, Bournehall House, shipped tonnes in the March quarter were globalisation of the supply chain,” said Steve Bournehall Road, Bushey below original guidance due to the impact Higginson, Willis Mining Practice Leader. WD23 3YG, UK mining insurance Tel: +44 (0)20 8955 7050 of two cyclones that resulted in the closure The report estimated that the current Fax: +44 (0)20 8421 8155 of Port Hedland and delayed ship loading market was hit by global capacity available to mining E-mail: [email protected] for around eight days. The iron-ore group property damage & business interruption Annual subscription: US$650 US$2.7 billion in (UK and Europe: £360/€580) said the performance of mining operations (PDBI) insurance programmes is ISSN 0026-5225 during the quarter was also hit by excessive natural catastrophe US$1.25 billion, down from US$1.75 billion Mining Journal, published weekly, is available only as rain in January from Cyclone Heidi. at the start of 2011. “Whilst this does not part of a subscription with Mining Magazine and losses and more Mining, People and the Environment, plus online access. BHP Billiton had already announced that represent the dramatic loss of capacity that Published by Aspermont UK its coal joint venture with Mitsubishi was than 60 operational precipitated historical hard markets such as Albert House, 1 Singer St, EC2A 4BQ forced to declare force majeure, a legal 2001, it may indicate a difficult year ahead Printed by Stephens & George, Merthyr Tydfil clause that allows companies to miss losses totalling for the renewal of mining PDBI Registered as a newspaper at the Post Office supply obligations as a result of events US$835m” programmes,” Willis said. Chief executive officer beyond their control, for all of its Bowen Last year, the mining insurance industry David Nizol Chairman Basin shipments as rains hampered endured another poor underwriting year Andrew Kent production and as a labour dispute continued. similar to 2008 with significant physical damage from natural © Aspermont UK 2012 March rainfall in Queensland was at the seventh-highest level catastrophe losses especially from flooding. Willis noted the Disclaimer: since 1900, according to Australia’s Bureau of Meteorology, with change between the handling of Queensland floods in 2008, Aspermont UK, publisher and owner of Mining Journal (‘the much of the Bowen Basin receiving 100-800mm. “with both sides selecting experts from a limited pool and then publisher’) and each of its directors, officers, employees, advisers and agents and related entities do not make any Meanwhile, Anglo American said its production of export seeking to outmanoeuvre each other”, and the more warranty whatsoever as to the accuracy or reliability of any information, estimates, opinions, conclusions or metallurgical coal fell 8% from the fourth quarter of 2011 due co-operative approach the insurance and mining companies recommendations contained in this publication and, to the to wet weather. employed for the 2010/11 flooding. maximum extent permitted by law, the publisher disclaims all liability and responsibility for any direct or indirect loss Mining Risk Management – which works with a number of Storm damage was estimated to have cut Australia’s or damage which may be suffered by any person or entity mining clients such as Rio Tinto, Xstrata plc and Barrick Gold commodity-weighted economy’s GDP growth by A$20 billion, through relying on anything contained in, or omitted from, this publication whether as a result of negligence on the Corp – noted there is an important differentiation between a or 1.5%, in the 2010-11 financial year, Reuters reported. part of the publisher or not. Reliance should not be placed on the contents of this magazine in making a commercial sudden intense rainfall and a long, slow build-up of waters. Still, Willis said well risk-managed mining programmes will or other decision and all persons are advised to seek “Likewise, the amount of rain in proceeding days and months still be able to get favourable terms this year even after the independent professional advice in this regard. makes a substantial difference to the impact from a particular unprecedented spate of losses in 2011. COMPANIES MENTIONED IN THIS ISSUE African Minerals Ltd 6 Galileo Resources Plc 7 Malaysia Smelting Corp 9 Rincon Lithium Ltd 14 Albemarle Corporation 14 Geomega Resources Inc 17 Matamec Explorations Inc 10, 17 Rio Tinto 1, 3, 4, 6 Alderon Iron Ore Corp 7 Great Western Minerals Group Ltd 10, 17, 18 Minemakers Ltd 7 Rodinia Lithium Inc 14 Alkane Resources Ltd 17, 18 Greenland Minerals and Energy Ltd 17 Molycorp Inc 10, 17 Search Minerals Inc 17 Alpha Natural Resources Inc 9 Hastings Rare Metals Ltd 18 Montero Mining and Exploration Ltd 18 Shunge Mining Co 6 Aluminum Corporation of China Ltd 6 Hebei Iron & Steel Group Co Ltd 7 Namakwa Diamonds Ltd 4 Sociedad Química y Minera de Chile SA 11 Arafura Resources Ltd 18 Huadian Power International Corp 6 Nemaska Lithium Inc 14 AuRico Gold Inc 6 Hudson Resources Inc 17 North American Palladium Ltd 4 Southern Crown Resources Ltd 18 Avalon Rare Metals Ltd 10, 17 IAMGold Corp 17 Nusantara Group 3 SouthGobi Resources Ltd 6 Banro Corp 9 Impala Platinum Holdings Ltd 1 Ormonde Mining Plc 9 Spur Ventures Inc 9 BHP Billiton 4 Indian Rare Earths Ltd 18 Paladin Energy Ltd 6 Stans Energy Corp 18 Bullabulling Gold Ltd 9 Ivanhoe Australia Ltd 7 Peak Resources Ltd 18 Talison Lithium Ltd 14 Caledonia Mining Corp 1 Ivanhoe Mines Ltd 1, 6, 7 Pele Mountain Resources Inc 17 Tantalus Rare Earths NA 10, 18 Cape Lambert Resources Ltd 6 Kagara Ltd 6 Polyus Gold International Ltd 6 Tasman Metals Ltd 10, 18 Castlemaine Goldfields Ltd 4 Kazatomprom 18 PT Ridlatama 3 UCL Resources Ltd 7 Chaarat Gold Holdings Ltd 3 Kimberley Rare Earths Ltd 18 Quest Rare Minerals Ltd 10, 17 Ucore Rare Metals Inc 18 Churchill Mining plc 3 King Island Scheelite Ltd 9 Randgold Resources Ltd 4 Codelco 3 LionGold Corp 4 Rare Earth Metals Inc 17 Vale SA 4 DNI Metals Inc 17 Lithium Americas Corp 14 Rare Element Resources Ltd 17 Wolf Minerals Ltd 8 Endeavour Silver Corp 6 Lithium One Inc 14 Reed Resources Ltd 14 Woulfe Mining Corp 9 Frontier Rare Earths Ltd 18 Lynas Corporation 10, 17, 18 Resources Commerce Corp 17 WPG Resources Ltd 9

2 Mining Journal April 20, 2012

02MJ120420.indd 2 19/04/2012 18:23 headlines Register to receive mining journal breaking news at mining-journal.com/newsletter

Churchill seeks Copper prices may rise again Us$1.8bn in by year-end, says GFMs compensation AFTER a weak start to the year, copper for east Kutai prices may rise again over the second CHURCHILL Mining plc is seeking half of 2012, according to the Thomson about US$1.8 billion in Reuters GFMS copper survey. compensation relating to the “There is a possibility that prices could development of the East Kutai coal re-test the $9,000 level later this year as project in Indonesia and is improving demand and the impact of considering taking its case to looser monetary policy drives increasing international arbitration. investment in the copper market,” said It plans to file an application for GFMS base-metals research director arbitration to the International Sanjay Saraf, adding that “having risen by Centre for Settlement of Investment 17% in 2011, prices may struggle to disputes in Washington in May-June register significant and sustained gains unless the Indonesian government in the short term”. comes to a decision on the project, Benchmark copper prices on the the company’s executive chairman, London Metal Exchange fell to a A worker counts copper cathode sheets at a Polish copper smelting factory David Quinlivan, told Mining Journal. three-month low of US$7,885.25/t this Photo: Bloomberg News The company has not publicly week and prices have only gained about announced a figure for international 5% so far this year. purchases to meet deliveries. lower,” the bank’s analysts said. arbitration, but a feasibility study GFMS forecast an average price of “Whilst we do see higher mine output “Demand for refined copper may not pointed to an asset value of US$8,475/t for the year, saying that growth this year, the supply side of the revive until September as current heavy US$1.8 billion and this was based on monetary easing in the major economies balance equation remains relatively stockpiles are depleted and Beijing takes a coal prices lower than at present, a would support prices and drive buying tight,” said GFMS analysts. “Even steps to boost the economy. Chinese spokesman for Churchill Mining said. on price-dips. factoring in increased mine supply, we demand this year is expected to grow at Earlier this month, Indonesia’s The report comes at a time of falling are still forecasting a deficit for 2012 as a least 6.5%, but market jitters may keep Supreme Court rejected an appeal by grades at some of the world’s largest whole, albeit a smaller one than last red metal prices volatile.” Churchill Mining, which has been in projects – Rio Tinto, for example, said it year’s estimate of 256,000t.” The GFMS survey also argued rising dispute with Indonesia’s Nusantara produced 18% less copper year-on-year Indian investment bank Ananda Rathi production costs would buoy prices, Group for almost four years over the in its last quarter due to lower grades at disagreed with GFMS’s deficit after costs increased about 17% last year. rights to develop the vast coal the Kennecott and Palabora mines. assessments but concurred with the “With operating costs continuing to reserves in East Kutai. The project is Concerns have also been raised price forecast, arguing that all-crucial rise significantly above inflation rates estimated to contain 2,730Mt of coal about the ability of producers to meet Chinese demand may take some time to and increasing capital costs, the gap reserves. demand, with reports indicating that affect prices. between market price and the incentive Churchill Mining filed an appeal leading producer Codelco had been “With negative data from China, our price for new projects appears to be on September 26 in Indonesia’s compelled to make spot market expectations of a copper deficit sink closing,” it said. Supreme Court. Mr Quinlivan said he wrote a letter to the president of Indonesia last November and is still Chaarat Gold seeks talks with awaiting a decision. “Six months is an appropriate time Kyrgyzstan to protect tax changes to try and come to a resolution GOld exploration company Chaarat Chaarat Gold will without going through a process of Gold holdings ltd said it plans to suspend further arbitration under the treaty and that enter into talks with the newly formed capital investment six-month period is going to come to government in the Kyrgyz republic to activities pending an end in May,” he said. seek to protect itself from what it the negotiations Churchill Mining bought a 75% considers to be likely changes to stake in Indonesian firm Ridlatama taxation, ownership structure and negotiations with the government,” 180,000-200,000oz/y in 2016. Group around four years ago, which royalties. the company said in a statement. “While the delay is a disappoint- it said received four mining licences The company said the government “The aim of these is to secure ment, we believe a more robust, more from the East Kutai government, and had confirmed its support of this long-term stability for the Chaarat de-risked project may be the end Churchill Mining said it has spent approach and Chaarat’s chief project by the development of a result,” said analysts at numis US$50 million on the project. executive, dekel Golan, told Mining mutually agreed investment securities. Mr Quinlivan said his company is Journal there was no issue between agreement, containing a ‘stabilisation Chaarat said that once it builds a involved in a number of disputes the two parties. clause’, protecting the company from processing plant, the biggest with Ridlatama over contractual “We find the country we operate in changes to taxation, ownership investment in the project, it will have measures and is also in a dispute very positive to work in,” he said. structure and royalties.” little leverage with the government. with Nusantara Group, which holds “some people took it as a sign that we The new government is under The processing plant will cost about licences in the region. have problems with the government, pressure to raise revenues and mining £11 million (Us$18 million) to build but this is not the case.” companies are seen as an obvious and Mr Golan said that the company Mr Golan said the legislation in the target, the company said, noting the needs to ensure there is no Central asian country is sensible, but rise in resource nationalism globally. misunderstanding with the lacks clarity. Chaarat will suspend further government before a decision is made “in order to mitigate any capital investment activities pending to go ahead with its construction. uncertainty concerning the possible the negotiations, yet it hopes to Chaarat’s chief executive said the impact on the phased development of complete the talks and still be in company is continuing with the Chaarat project, the company has production by the end of 2013. it is exploration and infrastructure work. decided to enter into direct seeking to raise production to

www.mining-journal.com April 20, 2012 Mining Journal 3

03MJ120420.indd 3 19/04/2012 18:26 News

nNaMakwa wage dispute Canada mining bodies welcome London-listed Namakwa Diamonds Ltd said the National Union of Mine Workers in South Africa has called a resource development plan strike at the group’s operations in the North West province, as a result of a tHe Mining association of Canada the country’s mining sector could wage dispute. “Negotiations are (MaC) and the prospectors and attract C$100 billion of investment ongoing and such strike action is not developers association of Canada over the next decade. expected to have a material impact (pdaC) have welcomed new under the new proposals, the on the production output for the government proposals to streamline environmental review process would year. FY2012 production guidance national mineral development be consolidated under Canada’s remains at 20kct,” said the company. regulations under a new economic environmental assessment agency action plan. and its nuclear regulator, with nNew bid for CastleMaiNe “the mineral exploration and maximum limits set out on the period Singapore-listed LionGold Corp said development industry needs an available for review. it made a A$50.3 million (US$52.2 efficient regulatory regime that decisions on whether to require an million) takeover bid for Castlemaine encourages investment by providing environmental impact assessment Goldfields Ltd, an Australian gold certainty and predictability,” said would take place within a maximum producer. Castlemaine said its board pdaC executive director ross of 45 days; the assessments Joe Oliver, Canada’s minister of natural had unanimously recommended the gallinger. “we commend the federal themselves would have a maximum of resources, announces the plan offer of two LionGold shares for government for its goal of a system one year for completion; and state every nine Castlemaine shares. The that provides predictable and timely bodies would have a two-year the plan has met a degree of takeover bid represents a 62% reviews, reduced duplication, maximum for reviewing findings. the criticism in Canada, with some media premium to Castlemaine’s closing strengthened environmental proposals would also allow provincial reports arguing that it represents a share price on April 13. Castlemaine protection and enhanced aboriginal government assessments to supplant way for the industry to escape has five goldfields in Victoria’s gold consultation.” those required at federal level. coherent oversight. belt and its primary focus is the the government’s plan argues that further measures include a shift to “the end point of an assessment high-grade underground gold mine resource developers “have had to face focus environmental assessments on should be determined by whether the in Ballarat, which started producing an increasingly complicated maze of major projects as opposed to smaller work is done, not by an arbitrary gold last September. rules and bureaucratic reviews that developments, and the imposition of deadline,” said green party leader has grown in a piecemeal fashion,” monetary penalties for violation of elizabeth May. “it is just another way nraNdgold kibali update giving as an example a 19-month assessment procedures. of undermining the process to the Randgold Resources Ltd said delay in environmental permitting for the move also seeks to integrate benefit of industry.” construction work on the Kibali a C$400 million (us$403 million) consultation with Canada’s aboriginal MaC president pierre gratton mine, expected to be one of Africa’s saskatchewan uranium project communities into the environmental argued that “greater efficiency and largest gold mines, is proceeding proposed by areVa. assessment process, and provides coordination in the review process will rapidly with first output anticipated Joe oliver, Canada’s minister of funding to facilitate consultation with not come at a cost to the by the end of 2013. The Kibali project natural resources, said last month that these groups. environment”. in the DRC is a joint venture between Randgold (45%), AngloGold Ashanti (45%) and the Congolese parastatal, bad weather hits iron-ore giants Sokimo (10%). The deposit is estimated to contain more than VALE SA, Rio Tinto and BHP Billiton all 10Moz of gold and the current reported lower iron-ore production in life-of-mine plan envisages average the quarter to end March, versus the production of 600,000oz/y for the preceding three months, due to adverse first 12 years at an average grade of weather conditions. 4.1g/t. The project, being built in two Brazil’s Vale, the world’s largest overlapping phases, should cost at producer of iron ore, said heavy rainfall least US$1.6 billion to develop. had affected its operations, resulting in output of the steelmaking ingredient nNap raises C$35M falling 14% from the fourth quarter to Iron-ore transport at Vale and a Rio Tinto train in the Pilbara. These companies both North American Palladium Ltd (NAP) 71.5Mt. reported lower iron-ore production in the last quarter Photos: Vale; Bloomberg News announced an 11.3 million share Rio Tinto said its iron-ore production offering, adding that it planned to in the first quarter rose 10% from the It produced 37.9Mt of iron ore in the depleted, the impact on future quarters use the C$35 million (US$35.3m) year earlier to 59Mt, although shipments quarter, raising its nine-month output to may be significant,” the company said. proceeds for exploration activities were 5Mt below output as ports in a record 118.6Mt, and said that despite Both BHPB and Rio Tinto have and mine expansion expenditures at Western Australia were closed because the cyclones it had retained its full-year announced reviews of their diamond its Lac des Iles palladium mine and of cyclones. Its output fell 9.2% from the production guidance for its WA iron-ore operations. Rio Tinto said that rough property in Ontario. Earlier this week, record 65Mt produced in the fourth operations. Iron ore accounts for half of diamond production from the Argyle the company announced it produced quarter. the company’s profits. mine in Australia jumped 52%, 41,760oz of palladium, at a cash cost Rio Tinto expects to produce 250Mt of BHP Billiton also said its coal compared with the first quarter of 2011, of US$380/oz, in the first quarter. iron ore from its global operations in production in Queensland, Australia when operations were affected by heavy “Based on these results, we are Australia and Canada, subject to weather remained constrained in the quarter to rains and flooding, while output from confident we will meet our 2012 constraints. The iron-ore division is Rio end March because of strikes and heavy the Diavik mine in Canada was up 19%. production guidance of 150,000 to Tinto’s largest and accounted for about rainfall and it warned that industrial BHPB diamond operations were less 160,000oz of palladium at a cash cost 70% of profits in 2011. action may have a major impact in successful, posting a 21% drop in per ounce in the range of US$375 to Meanwhile, BHPB’s iron-ore future. diamond production from the US$400,” said CEO William J. Biggar. production rose 14% from the “The extent to which industrial action year-earlier quarter. The miner also said Its flagship Lac des Iles mine has year-earlier quarter, but declined 8% will continue to affect production, sales output from the Ekati mine in Canada is been operating since 1993. from the preceding quarter because of and unit costs is difficult to predict – likely to remain hampered in the cyclone activity. however, with inventories now severely medium term by lower-grade material. 4 Mining Journal April 20, 2012

04MJ120420.indd 4 19/04/2012 18:24 Ngualla Project diScovERy To dEvEloPmENT a large NeW rare earth resource

West Australian based minerals explorer and developer Peak Resources is advancing its rare earth resource in southern Tanzania into the development phase and onto the road to production.

The 29th February release of the maiden JORC compliant resource estimate for Ngualla was a significant milestone in the rapidly paced development of the project.

The resource estimate summary is:

Lower cut-off Tonnage REO Contained REO grade (Mt) (%)* (t)

1.0% REO 170 2.24 3,800,000 3.0% REO 40 4.07 1,600,000

*REO (%) includes all the lanthanide elements plus yttrium oxides.

Peak continues to be very encouraged by the results to date, which indicate considerable upside to the project and will continue to aggressively advance Ngualla.

Development in 2012 will focus on further exploration and resource drilling, metallurgical test work and scoping studies.

The project is also highly prospective for niobium, tantalum and phosphate.

Level 2, 46 Ord Street, West Perth, WA 6005 Ph: (08) 9200 5360 www.peakresources.com.au ASX code: PEK ACN 112 546 700

RARE EARTHS Niobium TANTAlum PHoSPHATE

PEAK0155 FPA-v2.indd 1 13/04/12 1:31 PM News

nHuadiaN buys sHuNge AuRico sells two silver-gold projects China’s Huadian Power International aurico gold inc has sold the el cubo endeavour that will have an stawell and fosterville mines in Corp revealed that it planned to buy silver-gold mine and guadalupe y immediate and sizable impact on our australia to crocodile gold corp for coal producer Shunge Mining Co calvo silver-gold project to the production, reserves and resources, us$105 million. under an agreement signed between Nyse-listed endeavour silver corp for with minimal or no dilution to our aurico will continue to produce the two companies last September. us$250 million, continuing the shareholders,” said endeavour chief from the ocampe, el chanate and In a regulatory disclosure this week, company’s programme of divesting executive bradford cooke. young-davidson mines in the Huadian said it would pay RMB670 non-core producing assets. el cubo has been estimated to americas, with post-sale production million (US$106 million) for the endeavour will pay us$100 million contain 18.5Moz silver and 322,000oz guidance of 323,000-363,000 gold company, which operates the in shares and us$100 million in cash of gold in proven and probable equivalent ounces this year. Erdaoling coal mine in Inner for the Mexican projects, with a reserves, with a further combined “we look forward to participating Mongolia. Erdaoling holds 28.5Mt in further us$50 million to be paid on resource at 8.3Moz silver and in the success of these assets through reserves of high-calorific value coal. completion of the deal. 269,000oz of gold. our potential ownership interest in “Potential synergies with our the deal came as aurico sought to endeavour, and through the future nbaal gaMMoN trouble guanajuato mine make el cubo a divest assets deemed ‘non-core’, and receipt of the contingent payments,” Australian base metals producer logical and strategic acquisition for follows the sale last month of its said aurico ceo rene Marion. Kagara Ltd said it temporarily suspended operations at the Baal Gammon polymetallic project in Queensland after a restructuring of southgobi licences suspended the company’s banking arrangements affected its short-term cash flow. MONGOLIA’S mining ministry said it flagship Ovoot Tolgoi mine. said it would offer C$8.48/share Earlier this year, Kagara said it would suspended mining and exploration “The company has not received any (US$8.50) for a stake of up to 60% in sell the Lounge Lizard nickel mine and licences for SouthGobi Resources Ltd, official notification and has no reason to SouthGobi, which is 58% owned by place its Mungana and Thalanga two weeks after the Aluminum believe SouthGobi’s licences are not in Ivanhoe Mines Ltd. Ivanhoe is itself mines on care-and-maintenance. Corporation of China Ltd (Chalco) made good standing,” SouthGobi said. majority owned by Rio Tinto. Kagara previously said it planned to a US$930 million bid for a majority stake “Any official notification received may Analysts at Makor argued that begin development at Baal Gammon in the coal producer. require a suspension of operations until government approval was not legally in the second quarter this year. SouthGobi said the Mineral Resources an injunction is granted.” required for the deal to proceed and that Authority of Mongolia had unexpectedly The company said it believed the Chalco’s good standing with the Mongolia nPaladiN cuts guidaNce announced that some of the company’s suspension had been made to allow authorities would reduce its risks, adding: Uranium producer Paladin Energy licences would be suspended, including Mongolia’s government to review the “The threatened suspension might delay Ltd cut production targets for the those for mining at the company’s Chinese offer. Bauxite producer Chalco the deal, but it is still likely to close.” year after technical difficulties at its two African mines. The company said Gem finds 155ct it would reduce overall production cape lambert signs guidance by 2% from its original forecast of 3,221t uranium oxide. diamond Paladin said the flagship Langer african Minerals deal geM diamonds ltd discovered a 155ct Heinrich mine in Namibia fell 10% diamond earlier this month from the short of forecast production due to letseng operations in lesotho, issues with ramping up an additional southern africa, the company said process circuit. alongside a first-quarter trading update. nwto: growtH to slow it recovered 28,114ct from letseng The World Trade Organisation (WTO) in the first quarter, up 5.9% from the said it expected global trade growth year-earlier period, and noted that to slow to 3.7% this year from 5% last nine rough diamonds had realised year and 13.8% in 2010. A WTO report sale prices in excess of us$1 million argued that rising commodity prices each. posed further risks to overall growth, However, the average price of but that these might be offset by trade ASX-listed Cape Lambert Resources Ltd infrastructure pact between the parties us$1,976/ct at letseng was down 36% benefits to key producing states in the said it signed a binding heads of signed in October 2008. year-on-year, it said, adding that it developing world. The WTO noted agreement with African Minerals Ltd, The charge for rail transportation, received an average of us$ 1,049/ct that prices for metals had increased allowing iron ore from Cape Lambert’s port handling, transhipping and ship for diamonds from its ellendale mine 48% in 2010 and 14% last year. Marampa project in Sierra Leone to be loading of Marampa concentrate would in australia. exported through the latter’s rail and be at cost plus 20%. the company said it anticipated nclarificatioN: Polyus port infrastructure. The company also granted African buoyant diamond prices for the year, In last week’s Mining Journal (April Marampa is in eastern Sierra Leone, Minerals the option to buy up to 2Mt/y arguing that “despite the relatively 13) an article entitled “Polyus COO close to the Pepel rail and port of iron-ore concentrates directly from thin volumes being traded in the confident of meeting production network leased by African Minerals the mine, for a three-year period once polished market in high-end goods, targets” stated that Polyus Gold for the export of iron ore from its stage-one production has started, prices in these goods both in the International Ltd would expand plant Tonkolili mine. potentially providing transport polished wholesale market and processing capacity at the The agreement gives Cape Lambert infrastructure capacity of 4Mt/y. high-end branded auctions are Verninskoye mine to 3.6Mt/y by the an export capacity of 2Mt/y, via the Cape Lambert also said it expected to expected to improve further.” end of 2012. This has since been Pepel facilities, and 16.5Mt/y of make an announcement this month analysts at Numis securities said: clarified by the company: Polyus additional capacity once the Tagrin Point about the preparation for an initial “lower average prices may aims to ramp up production at deep-water port is completed. public offering (IPO) and listing of disappoint, but the quality variations Verninskoye to 2.2Mt/y by year end, Cape Lambert also gained a Marampa on London’s AIM market. should be smoothed once the letseng with future plans to expand the pre-emptive option to buy the Pepel The company added that it continued expansion is in place. gem remains a plant’s capacity to 3.6Mt. infrastructure if it is offered for sale. The to respond to third-party interest about good longer-term story for exposure agreement overrides an initial selling down its stake in Marampa. to rising prices.” 6 Mining Journal April 20, 2012

06MJ120420.indd 6 19/04/2012 16:16 EXPLORATION & DEVELOPMENT EDITED BY DOMINIC MERCER Hebei Iron in Ivanhoe Australia defers Mt Dore strategic tie-up IVANHOE Australia Ltd , a subsidiary of Ivanhoe Mines Ltd , has deferred a Little Wizard with Alderon prefeasibility study at the Mount Dore

ALDERON Iron Ore Corp said Hebei copper cathode project in Queensland Decline Iron & Steel Group Co Ltd , China’s after capital cost estimates were higher largest steel producer, has agreed to than an initial scoping study suggested. Open to make a C$194 million (US$196 million) The company has however, north-east strategic investment into Alderon and completed a feasibility study on its Kami iron-ore project in Canada. the adjacent Merlin molybdenum-

Hebei will take a 19.9% stake in the rhenium project, as well as a scoping Open at depth Canadian iron-ore development study at the Mount Elliot copper-gold Mount Dore Mount Dore Merlin leachable copper zone polymetalic zone molydbenum zone company, via a private placement, and project. a 25% interest in a newly formed “Given the strength of Ivanhoe 2.5km limited partnership that will own the Australia’s key projects, it has been Kami project. decided to focus on advancing Osborne, compared with the pre-feasibility higher-grade premium product. “Alderon now has both the capital Merlin and the large-scale Mount Elliott study last September. Initial capital The company said it was also and the China market access to build a Project, and proceed at a lower level of expenditure estimates have increased investigating the potential to locate the world-class company,” said Alderon activity on Mount Dore,” said the slightly to A$345 million from roaster offshore, rather than at its chairman Mark Morabito. company. A$337 million, but the average Osborne project, and that this could Following the acquisition of the A scoping study for Mt Dore, released life-of-mine operating cost estimate has further reduce up-front capital and 25% stake in Kami, Hebei has agreed in September 2011, estimated capital improved to US$6.60/lb of molybdenum operating costs. to buy 60% of the annual production costs of A$83 million (US$86 million) for from US$6.78/lb previously. The Mount Elliott scoping study from the project up to a maximum of a 19,000t/y cathode copper project, with An additional A$52 million of suggests a A$95 million open pit that 4.8Mt/y of iron-ore concentrate. costs averaging US$2.24/lb copper. capital has been included in the first would feed the mill at Osborne, followed “In addition to the potentially Meanwhile, the completed feasibility year of production at Merlin for an by development of the high-grade attractive investment returns, Hebei is study on the Merlin project showed an optimised molybdenum trioxide underground SWAN zone. able to lock up a long-term supply of improvement in project economics purification plant to produce a Two extraction methods have been high-quality iron ores,” said Wang identified for SWAN. One is a nine-year, Yifang, chairman of the steel producer. 3Mt/y sub-level open-stope operation, Hebei will also help obtain project and the second a 14-year, 12Mt/y debt financing from financial block-caving mine. institutions, including Chinese banks, The open-stope option carries a while the C$194 million will be used project capital expenditure estimate of mainly for the exploration and A$478 million and total life-of-mine development of Kami. output of 215,000t copper and 392,000oz The project hosts an NI 43-101 of gold. indicated resource estimate of 490Mt The block-cave option would cost at 30.0% Fe. Commercial production is A$1.18 billion and produce a total expected to start in 2015, according to 560,000t copper and 1.07Moz of gold. the preliminary economic assessment, Ivanhoe’s Australian projects (Sep 23, 2011) at a rate of 8Mt/y at 65.5% iron. Read more: www.mining-journal.com/285625 Kami study points to 8Mt/y (Sept 2011) Ivanhoe raises funds for projects (Sep 23, 2011) Read more: www.mining-journal.com/285629 The Mount Elliott copper-gold project Read more: www.mining-journal.com/285319

Tonnage TREO+Y2O3 P2O5 Nb2O5 Sc2O3 Glenover resource estimates released (Mt) (%) (%) (%) (ppm) Inferred 12.147 0.98 9.25 – – GALILEO Resources Plc announced an be relatively easy access and low cost indicated and inferred resource estimate to mine,” said chief executive Colin Measured & indicated 16.781 1.45 9.71 0.31 114.9 of 28.93Mt at 1.24% total rare-earth Bird. “The current inferred tonnage and Total 28.93 1.24 9.52

oxides + yttrium (TREO+Y2O3) at its grade of 0.66% TREO+Y2O3, in the prepared by GeoConsult International interest in the Glenover project, with an Glenover rare-earths joint-venture pyroxenite rocks is very encouraging and and was reported in accordance with the option to earn up to a maximum interest project, in the Limpopo Province of is leading the company to consider South African Code for Reporting of of 73.73%. South Africa. Glenover as a large-scale bulk-mining Exploration Results, Mineral Resources “The entire resource is around and project,” he added. and Mineral Reserves (SAMREC) code. For more on rare earths, please see this below the old open pit and therefore will The estimate was independently Galileo Resources holds an 11.5% week’s features on pp10-19. Sandpiper completes marine phosphate feasibility study A FEASIBILITY study on the Sandpiper 3Mt/y of phosphate concentrate at The desalination plant may lead to a optimisation work and finalisation on marine phosphate project on the grades of 27.5-28% phosphorous reduction to the overall operating cost the water strategy was required Namibian continental shelf, has pentoxide. Steady-state cash estimate, according to Minemakers. before it could provide an economic estimated a US$326.3 million capital operating costs are estimated at It also excludes working capital analysis of the project. cost to first production. US$59.67/t of rock phosphate requirements leading to a total Financing discussions and Minemakers Ltd (42.5%), UCL free-on-board at Walvis Bay, excluding funding requirement of US$387 approvals processes are also Resources Ltd (42.5%) and Tungeni Namibian royalties. million. ongoing, according to the company. Investments (15%) own Namibian The capital cost estimate excludes The measured resource on the The estimated construction and Marine Phosphate (Pty) Ltd, which in a potential small reverse osmosis project has also increased from 4.1Mt commissioning period is 24 months turn holds the project. desalination plant, which may need to at 20.5% phosphorous pentoxide following the final investment The operation envisaged would be constructed early in the mine life, to 60Mt at 20.8% (at a 15% cut-off). decision and the securing of have a 20-year mine life, producing and which is currently being refined. Minemakers said that continuing financing. www.mining-journal.com April 20, 2012 Mining Journal 7

07MJ120420.indd 7 19/04/2012 17:40 Miner’s right tungsten games BY tiM tReadgold point that skirts around the question of lax environmental controls and possibly market manipulation. oney spent on lawyers rarely achieves It has been China’s rise up the totem pole of the same positive result as money tungsten production, to a point where it speaks for an spent developing a mine, a point well estimated 85% of output, and the use (and possible understood by miners but not by misuse) of export controls, which has led to its government, as can be seen in inclusion in the rare-earths case filed at the WTo. tungsten,M a metal scheduled to make a return to the But, if tungsten is an element of such strategic British mining industry. importance that governments in the western world near the port city of Plymouth can be found the want China punished for alleged trade violations three world’s fourth-biggest deposit of tungsten, a metal important questions arise. They are: notorious for fickle price movements but regarded as a n Which metals might be next to achieve ‘critical critical strategic element by a number of governments. mass’ in a supply/demand sense? The Hemerdon tungsten and tin orebody has been n Is there really a shortage of ‘critical’ metals, or is worked intermittently since its discovery in 1867, there a shortage of government encouragement for mainly during periods of war when tungsten was in mining? strong demand for its use in making hard and n Will governments discover, with the tungsten and heat-resistant steels of the type used in armaments. rare-earths case before the WTo, that it makes more In both the first and second world wars the British sense to boost home-grown supply than running a government provided the demand that kept rear-guard legal action? Hemerdon in business, until peace returned, the tungsten price collapsed, and the mine closed. on the question of which element is next we can over the past few years the tungsten price has been thank the British Geological Society (BGS) for last year moving up thanks to a combination of higher demand producing a list of elements facing “supply risk”, such as and a supply shortage, but the real reason tungsten concentration of production in a single country. has been making headlines around the world is that it High on the BGS “relative supply risk index” were was named, along with rare earths, in a “class action” antimony, platinum group elements, mercury and against China at the World Trade organisation. tungsten. They all scored 8.5 out of a possible 10 for That action, led by the US and supported by europe maximum risk. Rare earths scored 8 on the risk list, but and Japan, caused two of America’s leading business so did niobium, with graphite on 7, and tin on 6. magazines, Fortune and Forbes, to tip tungsten as a The BGS list is a guide to possible future events as commodity to watch, and for two of Britain’s top demand for minerals continues to rise thanks to the newspapers, The Times and The Daily Telegraph, to industrial revolution sweeping across mainland Asia, remind readers that the UK was once a world leader in and the struggle in satisfying demand from the world’s tungsten production. 7 billion people, and counting. on April 3, Fortune asked its readers: “Is tungsten Hemerdon is simply the latest flashpoint in a global the next hot rock?” The following day Forbes told its scramble for supply of elements critical to a modern readers that: “A rare metal you’ve never heard of is industrial economy in the face of rising demand. on a tear.” The metal was tungsten. It might even be argued that rather than engage a What followed was a cavalcade of publicity about team of lawyers to pay for Britain’s share of the cost of tungsten and Hemerdon. The newsagency, Bloomberg, the WTo case, it would achieve a better outcome by said: “england challenge China by reviving a strategic encouraging the speedy re-opening of Hemerdon, and mine,” and this week The Daily Telegraph chimed in perhaps even taking a look at other mothballed mines. with: “Devon mine is focus of global trade war for tungsten”. SecuRing SupplieS A full-scale return of mining in europe is a topic for Raining on the paRade another day, but if governments in the western world At the risk of raining on the parade of the new arrivals are serious about securing future supplies of critical at the tungsten story, and before looking at the elements it is something they will have to think about big steps before construction starts. specific issues of Hemerdon, a few important facts or else rely on an increasingly erratic supply pipeline. “This is a really exciting project for the UK,” said need to be considered, including the all-important Sandvik and Sojitz, Swedish and Japanese consumers Humphrey Hale, chief executive of Wolf Minerals, the “market-making twins”, supply and demand. of tungsten in their machinery and tool-making latest owner of Hemerdon. “We’re confident we With total global demand of around 100,000t/y, divisions, have reacted to the squeeze on tungsten by can be in production in 2014, producing around tungsten is not a mainstream metal. Important, yes. investing in their own high-cost mines to ensure future 345,000Mt/y of APT (ammonium paratungstate, the Big, no. supplies of the metal, at whatever price it takes. most commonly traded form of the metal).” Supply, which once came from around the world, At Hemerdon, Britain could also return to the “our DFS (definitive feasibility study) has produced has largely contracted back to Chinese mines because tungsten business when Wolf Minerals Ltd, the pretty encouraging numbers for the initial 10 years of China is the biggest market for the metal, and because company planning to re-open the mine, finalises its the mine, including an internal rate of return of between it can produce tungsten cheaper than anyone else, a fund raising and off-take sales agreements, the next 21% and 26% based on APT prices of US$360-to-

8 Mining Journal April 20, 2012

08_09MJ120420.indd 8 19/04/2012 09:46 people & appointMentS [email protected]

million (US$31.0 million). nalpha pReSident The market value of US coal producer Alpha natural Resources Inc named Wolf is the first sign that hard-headed investors paul Vining as president, combining responsibility for the are not getting as excited about Hemerdon as the company’s mining as well as sales. Mr Vining, who popular British media, or high-brow US financial replaces outgoing president Kurt Kost, previously worked publications, with both guilty of reading too much at occidental Petroleum, eni, Peabody energy and politics into what will be a commercial process. Magnum/Trout Coal Ltd. The company said combining To talk about tungsten as the next hot rock, as the mining operations with its sales and marketing efforts Fortune did, is to misunderstand the historic would help provide opportunities for growth. cyclicality of the metal, misread the potential supply response to demand, and over-estimate the stomach nBanRo’S Van RooYen for governments to do something positive about Gold producer and developer Banro Corp said Bernard encouraging mining of critical minerals. van Rooyen would take over as chairman. Mr van on the first point, tungsten is a metal with an Rooyen has been on the company’s board since 1997, astonishing ability to disappoint, as shown in and chief executive Simon Village said his involvement Hemerdon’s on/off production track record and would be of value as Banro ramps up production at its frequent changes of ownership. The BGS in its report Twanziga mine in the Democratic Republic of the into the mine notes occasional bursts of production Congo. Twanziga became Banro’s first producing during war years, and a flurry of owners and open-pit gold mine when it entered production in last joint-venture investors between 1960 and 2006, october, and is one of four projects that the company is including: British Tungsten; Hemerdon Mining and developing in central Africa. Smelting; Amax; Billiton; Canada Tungsten; north American Tungsten; and, Wolf, since late 2007 nMSc Mining chieF Driving the current revival of interest in Tin producer Malaysia Smelting Corp (MSC) appointed a Hemerdon is the five-fold rise in the price of APT chief operating officer to oversee the company’s mining since 2005, a function of mine closures during the projects. encik Mohamed Yakub takes on the role, with depressed years, rising Chinese demand, and the 37 years’ experience in tin mining and 10 years with sell-down of stockpiles amassed in the former Soviet MSC. The company also appointed chua cheong Yong Union, and other countries that do not need quite so as deputy chief executive, alongside his current role of many tanks and armour-piercing armaments. chief operating officer for smelting operations. MSC What a tight market gave, in the form of higher produced 46,599t of tin last year, making it the world’s prices, a rising tide of production could just as easily second-largest supplier, according to the company. take away because Hemerdon is not the only old tungsten project on the drawing boards. nBullaBulling chaiRMan King Island Scheelite Ltd in Australia is planning Recently created exploration firm Bullabulling Gold Ltd to re-start production on its namesake island off the named peter Mansell as its first chairman. Bullabulling north coast of Tasmania. ormonde Mining Plc is was formed from the combination of GGG Resources plc working towards a re-start next year of the and Auzex Resources Ltd and began trading on the Barruecopardo mine in Spain. Woulfe Mining Corp is Australian Stock exchange on March 23. Mr Mansell planning to commission the Sangdong tungsten brings a background in law, and held chairmanships at mine in South Korea next year. West Australian newspapers Ltd and Zinifex Ltd. He is on The BGS, in a study published last year into the boards of Ampella Mining Ltd and nyrstar nV. tungsten, noted the revival of interest in opening Bullabulling anticipates first production from its new mines and reopening inactive mines in: “Asia, eponymous mine in 2015 and output is forecast at Australia, europe and north America”, and noted the 230,000oz/year. possible development of the o’Callaghan’s deposit near the Telfer goldmine of newcrest Mining in nSpuR ceo Western Australia. Developer Spur Ventures Inc appointed John Morgan as Little has been written about o’Callaghan’s in president and chief executive, replacing outgoing Ceo recent years, but if newcrest proceeds with the Rob Rennie. Mr Morgan’s appointment comes as Spur project it could become, according to the BGS, the seeks to shift focus from phosphate mining to base- and world’s largest tungsten mine accounting for 7% of precious-metals acquisitions, having sold its China-based global output. phosphate assets earlier this year. The company said Mr newcrest itself is coy about its plans for Morgan’s 35-year experience in mining would be of value o’Callaghan’s but in last year’s annual review the as it weighs a range of projects in low-risk jurisdictions. company noted that the possible tungsten project would cost up to A$500 million to develop, but nWpg chieF eXec would enjoy the benefit of shared infrastructure with Australian coal and iron-ore exploration company WPG gold and copper operations, and would have the Resources Ltd appointed chief operating officer Martin US$415/t.“ Cash costs will be around US$105/t. effect of lowering the cash cost of gold production at Jacobsen to the newly created role of chief executive, At current tungsten prices, Hemerdon appears to Telfer by between US$100 and US$150/oz, which is effective immediately. Mr Jacobsen previously held posts be an attractive project, not that the share price of quite an incentive. with emperor Mines Ltd and Gold China Resources Ltd. Wolf (dual-listed on Australia’s ASX and on London’s Hemerdon, o’Callaghan’s, King Island, Sangdong WPG sold an initial set of iron-ore projects for A$320 junior AIM market) is reflecting the potential future and Barruecopardo are examples of tungsten supply million (US$331 million) last year and made a return to the profits from a return of tungsten mining in Devon. potentially rising to meet demand with minimal commodity this year with its acquisition of the Giffen Well over the past 12-months, perhaps due to the government involvement. project in January. dilutive effects of fund raising, the share price of Rather than engaging lawyers to chase China Wolf on its home market, the ASX, has hardly through the WTo, it might make more sense to Register to receive our set the world on fire, falling from A$0.43 to recent encourage production of critical minerals to solve sales at A$0.345, valuing the company at just A$29.9 problems of supply shortage. fortnightly people & appointments recruitment newsletter at www.mining-journal.com/newsletter

www.mining-journal.com April 20, 2012 Mining Journal 9

08_09MJ120420.indd 9 19/04/2012 09:46 Focus – strategic Metals rare earth update Since the middle of 2011, all rare earth oxide prices have been tumbling

BY Jon HYkawY current BYron capital Markets reo price deck (us$/kg) (oxides) 2012 2013 2014 2015 2016 2017 2018 2019 2020 Lanthanum (La) 75 10 6 4 3 3 2 2 2 iven the implementation of Chinese Cerium (Ce) 60 8 3 2 2 1 1 1 1 export quotas, a system that did not differentiate between rare earth elements, Praseodymium (Pr) 200 90 70 70 70 70 70 72 73 it was largely inevitable that the price of neodymium (nd) 220 100 75 75 75 75 75 80 85 light rare earths would skyrocket. Buyers Samarium (Sm) 60 6 4 3 2 2 2 2 2 ofg formerly inexpensive light rare earths – such as europium (eu) 3,000 1,100 500 450 400 400 350 350 300 lanthanum – were put in direct competition with buyers of much more expensive heavy rare earths – Terbium (Tb) 2,500 950 600 400 300 250 250 250 200 such as dysprosium Dysprosium (Dy) 1,500 500 300 300 250 250 250 250 300 While the Chinese tried to create an impermeable Source: Byron Capital Markets border between the foreign and domestic markets for manufacturers such as Albemarle and WR Grace have 80,000t of light-rare-earth production has been rare earth oxides, the fact that many companies sold to substituted other metals into their formulations. sufficient, when not under the influence of stringent both markets allowed higher foreign prices to ‘bleed’ Lanthanum is a good catalyst when its price is low, but a export quotas, to keep the world’s need for light rare into the Chinese domestic market, and caused domestic lousy one in terms of its desirability when the price is at earths satisfied. prices to rocket higher, as well (not as soon or as high, US$125/kg. As the price drops and supply becomes Between Molycorp inc, Lynas Corporation Ltd and but the effect was still dramatic). more reliable, then demand for its use in catalysts Great Western Minerals Group Ltd, the three companies Almost invariably, high prices manage to cure high should re-emerge. have plans that would see them produce a combined prices. in this case, the demand for many rare earths fell Similarly, the demand for neodymium in strong 75,000t of light-rare-earth deposit-based rare-earth dramatically in 2011. Demand for lanthanum and magnets should rebound as manufacturers can become oxides by 2015. Byron suspects that this 90% increase in cerium outside China, in particular, collapsed. certain of their being able to source the required light rare earth availability will result in collapsing prices Part of this may be due to higher levels of production neodymium oxide. At least for the automotive industry, for lanthanum and cerium. within China, as some companies moved production to even the historically high neodymium oxide prices seen This price drop limits the number of additional the country or increased subcontracting to procure in mid-2011 preclude the use of rare earth-based light-rare-earth deposits that can enter the market. downstream products that were not subject to the export magnets. Byron believes that the number of such bastnäsite/ quota, but the official Chinese figures suggest that only However, no auto manufacturer can approve a monazite producers outside China can number no more about half the 2011 export quota was used. design and commit manufacturing lines to a model for than five, and we would suggest three or four is more it is fairly easy to see the effect of price elasticity in which a key component such as a rare earth-based, likely. the markets for each of these materials. Lanthanum is permanent magnet-equipped main electric motor Heavy rare earths are truly rare, and, Byron believes, relatively simple to substitute in the formulation of might not be available from week to week. will maintain high prices relative to their historical catalysts with other metals, the decision on substitution in the wind industry, neodymium oxide prices must averages. However, even here the demand cannot be being made on the basis of costs and effectiveness of drop below US$85/kg consistently for demand to begin insatiable. the metal, and on the reliability of supply. to rebuild, and this is not the case at present. But Byron in China, 20,000t of annual production from the neodymium is substituted reluctantly. A rare believes all of this will happen. south-China ionic clays has been sufficient to meet both earth-based permanent magnet is far stronger, smaller Dysprosium demand has not been dramatically domestic and foreign demand at historical prices. if and lighter than other magnets, and a motor containing curtailed. Given the level of demand and the Avalon Rare Metals Ltd, Quest Rare Minerals Ltd, Tasman rare earth-based permanent magnets can be substituted elasticity of this market, it did not require much Metals Ltd, Matamec explorations Ltd, Tantalus Rare with induction motors containing no rare earths, albeit more than a willingness to use lower grades of earths Ag and perhaps one or two other ionic clays with different (generally inferior) specifications for magnet alloys to decrease demand and lower the were to enter production, it would be likely that total weight, volume, reliability and efficiency. price to the degree presently observed. Dysprosium heavy-rare-earth deposit-based production would be neodymium will be used in many applications even prices will continue to fall, but less as a result of some 60,000t. at high prices, providing the reliability of supply is high. demand continuing to slacken and more due to it seems unlikely, either on first glance or through However, in their applications, many truly uncommon supply increases. detailed element-by-element analysis, that there is heavy rare earths are substituted only reluctantly, the sufficient demand for this quantity of material. most likely solution being increased stinginess of use supplY up, deMand up With generally higher operating costs than light- and a lower, but not plummeting, demand. Byron believes light-rare-earth prices will fall, some rare-earth deposits, it is unlikely given only partial Heavy rare earths, such as dysprosium, are rarely collapsing even from present levels, and that while sales and declining prices, that all such companies purely substituted, they are necessary at some level – heavy-rare-earth prices will decline, they will still would survive. almost regardless of price or the reliability of supply. maintain high prices compared to historical averages. From the above, it would have been expected that The reasoning for this is simple. Only three types of conclusions and directions lanthanum and cerium prices would vault most rare-earth deposits have demonstrated that they can be Rare earths remain a strong industry, one where Byron energetically, and for these prices to fall the fastest. economically mined. Two of these deposit types, those believes that the right companies can make investors a neodymium would rise less dramatically and fall more containing the minerals bastnäsite and monazite, will lot of money. Making those outsized profits are slowly. Dysprosium should have vaulted the least of all produce predominantly light rare earths such as predicated on a few things: and the price been the most reluctant to fall. And by lanthanum and, without going into specifics, light rare n Have a strong deposit; and large, this is precisely what we have seen. earth deposits contain approximately 80% of their n Have a strong physical concentrate; rare-earth oxides in the form of lanthanum and cerium. n Know how to do solvent extraction; tHe Market MaY return in China, production quotas plus some “slack” n Know how to make downstream products; and, The pit below rare earth oxide prices is not bottomless. suggests that annual production is in the order of n Find an off-take partner, not just for the good stuff. in fact, the main stabilising influence on prices will be 100,000t of rare-earth oxides. Of the production reliable and consistent production outside China. quota, 80% is granted to companies in the north of Combine all of the above, and you have a winning The demand for lanthanum has fallen as catalyst China that produce from light-rare-earth deposits, so formula.

This feature is a summary of a report released by Byron Capital Markets on April 19 10 Mining Journal April 20, 2012

10MJ120420.indd 10 19/04/2012 09:47 Focus – strategic Metals

light rare earths Lanthanum (La) Cerium (Ce) on the critical list Praseodymium (Pr) Neodymium (Nd) By gerry clarke Lithium production is concentrated in the hands of Samarium (Sm) four major companies operating in Argentina, Australia, Europium (Eu) Chile and the uS. technological innovation is leading to ithium and the rare earths, although entirely increasing demand from China, Japan, and South Korea. heavy rare earths different in nature, have common attributes in this has fuelled an exploration boom with over a Gadolinium (Gd) terms of supply and demand characteristics. hundred recognised occurrences and deposits at terbium (tb) three decades or so ago lithium and the varying stages on the part of the major players. Dysprosium (Dy) rare earth minerals were exploited by relatively While the fruits of exploration for both lithium and holmium (ho) fewl companies for arguably mundane uses such as rare earths are demonstrating that the planet has the Erbium (Er) lighter flints and oven cookware. But the writing was on resources to meet projected likely demand on a thulium (tm the wall even then, as lithium’s electrochemical theoretical basis, the greatest challenges are converting Ytterbium (Yb) properties were well known and high-tech rare-earth- resources in to useful products on an economically Lutetium (Lu) element applications were just starting to be recognised. sound basis and foreseeing which of the many projects Yttrium (Y) **Care needs to be exercised as the dividing line between what constitutes light and today, both commodities are on critical lists to 2025 will be realised over what time span. heavy sometimes varies in the literature. Conventionally Nd is a LREE but it is also one of for future supply risk and for their clean-energy the five CREOs which are mainly thought as hREE even though Eu is sometimes shown as a LREE. Despite its lower atomic weight, Y is always grouped as a hREE. credentials. this is because of projected demand, supply overshoot? reliance on foreign imports, and belief that there is Lithium resource sufficiency, forecast demand growth, between the lithium resource-rich Americas and insufficient supply capability of refined mineral products and resource conversion have been key concerns in Australia, and the technology-leading north Asia Pacific as well as insufficient diversity of supply. Five of the recent years. Given the industry’s response in terms of countries of China, Japan, and Korea. heavy rare earth elements are regarded as most critical exploration effort, the first concern has waned, at least the big question about lithium is how much will the today and through to 2025. on a theoretical basis. market digest and over what period of time. Given Lithium does not feature in the 2010 European substantial expansion by the four established major Commission’s top 14 Critical Raw materials List for the producers and the line up of new project capacity European union (perhaps surprisingly given a text on announcements compared with forecast demand the subject soon to be published by the British “in addition to electricity levels, it is easy to identify a truly alarming potential Geological Survey), although it does appear in the uS oversupply in the medium term that is probably Department of Energy’s 2011 Critical materials Strategy storage, lithium growth is untenable. listing from 2015. For certain rare earths the position is also identified in solar and acute, whereas for lithium it is not so. Forecast lithiuM deMand China’s virtual monopoly of rare-earth-elements nuclear energy” Estimated lithium demand in 2011 was 138,000t lithium supply, led by its unique Baiyun-Ebo iron ore and rare carbonate equivalent (LCE) compared with 116,000t in earths mine in inner mongolia, exacerbated by recent 2010. Apart from the 2009 downturn resulting from the policy decisions that will reduce material for export, general economic recession in late 2008, lithium caused an unprecedented exploration boom. the united States Geological Survey (uSGS) now production has increased at about 7.5%/y for a decade. there are over 350 commercially interesting recognises 34mt contained lithium as the world Production rebounded 30% in 2010, partly stimulated rare-earths occurrences and projects, mostly in early resource, with 13mt categorised as reserves. Other by a rare 20% price reduction on the part of Chile’s stages of recognition, with up to 50 or so at varying estimates range between 39-40mt. As activity Sociedad Química y minera de Chile SA (SQm). stages of advanced exploration and development. this progresses and knowledge increases, these broadly At least a dozen lithium-demand forecasts made by shows that rare earths are anything but rare in based non-compliant figures are likely to improve analysts, consultants, and the major players in recent occurrence. however, they are rare in appropriate further before primary consumption takes its toll and years show average annual growth of approximately concentration and development is capital intensive. recycling becomes significant. 9.5% in the period 2011-2020. in 2015 the forecasts are in contrast, China’s indigenous lithium resources Attention has moved to conversion technology and in the 138,500-265,000t range, with an average of remain elusive as the country continues its reliance on strategic partnerships between resource developers 191,472t. Clearly, the estimated demand during 2011 is imported raw materials. and manufacturing consumers, typically alliances already at the lowest point of the predicted range for

Solar evaporation ponds operated by Sociedad Chilena de Litio in Salar de Atacama, Region II, Chile Photo: Photo: Chemetall Lithium

www.mining-journal.com April 20, 2012 Mining Journal 11

11, 14, 17_18MJ120420.indd 11 19/04/2012 09:30 Company profile Explorer to developer The transformation from explorer to developer has commenced for Peak Resources.

nce just an explorer, Peak Resources is With this in mind there is also room for significant now a dynamic developer of a potentially growth in terms of the market capitalisation per REO low cost, long term, rare earth project. tonne in ground, particularly when compared with the The turning point was marked by the industry leaders Molycorp and Lynas Corp. release of the maiden resource in late In order to achieve its long term objective of rare OFebruary, containing 170Mt of rare earth oxides (REO) earth supply, Peak is focussing on the immediate grading 2.24% within the company’s Ngualla Project in developmental stages to continue to aggressively move SW Tanzania. the project forward. The three key areas to achieve this For investors, this project offers real excitement with and which will add value are: the potential for strong upside as the size and quality n The continuation of exploration and resource drilling, places this resource as the fifth largest deposit and the n Advancement of the metallurgical test work; and, Figure 1 (above): The exploration and resource drilling focus for 2012 will be in the southern rare earth and northern niobium-tantalum highest grade of the top six outside China. n The commencement of scoping studies. phosphate zones shown on a satellite image of the Ngualla carbonatite (light-grey soil) draped over topography. Drill holes and contours It is important to note that within this resource there is coloured by maximum down hole REO % a highly weathered and near surface zone estimated at Exploration and resource drilling 40Mt @ 4.07% REO, equivalent to 1.6Mt of contained REO. The 2012 drilling season will be the fourth phase of To complete the picture of the fundamental nature drilling since the programme commenced. A service of this resource, Ngualla is also a bulk deposit that is contract with Alpha Drilling Services has been signed largely outcropping. These attributes place the project and the drilling equipment will be mobilised to site for among the world’s most notable rare earth discoveries a scheduled start in May. of recent years. The drilling programme is designed around four Ngualla, as a shallow resource with outcropping high strategies and consists of 30,000m of RC and 2,000m grade mineralisation, positions itself as a potential low of diamond drilling (see Figure 1). cost, open-pit mine. The initial sighter metallurgical test Infill resource drilling of 15,000m of RC in the work completed to date is encouraging development Southern Rare Earth Zone will increase the level of via the direct acid leach process route, suggesting a confidence in the resource by moving tonnages into relatively less complex project, lower capital outlay and Indicated and Measured Mineral Resource quicker time to market. classifications. This will assist with the metallurgical test The supply and demand projections as per the work in the weathered zone by defining the amount of recent US Department of Energy study have five rare high grade mineralisation suitable for treatment by a earths listed as critical where there is a supply risk to direct acid leaching process route. This will also allow clean energy production during the next five and for the conversion of resources to reserves as the fifteen year timeframes. The five critical rare earths are economic studies progress. Neodymium (Nd), Dysprosium (Dy), Europium (Eu), Resource extension drilling of 4,000m of RC in the Terbium (Tb) and Yttrium (Y). Southern Rare Earth Zone to test the north, south and Peak predicts the market demand for critical REOs will depth of the mineral resource will enable the increase and that Ngualla is well positioned to meet this determining of the optimum mine design and shortfall in supply, with 54% of its in ground value coming extraction sequence once in production. It may also, by from these five critical REOs – Neodymium is the major default, increase the overall size of the mineral resource. contributor at 35%. The further positive for Peak being the RC drilling of 11,000m in the northern niobium- likelihood of supplying the product at a low cost. tantalum, phosphate zone will define a maiden Inferred Mineral Resource for this second style of mineralisation at Ngualla. This is the first step towards developing a Richard Beazley, pipeline of additional commodities to add further value earth mineralisation and occurs from surface in the Managing to the rare earth development. following main hosts: Director Diamond drilling of 2,000m in the Southern Rare n Iron-rich gravel colluvium and ferricrete. Typical Earth Zone and the northern niobium-tantalum, grade 1 to 4% REO*; phosphate zone to collect samples for metallurgical test n Highly weathered carbonatite, rare earth enriched, work is also planned. This will allow the development of iron and barite rich, the original carbonate minerals a detailed mineral processing flow sheet for rare earths are completely leached – typically 2.5 to 7% REO; and, and initial sighter test work for the minerals in the n Fresh, primary carbonatite rock, iron poor, northern zone. carbonatite rich- 1.5 to 2.5% REO. *REO= Total Rare Earth Oxide including yttrium Metallurgical test work The geological setting of Ngualla comprises three distinct Mineralisation in the South West Alluvial Zone occurs zones that have significantly different mineralisation and from surface over a wide area within unconsolidated metallurgical characteristics (see Figure 1). (potentially ‘free-dig’) material at grades of 2 to 4% REO. The Southern Rare Earth Zone is defined by its rare This zone is an erosional feature that was originally www.peakresources.com.au

Peak_profile.indd 2 19/04/2012 09:36 Company profile

of these samples being associated with iron-rich gravel colluvium and ferricrete, which contain high levels of phosphate, calcium and magnesium that resulted in the poor performance of the leach kinetics in extracting rare earth minerals. Two of these samples were located on the perimeter of the Southern Rare Earth Zone where the geology changes dramatically to a strong association of phosphate with the rare earth mineralisation, and the third was collected from a small isolated zone of atypical transported colluvium within the centre of the Southern Rare Earth Zone. Direct acid leach test work on the these eight samples has progressed to test acid consumption rates and leach recovery of rare earth minerals under a range of conditions of acid strengths, acid types and temperatures to optimise the leach kinetics. It is important to note that initial metallurgical testing has also returned very low thorium and uranium levels, typically 21ppm uranium and 35ppm thorium, supporting easier permitting and lower cost mining, storage, processing and transportation. The next step in this study will be to investigate the Figure 1 (above): The exploration and resource drilling focus for 2012 will be in the southern rare earth and northern niobium-tantalum chemistry required to selectively precipitate rare earth phosphate zones shown on a satellite image of the Ngualla carbonatite (light-grey soil) draped over topography. Drill holes and contours minerals from the acid solution. Precipitation will produce coloured by maximum down hole REO % a solid form of a rare earth concentrate for further refining. The work on direct acid leaching continues to progress with the collection of 30 additional samples of high grade weathered rare earth mineralisation from the Southern Rare Earth Zone. The greater geographical spread of representative low calcium-magnesium-phosphate samples will increase the level of statistical confidence for the direct acid leach potential of the Southern Rare Earth Zone. These samples are scheduled to arrive shortly at Amdel (Perth) and testing will be completed within three months.

Scoping studies The third focus is now on defining the Ngualla Project as a potential mining and processing operation that will deliver value to the shareholders. Work will start on the scoping study in April with the appointment of an engineering group. The scoping study is scheduled for completion in December 2012. The scoping study has a broad framework set to meet the following objectives: n Determine the optimal commercial development route for Ngualla; n Examination and confirmation of the strategic, commercial and operational fit; n Examination and justification of additional exploration and resource drilling; n Estimation of the magnitude of the capital and operating costs required for the development; n Identification of potential technical issues needing sourced from the Southern Rare Earth Zone. further investigation; Rare earth mineralisation in the northern niobium- n Estimation of the costs and time required to tantalum, phosphate zone ranges in grade from 1 to 2.5% undertake further development work for a REO but is also accompanied by niobium mineralisation pre-feasibility study; and, COntaCt in the 0.25 to 1.5% Nb2O5 range and phosphate at 15 to n Planning for the next phase, the pre-feasibility study. 25% within an iron-rich magnetite-apatite rock. Peak Resources: Initial sighter metallurgical test work is nearing In the coming months Peak will be engaged fully in Level 2, 46 Ord Street, West Perth, completion, while a number of flow-on studies have developing the Ngualla Project to further add value. Western Australia, 6005 been developed and continue due to the positive Investors can expect frequent updates on the technical tel: +61 8 9200 5360 results in the initial programme. programmes involving the restart of the drilling Fax: +61 8 9226 3831 Preliminary acid leach test work on eight RC drill programme, the continuing metallurgical test work and Email: [email protected] samples of weathered rare-earth mineralisation from the commencement of the scoping studies. aSX: PEK the Southern Rare Earth Zone produced a range of By year’s end, scoping study results are expected to results from 8% to 92% of rare earths leached. be in hand, ahead of the formal start of the pre- The poorer results of 8%, 30% and 46% were a result feasibility in 2013. www.peakresources.com.au

Peak_profile.indd 3 19/04/2012 09:37 Focus – strategic Metals

2015. An annual growth of 9.5% suggests demand will surpass the forecast 2015 average by 3.6%, at 198,396t. By 2020, sustained average annual growth indicates demand of 312,320t, some 11.6% ahead of forecast. Yet such forecasts are fraught with difficulty as so much of future lithium demand is less to do with evolutionary growth in established uses and markets and more about growth owing to revolutionary technology change and emerging markets set against volatile global economic conditions. All manner of mobile communications devices, computers, and hand-held power tools use lithium batteries and demand continues to grow. Larger batteries for automotive transport – from bikes to trikes to cars – are expected to use more lithium. Also, grid electricity storage, particularly as infrastructure renewal and emerging country urbanisation develops, will increase requirements. Growth will also come from the solar and nuclear energy. Rare-earth magnets at lithiuM supply intentions the Green Cycle Systems It is the comparison between forecast demand and Corp plant, a subsidiary resource development that is causing concern. In 2011, of Mitsubishi Electric Corp

the major established lithium producers, accounting for Photo: Bloomberg News about 80% of supply in 2010, had a combined first 16,000t/y plant is expected to begin this year. By offset. But there are many hurdles to overcome in what production capacity of 144,900t (Talison Lithium Ltd 2020, Simbol envisages capacity tripling to 48,000t/y is clearly a competition to be among what will likely be 47,000t; SQM 44,000t; Chemetall Lithium 36,400t, FMC high-purity lithium products extracted from geothermal the first of the few new flyers. Many projects have still to 17,500t). Well before 2015 this will have increased 70% brines pumped to the surface by California power secure full project financing or customer specification to reach 245,800t, with Talison Lithium accounting for facilities. approval, and there are permitting issues. 45% or around 110,000t/y Relatively new on the lithium radar in 2011 was The short to medium term is a complex and In China, lithium mineral conversion capacity by 11 Albemarle Corp’s initiation of pilot scale production of rudimentary roadmap that shows insufficient space for concerns is estimated at 69,500t/y, with Tianqi Group’s lithium carbonate from subsurface oilfield brines at its all the identifiable planned new lithium capacity to recent expansion to 18,500t/y and Galaxy’s recently Magnolia, Arkansas, bromine facility. The company is 2020. Only a very few new projects expected on stream opened plant near Shanghai ramping up to 17,000t/y targeting 2013 for the start up of its full-scale 20,000t/y in the next few years are expected to be sustained. capacity by end 2012. While difficult to assess, facility – in doing so it will have overtaken most of the operational level capabilities of China’s four lithium conventional resource development projects. brine facilities in the west of the country are expected The above seven projects (combined 128,500t/y), to increase during the decade and may reach 30,000t/y estimated Chinese capability from 14 concerns “Lithium production capacity by 2015. If they do not then it will provide some relief (82,500t/y), and expanded capacity from the majors for rest of the world players, but it will not change the suggests 2015 production capacity could reach could theoretically reach overall message. 456,800t/y, a massive 232% growth in supply capability 456,800t/y LCE, a massive Looking to 2015, there are seven projects with compared with 2010. combined planned annual production capacity of By 2020 in Argentina, Lithium Americas Corp’s two 232% growth in supply 128,500t/y that are advanced enough to reach full phase project at Salar de Cauchari, Argentina output – subject to sustained financing, market (40,000t/y), Lithium One Inc’s 25,000t/y project at Sal de capability compared with acceptance and demand. Vida (25,000t/y) (Lithium One is now merging with 2010” In Argentina, Rincon Lithium Ltd initiated low level Galaxy Resources), and Rodinia Lithium Inc’s 15,000t/y production at 1,200t/y in 2011 test marketing for a Salar de Diablillos should be producing. In the same capacity of 16,000t/y and Orocobre, having completed year, Comibol’s project at Salar de Uyuni (30,000t/y) in its definitive feasibility study, expects to initiate its Bolivia should be online. Some see no need for any new projects at all, saying 15,000t/y operation in 2013. In Canada, Nemaska Lithium Inc’s Whabouchi project new players are limited by unfavourable economics and Australia’s Galaxy began mining at Mt Cattlin in in Quebec (25,000t/y) and Lithium One’s James Bay development challenges, while others envisage an December 2010 and opened its 17,000t/y plant near project (20,000t/y) are being pursued by Galaxy opportunity for integrated industry development from Shanghai in March 2012, while Reed Resources Ltd at Resources. Also expected by 2020 in the US is Western mine to battery. In the absence of unforeseen, Mt Marion is expected to start 25,000t/y mining Lithium USA’s Kings Valley hectorite project (13,500t/y) substantial, and sustained increased demand in the operations this year. Canada Lithium, near Val d’Or in and, in Serbia, Rio Tinto’s jadarite project (27,000t/y). medium-term, project slippages, minimum capacity Quebec, has also completed its definitive feasibility Increased capacity in China in the 2015-2020 period is levels, and delays are likely with resultant corporate study and is progressing its 19,300t/y project, expected estimated at 20,000t/y. restructuring and consolidation. to start in early 2013. So, by 2020 an extra 215,000t/y planned and Yet the longer term looks brighter. Ford Motor Co Two projects based on hitherto unexploited lithium estimated capacity can be identified today, taking 2020 and the University of Michigan undertook in 2011 what resource types are expected to make their presence felt total capacity up to an eye-watering 671,800t/y, or an must be one of the longest range forecasts for supply before 2015. Simbol Materials started its 500t/y extra 388% compared with 2010. This excludes dozens and demand. high-purity LCE pilot facility in Imperial Valley, California, of other projects, some of which are accelerating To the year 2100 their study showed a global in September 2011. The company intends to expand advancement and may well be in contention before demand for 20Mt elemental lithium across all this to 1,500t/y by end 2012, while construction of its 2020. For instance, Li3 Energy in Chile, International applications, which, assuming 50% losses in the Lithium in Argentina, and Critical Elements in Canada to process of resource conversion, requires an in situ theoretical oversupply name a few. It also excludes Korea’s seawater project resource of 40Mt – similar to today’s resource tonnes lce 2015 (units) 2020 and contributions from Brazil, Portugal and Zimbabwe. recognition. Estimated capacity intent 456,800 671,800 The above scenario of substantial theoretical That suggests new lithium projects could emerge in Average forecast demand 191,472 279,945 oversupply would not be sustainable, even allowing for several waves over time. Meantime, however, financial lower operating capacity levels. Many of the emerging investment in new lithium projects looks severely Potential oversupply (gap) 265,328 391,855 projects have established strategic partnerships and/or overshoot with returns unlikely for some perhaps for Oversupply 138.60% 140.00% purchasing arrangements that suggest a degree of risk decades. 14 Mining Journal April 20, 2012

11, 14, 17_18MJ120420.indd 14 19/04/2012 09:30 Company profile

Crossland Uranium Mines Ltd ASX:CUX

rossland Uranium Mines Limited (CUX) commercial deposits of REE, and an ASX release dated in the south of the alluvial areas indicate the potential was formed from the merger of April 5, 2012, updates progress with this work. for hard-rock mineralisation and warrant follow up for Crossland Mines Pty Ltd and Klondike Analyses of 931 regional stream sediment samples hard-rock xenotime occurrences. Source Ltd, which was completed on have identified the presence of high concentrations of The results reported here cover areas held by May 31, 2006. HREE in alluvial deposits at Charley Creek. The results the Crossland (CUX)/Pancontinental (PUC) joint CCrossland’s experienced exploration team is include 0.6% TREO in alluvium (5,778ppm total venture and the Clough’s Dam joint venture with exploring for rare earth elements and uranium in the rare-earth oxides or TREO). Within these samples the Western Desert Resources Ltd, (WRDL) where Northern Territory and South Australia. CUX’s team HREO/TREO ratio is as high as 69.5%. the CUX/PUC joint venture is earning an initial includes experts in exploration and mining with the Of the total 931 samples, 199 samples (or 21%) had a 60% interest. track record required to acquire, find, and develop HREO/TREO ratio greater than 20%. This ratio of HREO is profitable mines. high when compared to most rare-earth deposits. CUX board members, engineer Bob Cleary, geologist The results provide focus and guidance to identify Geoff Eupene, geophysicist Bob Richardson, and lawyer areas where further exploration and drilling could Peter Walker have had strong associations with Ranger’s delineate high HREE material. Previous mineralogical exploration, development, permitting, and operations studies have shown that Xenotime is the HREE host stretching over many years. They have the talent and mineral in the Charley Creek project area. Xenotime is experience to succeed in the multiple facets of highly enriched in high-value heavy rare earths and successful mine development. Yttrium (see picture, top right). The HREO/TREO ratio at Charley Creek is important Charley Creek project because it is the heavy rare earth elements, particularly The Charley Creek titles lie on pastoral leases to the Terbium, Dysprosium and Yttrium that are in critical west-north west of Alice Springs. Crossland believes the short supply. Charley Creek could be a valuable Charley Creek rare earth elements (REE) project long- term resource of these strategically vital represents a unique opportunity to become an REE high-value minerals. producer, with a short lead time to production and a Stream sediment sampling with heavy mineral potentially long mine life. concentrate is an effective exploration technique to Xenotime identified in exploration results (April 2012): identify the source of REE within the tenements. This ■ New regional stream sediment results at Charley provides a focus for further exploration programmes CONTACT Creek confirm widespread indications of xenotime, a and resource identification. Crossland Uranium Mines Ltd mineral enriched in valuable heavy rare earth Surface alluvial mineral deposits have an advantage Unit 8, Raffles Plaza, elements (HREE). because they are easy and cheap to explore by shallow 1 Buffalo Court, Darwin 0800, NT ■ The results highlight new target areas for HREE drilling. They are also cost effective in mining. GPO Box 2437, Darwin, 0801, NT mineralisation. Crossland’s extensive drilling programmes have ABN 64 087 595 980 defined alluvium from 3m up to 32m thick from surface, Tel: (08) 89815911 Crossland and its Joint Venture partners hold titles in the Dad’s Dam, Western Dam and Cattle Creek areas. Fax: (08) 89411364 covering rare-earth-bearing alluvial deposits in the These returned average HREO/TREO ratios of about 17% Email: [email protected] West MacDonnell Ranges in central Australia. by weight. Within these titles, rare-earth-enriched alluvial The new stream sediment results suggest that higher deposits are present over a lateral distance of 130km. ratios of HREO could be expected in the large alluvial Crossland has conducted regional stream sediment deposits to the east of Cattle Creek. programmes to identify areas with the potential to host Highly anomalous HREO results from stream samples www.crosslanduranium.com.au

CUX_profile.indd 2 19/04/2012 09:42 Company profile Hastings moves to capitalise on looming shortage of heavy rare earths

astings Rare Metals (ASX code: HAS) has The Hastings deposit is the seventh-largest HREO Dysprosium accelerated development of its Hastings resource in the world and possesses the highest ratio of heavy rare-earth oxides (HREO) resource 85% heavy rare earths to total RE content of any near Halls Creek, in northern Western comparable resource. It has a significant development Australia, to take advantage of increasingly time advantage due to the success of previous flow sheet advantageousH conditions for producers in the sector. development work. As a result, the company is strongly Buoyed by an encouraging base-line scoping study placed to win the investor and potential joint venture last year, using a 15-year mine life from the JORC support needed to have EPCM work underway in two compliant 36Mt resource (85% indicated), and the years, and production within four, says Mr Mackowski. decision by the globe’s dominant rare earths producer The western economies have responded to China’s – China – to restrict exports, Hastings has upped the rare earths export crimp by taking it to the World Trade pace to bring its resource into production as soon as Organisation. This could take years to resolve, according possible. to Mr Mackowski, thus presenting prospective It has retained Jacobs Engineering as project producers such as Hastings with a wide-open window manager, and brought in the world-respected of opportunity. Australian Nuclear Science and Technology Mr Mackowski says that even if the WTO case with Organisation (ANSTO) to expand on the valuable China totally opened up the rare-earth trade, there is development work done 20 years ago by previous insufficient dysprosium supply for the world’s magnet owners by further optimising the extraction of the six needs. In fact, China is facing a situation before the end metals identified at the site. of the decade, where it will need to import dysprosium The company’s main focus will be on the scarce for its own internal use. heavy rare earths, particularly dysprosium and yttrium, Hastings had a running start when acquiring the contained in the resource. Heavy rare earth elements deposit 12 months ago. It has the advantage of test the supply of heavy rare earths with its namesake are important in the production of high-technology results from former owner Union Oil Development (now Hastings project, it can build on its rare-earths legacy and green energy products including wind turbines, Molycorp) in the 1970s and 1980s and West Coast through its 60%-owned Yangibana project in Western hybrid and electric cars, high speed railway systems, Holdings, which ran a pilot plant in the late 1980s. These Australia’s northwest. smart phones and plasma screen applications. surveys were used in the scoping study last year, with Early exploration indicates Yangibana contains a The US Department of Energy has recently placed 2012 updates where appropriate. high proportion of neodymium, another critical rare these elements on the short- and long-term critical ANSTO has been commissioned to verify these earth, and also an essential ingredient in the magnet supply list. This sense of urgency is also being felt results and plot the optimal order of extraction of the market. by the European and Japanese governments. metals. The last company report to mar ket indicated there China’s decision to limit exports of rare earths has Mr Mackowski says ANSTO is the pre-eminent HREO was potential for a high neodymium oxide resource at deeply concerned the users of these elements – car, process developer. The organisation has developed flow Yangibana that may complement the high-grade smart phones, and electronics makers – that are now sheets for Lynas, Arafura Resources, and Alkane’s Dubbo dysprosium and yttrium-oxide project at Hastings. desperately casting around to find new sources. The car Project – a veritable army of HREO specialists. This year the company has an RC drill programme makers, in particular – are already significant users of “We did what I call a baseline study to get a quick scheduled at Yangibana and plans to carry out rare earths for magnets and batteries in hybrid/electric view of the project economics based on a 1Mt/y ore preliminary metallurgical assessment. applications – face an uncertain supply future. throughput to produce 150t/y dysprosium and 1,000t/y Steve Mackowski, Hastings’ technical director, says yttrium for a net profit of US$150 million a year. That CONTACT that industry is finally acknowledging that the light rare size plant could cost about US$500-600 million with an Hastings Rare Metals Limited earth developments of Lynas, Molycorp and others are NPV greater than US$500 million. Level 9, 50 Margaret Street, Sydney, NSW 2000 not going to resolve the shortage of heavy rare earths. “However, it is my expectation that due to the PO Box R933, Royal Exchange, NSW 1225 “It is very clear that the world, not just China, has demand for dysprosium, the plant would more likely Tel: +61 2 9078 7674 insufficient dysprosium capacity now and in the be 2Mt/y capacity, so we double all of those production Fax: +61 2 9078 7661 pipeline to supply all the car makers, all the wind numbers, triple the NPV, but not the capital Email: [email protected] turbine makers, all the high-speed rail makers,” he says. requirement, which would be in the US$600-700 million “There is an urgent need for 3-5 new HREO range. operations and, with growth in demand approaching “In terms of developing the chem istry, we are a long 20%, an extra operation is needed every year until the way there. So, providing all goes well, we’ll hopefully be end of the next decade. It is clear that everyone’s needs starting the EPCM in about two years.” will not, cannot be met.” While Hastings moves to help fill the looming gap in

www.hastingsraremetals.com

Hastings_profile.indd 2 19/04/2012 09:39 Focus – strategic Metals

rare earths – pursuing the heavy kind industry leader’s Mountain Pass mine compare with Minerals Ltd/Strange Lake, IAMGold Corp/Niobec, The rare-earth elements are particularly complex. grades that fall well below 1% in some new projects, Geomega Resources Inc/Montviel, Matamec Because these 15 naturally occurring elements are so making them especially challenging. Explorations Inc/Kipawa, and Resources Commerce similar, nature’s processes failed to differentiate each of Such are the economics associated with rare- Corp/Ashram); and one in Saskatchewan (Great Western them into separate mineral species amenable to earths supply that leading projects are pursuing a Minerals Group Ltd/Hoidas Lake). classical beneficiation techniques. The common ore global vertically integrated policy from resource Avalon Rare Metals Inc is furthest advanced at its minerals of bastnaesite, monazite, xenotime, eudialyte determination through mining and beneficiation into Nechalacho project, near Thor Lake, North West and certain others among over 200 rare earth mineral chemical processing for mixed rare-earth chloride Territories. Of the 57.49Mt indicated resource in the species provide crystal structures in which all 15 production and refining, to the manufacture of Basal Zone, just over 14.5Mt grading 1.53% are now in elements (excludes promethium) are found in separated individual rare-earth oxides for sale. the probable reserve category. Of the total rare-earth frustratingly different proportions from one occurrence content, 26.1% are heavy rare-earth oxides. Progress is to another, and oftentimes within the same occurrence now being made towards mine construction in 2013 for and not in proportions that conveniently match mining by end 2015. demand characteristics. “In 1990, Mountain Pass In the US, there are three projects in addition to the Ion-adsorption ores found in China are the result of accounted for 40% of global well known Mountain Pass deposit owned, operated weathering processes that caused some further and reasserted by Molycorp. differentiation of elements in favour of the heavier kind. rare earths production” So, for the reported several hundred potentially Molycorp – beginning to Fly interesting rare-earths-minerals occurrences, work only Molycorp is the one company with a long pedigree in just begins at the stage of mineral species recognition. rare-earths mining and processing dating back six Another complicating feature is the presence of the Strategic partnerships, producer-consumer alliances, decades to 1952 at Mountain Pass, California. radioactive element, thorium, in monazite and the technological agreements and now industry In 1990, Mountain Pass accounted for 40% of global association of some deposits with uranium mineralisation. consolidation is shaping what is one of the most rare-earths production and mining continued for 50 Conventionally reported as total rare earth oxide complex of natural resources industries to secure years until 2002. content it is important to determine the relative sustained supplies. Changes of ownership, new investment, resumption proportions of these elements that exist in each of rare-earth processing operations in 2007, and start of occurrence. Deposits are classified by the relative rare earths highlights new bastnaesite-ore mining began in December 2011. proportions of two sub-groups, referred to as the light Technology Metals Research, in its 15 March 2012 Molycorp’s Project Phoenix is scheduled to complete and heavy rare earths, according to their atomic Advanced Rare Earth Project Index, lists 35 rare earth its two-phase modernisation programme at Mountain weights. projects operated by 31 companies across 13 countries. Pass by the beginning of 2013 when it expects to have Reflecting mineral industry convention and Whilst beyond the scope of this review to consider 40,000t/y rare earth oxide production capacity. commercial trade, rare earths are also expressed in the them all in detail there are a half dozen that have In April 2012, the company announced a 36% increase form of their oxide equivalents – referred to as light rare mineral reserve estimates that include Molycorp Inc, in proven and probable reserves to 16.7Mt which, on the earth oxides and heavy rare earth oxides. Rare earths Lynas Corp, Avalon Rare Metals Ltd, Alkane Resources basis of a 5% rare-earth oxides cut-off and average 7.98% that are considered most at risk in terms of supply today Ltd, and Rare Element Resources Ltd. rare-earth oxide grade, yield 1.3Mt contained rare-earth are the mid to heavy elements: neodymium, europium, The North American continent accounts for half of oxide. Ongoing work is expected to further increase terbium, dysprosium and yttrium. the advanced rare earth projects, with two in reserves. The applied cut-off grade is an industry high. Given disparate market values for the rare earth Greenland, a dozen in Canada, and four in the US. Molycorp has made several substantial acquisitions elements and variable amounts and proportions of Greenland Minerals and Energy Ltd released its initial that extend its global reach and commitment to elements from one deposit to another, it is hard to inferred mineral resource estimate (JORC) in March downstream integration. In April 2011, the company determine exactly what grade characteristics will 2012 for its uranium and rare-earths project at acquired a 90% share in Estonia’s AS Silmet and doubled provide optimum returns. However, there is a premium Kvanefjeld, whilst Hudson Resources Inc released its rare-earth oxide production capacity to 6,000t/y. in favour of the heavy rare earths, reflecting demand preliminary economic assessment for its Sarfartoq Also in 2011, Arizona-based speciality metals and and comparative rarity, and wherever their presence is project in December. alloys manufacturer Santoku America Inc was acquired. significant as a proportion of total content it is given In Canada, there are a dozen advancing projects In March 2012 Molycorp announced a US$1.3 billion particular emphasis. recognising rare-earth resources across six provinces/ deal to acquire Neo Materials Technologies Inc which, in Exploring for and mining rare earth minerals are the territories. There is one in Alberta (DNI Metals Inc/ addition to operations in 10 countries including China, least difficult parts. As ore grades diminish, Buckton), two in Labrador (Rare Earth Metals Inc/Two is involved in projects in Brazil, Korea and Thailand. beneficiation challenges for rare earth minerals from Tom and Search Minerals Inc/Foxtrot); two in Ontario In Wyoming, Rare Element Resources announced the rocks increase – usually to the detriment of recovery (Rare Earth Metals Inc/Clay-Howells and Pele Mountain results of its preliminary feasibility study in March 2012. levels. Grades as high as 5% total rare-earth oxide at the Resources Inc/Eco Ridge); five in Quebec (Quest Rare Mine recoverable resources at 1.5% cut-off grade are

Left to right: Molycorp’s open-pit mine at Mountain Pass, California; the company’s chief executive, Mark Smith Photos: Photos: Bloomberg News

www.mining-journal.com April 20, 2012 Mining Journal 17

11, 14, 17_18MJ120420.indd 17 19/04/2012 09:30 Focus – strategic Metals

6.332Mt with an average 3.6% total rare earth oxide grade. A further 10Mt of lower grade material is also recoverable. The prefeasibility shows 81.2% rare earths recovery for a mine life of 19 years at a production rate of 10,400 t/y. Earlier work showed the ore contained 23.6% heavy rare earths, representing approximately 62% of the value. Mine permitting is planned for 2014 for mining operations in 2015. In Alaska, Ucore Rare Metals Inc’s Bokan Project has an inferred resource of 3.7Mt averaging 0.75% rare-earth oxides, of which 39% is heavy rare earths. A preliminary economic assessment is imminent. In Arizona, AusAmerican Mining Corp’s scoping study of its La Paz project is also expected imminently.

australia – lynas entering at Mt Weld In Australia, the most advanced projects include: Kimberley Rare Earths Ltd/Cummins Range, WA; Alkane Resources Ltd/Dubbo Zirconia Project, NSW; Hastings Rare Metals Ltd/Hastings, WA; Arafura Resources Ltd/ Eliiy Power Co’s lithium- Nolans Bore, NT; and Lynas Corporation Ltd at Mt Weld, ion rechargeable battery WA, where two projects are being pursued. at the Smart Energy Lynas Corp expects to be in production in the current Week 2012 in Tokyo

quarter based on its central lanthanide deposit at Mt Photo: Bloomberg News Weld. Preliminary process test work is ongoing at the in Mozambique (Southern Crown Resources Ltd/Xiluvo). Tsusho and Shin-Etsu in a joint venture to construct a Duncan deposit. In January a revised mineral resource Great Western Minerals Group (GWMG) expects to 4,000t/y rare-earth oxide plant that is expected on estimate was released that showed a combined 23.9Mt begin mining at Steenkampskraal in South Africa in the stream in Orissa by the end of 2012. reserve grading 7.9% rare-earth oxides for a total 1.9Mt second half of calendar 2012, and to be fully mining and Kazakhstan’s Kazatomprom, is establishing a REO with 99% in the measured and indicated categories. producing mixed rare-earth chloride and separated 15,000t/y rare-earth oxide plant at its Ulba metallurgical The concentration plant, commissioned in May 2011, rare-earth oxides in early 2013. The company, with its plant in the east of the country by 2015 in association continues to ramping up ouput and has achieved over manufacturing facilities in Birkenhead, UK, and Troy, with Sumitomo and Sareco. 71% recovery, while the advanced materials plant in Michigan, is aiming to fulfil its objective of becoming a Kuantan, Malaysia, was 91% complete in December fully integrated rare-earths company from early 2013. 2011. Frontier Rare Earths filed its preliminary economic Alkane Resources expects to start mining at its assessment in March 2012 and has started on the “Tasman Metals Ltd’s Norra Dubbo Zironia project in 2014. The site has rare earths preliminary feasibility study expected in the third reserves of 8.1Mt in the proven category and 27.9Mt in quarter 2012. Frontier has established a strategic Kärr in southern Sweden is the probable category, both grading 0.9% total partnership with Korea Resources Corp and envisages the European Union’s sole rare-earth oxides. An expected overall production rate establishing a fully integrated rare-earths project to of 22,875t/y includes 4,170t/y total rare earths manufacture separated rare-earth oxides. rare-earths project” accounting for about 39% of production value. The Peak Resources published its initial resource estimate balance relates to zirconium, hafnium, niobium and in February and expects to complete scoping by tantalum co-products. Construction is expected to start December. Similarly, Montero Mining and Exploration in late 2012 and production in 2014. published its initial resource estimate in September elseWhere 2011, as did Tantalus Rare Earths in December 2011, Tasman Metals Ltd owns the European Union’s sole aFrica – led by gWMg and lynas while Southern Crown Resources has yet to file. rare-earths project at Norra Kärr, near Ganna, in Five countries in Africa account for seven projects: two in Lynas is progressing exploration of its recently southern Sweden where its preliminary economic South Africa (Great Western Minerals Group Ltd/ acquired Kangankunde Hill project in Malawi. The deposit assessment, published in March 2012, showed Steenkampskraal and Frontier Rare Earths Ltd/ was initially explored by Japanese and French geologists indicated resources of 41.6Mt containing 237,120t Zandkopsdrift); two in Tanzania (Peak Resources Ltd/ in the 1980s and 1990s when an inferred resource of total rare-earth oxides based on an average 0.57% Nqualla and Montero Mining and Exploration Ltd/Wigu 107,000t total rare-earth oxides was identified in 2.53Mt grade. Content is 51% heavy rare earths. Tasman Hill); one in Malawi (Lynas Corp/Kangankunde); one in of host mineralisation. With a 3.5% rare-earth oxides expects to initiate its preliminary feasibility study Madagascar (Tantalus Rare Earths NA/Tantalus); and one cut-off, the average grade was 4.24%. Exploration is this year. underway and is expected to improve these figures. In Brazil, Neo Material Technologies, now merging with Molycorp, has a joint development agreement asia outside china with Mitsubishi and Mineracao Taboca to establish a In Kyrgyzstan, Stans Energy Corp is breathing life into the 500t/y rare earth oxide processing facility in 2012, former Soviet Union’s Kutessay II open-pit mine and doubling to 1,000t/y in 2015. processing facility. In March 2011 measured and In Russia’s Kola Peninsula, Lovozersky Mining Co is indicated resources (JORC) were 42.98Mt total rare-earth understood to operate a 4,000 t/y rare earth oxide plant oxides with an average 0.264% grade, unusually at its Kamasurt mine and looking to expand to proportioned in favour of heavy rare earths at 46%. 15,000t/y by 2015. In the Urals, Solikamsk Magnesium Stans Energy acquired ownership of the Kyrgyz Works has a 3,600t/y facility. Chemical-Metallurgical Plant in February 2011, which In southern Turkey AMR Mineral Metal Inc’s heavy will produce separated rare-earth oxide products. mineral sands Canakli-1 project near Burdur is evolving In Vietnam, state run Lavreco is developing the Dong to upgrade its 100t/h hydromining and gravity Pao project in the northern province of Lai Chau and is separation operation in 2012. expected to start producing 3,000t/y rare-earth oxide by In 2013 it plans to introduce flotation and 2013 and later doubling to 6,000t/y. The project is in hydrometallurgy circuits for rare earth oxide and co-operation with Japan’s Toyota Tsusho and Sojitz Corp. co-product titanium, zircon, niobium, and scandium Indian Rare Earths Ltd is also partnering with Toyota products as well as magnetite.

Photo: Photo: Bloomberg News Gerry Clarke is a former editor of Industrial Minerals and director of Metal Bulletin plc until 2005. He now works as a James Kenny, chief executive of Frontier Rare Earths freelance writer, commentator and consultant in the field of industrial minerals 18 Mining Journal April 20, 2012

11, 14, 17_18MJ120420.indd 18 19/04/2012 09:30 Company profile

Lithium Americas ithium Americas (TSX: LAC) (OTCQX: LHMAF) is ■ Environmental and Social Baseline developing one of the world’s largest and study is complete. lowest cost lithium operations. Its principal ■ Environmental Impact Assessment property is strategically located in Argentina, has been submitted to government within an area known as the ‘Lithium Triangle’. authorities. LThe company’s key highlights include: ■ Third largest lithium-brine resource in the world. The company’s next major milestone is ■ Operating costs are expected to be among the the completion of its definitive feasibility lowest in the industry. A completed preliminary study (DFS), expected to be announced in economic assessment identifies lithium carbonate Q2 2012. Lithium Americas expects to operating costs of US$1,434/t (prior to potash receive its environmental impact assessment by-product credits). Given battery-grade lithium permit, and finalise its project financing, in a carbonate currently sells for approximately US$6,000/t, timely manner after the completion of the DFS. Lithium Americas is expecting very attractive operating The company expects to be in a position to start margins of more than 70%. project construction in 2012. CONTACT ■ Advanced stage – pilot plant complete. The With the electrification of transportation using Mike Cosic, VP corporate development company’s pilot plant, designed and constructed by lithium-ion battery technology well underway, Lithium Suite 602, 357 Bay St, Toronto, SGS Minerals Services, was completed in November Americas is in an enviable position having off-take Ontario, Canada M5H 2T7 2011. Lithium Americas has produced battery-grade arrangements in place with both Mitsubishi Corp and Tel: 1-416-360-1921 lithium carbonate from its pilot plant, sending samples Magna International. to potential global customers for qualification purposes. Collectively, these two companies own approximately ■ Long-term land agreements secured, allowing for 17% of Lithium Americas’ shares outstanding, and have the right to build the project on the company’s principal the option to collectively purchase up to 37.5% of property. Lithium Americas’ lithium-carbonate production. www.lithiumamericas.com

Lithium Americas_profile.indd 2 19/04/2012 09:38 MINING SERVICES DIRECTORY

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20-21_MJ class_20Apr.indd 21 19/04/2012 14:45 LME MEtaL stocks and pricEs MarkEt UpdatE Stocks (t) Three-months price US$/t (rhs)

5000000 3000 LME pricEs prEcioUs MEtaLs 4000000 2760 Us$/t % change % change Us$/oz % change % change on week on year on week on year 3000000 2520 aluminium Cash 2016 -2.6 -24.2 Gold (pm fix) 1650 -1.1 10.7 3 months 2057 -2.5 -23.2 Silver (spot) 32 -1.6 -27.6 2000000 2280 aluminium-alloy Cash 1933 -0.8 -18.5 Platinum (last fix) 1592 -0.1 -10.7 3 months 1950 -1.8 -17.7 Platinum (J Matthey) 1584 -0.9 -11.3 1000000 2040 copper Cash 8045 -1.7 -13.3 Palladium (last fix) 661 3.8 -13.3 3 months 8005 -1.7 -14.0 Palladium (J Matthey) 659 0.6 -10.1 0 1800 Lead Cash 2039 -2.0 -21.5 Osmium (free market indication) 400 0.0 0.0 April 2011 April 2012 3 months 2048 -1.2 -19.4 Iridium (J Matthey) 1085 0.0 3.3 nickel Cash 17603 -3.3 -31.1 Rhodium (J Matthey) 1385 0.7 -40.4 3 months 17675 -3.2 -30.8 Ruthenium (J Matthey) 115 0.0 -36.1 600000 10500 tin Cash 21058 -6.9 -35.4 3 months 21225 -6.4 -34.9 500000 shipping ratEs 9500 Zinc Cash 1985 -1.8 -14.3 representative dry cargo single voyage rates (apr 11) 3 months 1997 -1.2 -14.5 route/size (’000 dwt) % change % change 400000 8500 Source: Bloomberg, LME coal Us$/t on week on year Richards Bay-ARA (100-150) 8.3 -1.8 -12.8 300000 7500 LME officiaL avEragEs E Aus-South Korea (120-160) 11.1 -3.5 4.7 (Us$/t) E Aus-ARA (100-150) 9.7 -3.7 -7.6 200000 6500 settlement cash 3-mths Hay Pt-China (100-150) 9.0 0.0 -11.8 Aluminium 2182.89 2182.6 2224.73 iron ore 100000 5500 Alum-alloy 2079.02 2077.15 2107.4 Narvik-ARA (100-150) 3.5 0.0 -14.6 April 2011 April 2012 Copper 8457.05 8456.55 8441.49 Brazil-ARA (100-150) 7.9 -3.3 -8.4 Lead 2061.45 2061.01 2079.07 Brazil-China (100-150) 19.6 -3.7 2.9 Nickel 18709.55 18705.57 18785.12 W Aus-China (120-160) 7.5 -4.8 -1.7 150000 30000 Tin 23016.14 23002.62 23046.14 W Aus-ARA (120-160) 10.4 0.0 -13.8 Zinc 2034.55 2034.21 2048.32 Saldanha Bay-China (100-150) 14.0 -5.4 -7.0 Source: Drewry Shipping Consultants Ltd 125000 26250 settlement £/Us$ Us$/¥ €/Us$ exchange rates 1.5821 82.49 1.3201 Settlement is the average of the cash sellers’ price. Cash and BULk MinEraLs 100000 22500 three-months are the average of the buyers’ and sellers’ price. Us$/t % change % change Source: LME on week on year 75000 18750 Rutile Aus export fob 1750 187.8 ExchangE stocks Ilmenite export fob 248 115.7 t % change % change Zircon export fob 2590 146.1 50000 15000 on week on year April 2011 April 2012 globalCOAL RB™ Index (Feb)‡ 105.62 0.0 -14.6 LME aluminium 5062125 0.0 10.2 globalCOAL NEWC™ Index (Feb)‡ 117.89 0.0 -4.4 Comex aluminium 1603 0.0 Source: † monthly from TZ Minerals International Ltd Comex 1000000 ‡ Global Coal Ltd (www.globalcoal.com) 3000 aluminium pieces* 62212 0.0 total aluminium 5106032 -0.1 800000 othEr MEtaLs 2600 LME aluminium-alloy 131760 0.7 85.7 Bid ask % change % change 600000 LME copper 262700 -1.3 -41.9 on week on year 2200 Comex copper 73718 -2.7 -2.9 Antimony US$/t cif (99.65%) 12800 / 13200 2.8 -21.2 400000 total copper 336418 -1.6 -36.3 Arsenic (Rotterdam 99%) US$/lb cif 0.75 / 0.85 0.0 14.3 Bismuth US$/lb cif (99.99%) 10.2 / 10.75 0.0 -6.9 1800 200000 LME lead 370200 -0.9 24.1 Cadmium (99.99%) US$/lb cif 0.9 / 1 0.0 -38.7 LME nickel 99762 1.3 -16.2 (99.95%) US$/lb cif 0.8 / 0.9 0.0 -41.4 0 1400 LME tin 13480 1.9 -33.2 Indium US$/kg (99.99%) 525 / 575 0.0 -18.5 April 2011 April 2012 LME zinc 911825 1.3 16.1 Mercury (99.99%) US$/flask 2500 / 3000 0.0 96.4 * Assuming 0.75t per Comex aluminium piece Selenium US$/lb cif (99.5%) 60 / 65 -2.3 -10.7 Source: Bloomberg, LME, Comex Uranium U3O8 US$/Ib * 51.25 0.0 -12.4 148.5 -0.2 -17.3 1900 Iron ore 62% Fe fines (US$/t) coMEx coppEr pricEs Iron ore 58% Fe fines (US$/t) 135.4 -0.8 -12.4 1800 *Source: Ux Consulting (Us$ c/lb) 1700 Apr 362.8 US$/t US$/t Iron ore fines 58% Fe 200 1600 May 361.7 200 Jun 363.6 Iron ore fines 62% Fe 1500 Jul 361.4 Source: Bloomberg, Comex 176 176 1400 1300 LEading indicators Last % change % change 152 152 1200 on week on year April 2011 April 2012 Dow Jones Industrial Average 13050.00 0.49 6.39 128 128 Nikkei 225 9588.38 0.67 1.56 Hang Seng 20995.01 3.28 -10.74 2000 HSBC Global Mining 563.49 3.34 -24.38 FTSE Gold Mines 2236.59 -3.35 -19.55 104 104 FTSE/JSE Africa Gold 2985.01 -2.43 -24.17 1800 S&P/ASX 300 Resources IRON ORE S&P/TSX Diversified 4742.91 2.95 -21.77 80 80 Metals/Mining 8296.73 -1.46 -25.09 April 2011 April 2012 Source: Source: Steel Index 1600 10000 10000 1400 COPPER

1200 8000 April 2011 April 2012

6000 55

US$/t 8000 US$/t 49 4000 43

37 2000 10 years / 2 months 31 0 6000 25 April 2002 April 2012 April 2011 April 2012 February 20, 2012 April 19, 2012

22 Mining Journal April 20, 2012

22_23MJ120420.indd 22 19/04/2012 18:15 financE

hsBc indExEs Ernst & YoUng Mining EYE indEx sharE pricEs

All five of the indexes graphed below commenced in December 3300 Local change Local Mkt cap 1985. The market capitalisations below are for end-October 2010. Nickel 5-day % hi-lo % Us$m Mining: This index comprises 202 companies with a total market nickel capitalisation of over US$1,300 billion, half of this being in ten 2800 Aneka Tambang (Rp) 1,770.00 0.6 40 1,839 companies. The index is split 49% diversified, 21% gold, 14% base metals, 8% coal and 8% other metals. ENK (£) 0.11 2.4 9 44 Norilsk Nickel (US$) 5,258.00 0.3 18 33,939 diversified mining: This index comprises 29 companies, with a 2300 combined market capitalisation of some US$660 billion, with the Sherritt Intl (C$) 5.71 -0.3 44 1,706 top four companies accounting for 56% of the total. Base metals: An index of 48 companies (some US$190 billion), with Zinc/Lead/tin 1800 Freeport McMoRan Copper & Gold representing 24% of the total Mining EYe Boliden AB (SK) 15.25 0.0 45 4,200 market capitalisation. Grupo Mexico and Alcoa Inc account for a FTSE Mining (rebased) Hindustan Zinc (Rs) 126.10 -0.1 40 10,218 combined further 15%. Industrias Peñoles (MP) 623.33 2.6 86 18,721 gold: This index of 50 companies has a market capitalisation of 1300 April 2011 April 2012 Ivernia (C$) 0.13 -7.1 33 98 US$280 billion. The top three companies account for 39% of the Lundin Mining (C$) 4.53 1.5 22 2,656 total. Mining EYe represents the weighted average market capitalisation of the top PT Timah (Rp) 1,820.00 4.0 20 998 coal mining: The 36 companies have a market capitalisation of 20 mining companies on London’s AIM market. some US$100 billion. Peabody Energy and China Shenhua account Source: Thomson Financial Datastream ferrous for a combined 26% of the total. African Minerals (£) 5.68 -1.8 69 3,004 Cliffs Natural Resources (US$) 67.95 -4.5 38 9,681 gLoBaL Mining sharE pricEs Ferrexpo (£) 2.89 0.5 18 2,731 800 Fortescue Metals (A$) 6.02 6.0 73 19,373 Local change Local Mkt cap Evraz Highveld (R) 29.00 7.4 13 366 5-day % hi-lo % Us$m Kumba Iron Ore (R) 542.40 3.3 77 22,233 700 Merafe Resources (R) 0.90 -4.3 11 286 diversified MMX (BR) 9.18 6.4 63 3,015 Anglo American plc (£) 23.11 1.7 21 49,245 Global 600 African Rainbow Minerals (R) 180.05 1.8 32 4,911 Energy Minerals BHP Billiton Ltd (A$)* 35.50 4.7 14 184,173 Alpha Natural Resources (US$) 16.67 3.7 6 3,668 mining BHP Billiton plc (£)* 19.43 1.9 33 184,173 Arch Coal (US$) 9.89 -7.0 1 2,109 500 ENRC (£) 5.59 -4.5 11 11,557 Banpu PCL (Bt) 556.00 -4.5 22 4,893 Rio Tinto Ltd (A$)* 66.60 3.3 31 109,716 PT Bumi Resources (Rp) 2,125.00 1.2 26 4,808 Rio Tinto plc (£)* 35.20 0.9 44 109,716 Cameco (C$) 21.06 0.6 31 8,372 China Shenhua Energy (H$) 400 Teck Resources Ltd (C$) 37.14 0.6 36 21,934 34.25 4.9 55 84,694 April 2011 April 2012 Vale SA (BR) 43.36 -1.1 37 121,956 Coal India (Rs) 361.60 8.5 53 43,801 Vedanta Resources (£) 12.00 -1.1 21 5,720 Consol Energy (US$) 34.83 0.2 20 7,910 gLoBaL divErsifiEd Mining Xstrata plc (£) 11.40 3.1 50 54,957 Energy Resources of Australia (A$) 1.67 31.0 17 894 Exxaro (R) 207.00 -3.0 88 9,338 1400 gold/silver Peabody Energy (US$) 0.30 3.8 8 8,293 Agnico-Eagle (C$) 33.70 -1.4 5 5,801 UK Coal plc (£) 0.15 0.0 2 72 AngloGold Ashanti (R) 262.67 -1.9 2 12,871 Uranium One (C$) 2.98 6.4 43 2,873 Global Barrick Gold (C$) 40.74 -3.0 4 41,045 Yanzhou Coal (Yu) 23.55 1.0 19 15,347 Centerra Gold (C$) 12.49 -9.2 2 2,973 diversi ed Coeur d’Alene (US$) 21.70 -5.7 17 1,951 industrial Minerals & diamonds 1050 Eldorado Gold (C$) 14.18 -1.3 18 10,134 Harry Winston (C$) 13.89 -0.3 52 1,187 mining Fresnillo (£) 16.27 0.7 38 18,733 Gem Diamonds (£) 2.73 3.4 70 606 Gold Fields Ltd (R) 99.35 -3.5 9 9,162 Iluka (A$) 17.54 1.6 75 7,590 Goldcorp (C$) 41.03 -1.8 5 33,689 Mosaic Co (US$) 50.81 -0.7 18 21,615 Golden Star (C$) 1.52 -6.7 2 396 Petra Diamonds (£) 1.60 -1.1 68 1,295 Harmony Gold (R) 75.58 -7.3 3 4,150 Potash Corp of Sask (C$) 43.27 -0.1 18 37,421 700 Hecla Mining (US$) 4.12 -5.7 1 1,175 Trans Hex (R) 2.79 1.5 43 38 April 2011 April 2012 Iamgold (C$) 12.62 -1.3 6 4,778 Kinross Gold (C$) 9.22 -2.7 2 10,564 gLoBaL BasE MEtaLs Newcrest Mining (C$) 28.16 -2.8 3 22,269 Newmont Mining (US$) 47.83 -3.5 1 23,667 850 Pan American Silver (C$) 19.38 -4.4 2 3,004 Petropavlovsk (£) 4.80 -8.5 0 1,447 Global 770 Polymetal (£) 998.00 4.0 38 6,185 Polyus Gold (Rb) 3.00 0.1 56 this wEEk’s Main MovErs base 54.50 -2.9 28 8,026 690 Randgold Resources (£) metals Yamana Gold (C$) 14.35 -6.8 48 10,780 price change % Zijin Mining ‘H’ (H$) 3.09 3.3 44 13,198 top 6 performers 610 Energy Res Australia 1.67 31.0 platinum group Metals Coal India 361.60 8.5 Evraz Highveld 29.00 7.4 530 Anglo Platinum (R) 500.00 -2.9 2 17,162 Aquarius Platinum (A$) 2.15 4.4 5 1,045 Uranium One 2.98 6.4 Impala Platinum (R) 146.50 -2.7 2 11,308 MMX 9.18 6.4 450 Lonmin plc (£) 10.10 0.3 11 3,286 Fortescue Metals 6.02 6.0 April 2011 April 2012 Northam Platinum (R) 32.99 -3.0 27 1,606 Stillwater Mining (US$) 11.93 -1.1 28 1,379 top 6 falls gLoBaL goLd Zimplats (A$) 10.30 1.0 41 1,146 Centerra Gold 12.49 -9.2 Petropavlovsk 4.80 -8.5 350 aluminium Harmony Gold 75.58 -7.3 Alcoa (US$) 9.87 -2.9 15 10,527 Ivernia Inc 0.13 -7.1 Global Alumina Ltd (A$) 1.21 2.1 9 3,052 Arch Coal 9.89 -7.0 Aluminum Corp of China ‘H’ (H$) 3.78 2.4 13 12,393 Yamana Gold 14.35 -6.8 gold 300 Hindalco (Rs) 128.10 0.1 15 4,703 Norsk Hydro (NK) 29.29 -3.7 22 10,547 index hsBc indicEs copper change hi-Lo 52-week 52-week 250 Antofagasta (£) 11.69 2.5 48 18,503 100 on 31.12.88 on week (%) (%) max low First Quantum Minerals (C$) 21.53 -4.5 54 10,327 Global Mining 545 -1.7 13 785 509 Freeport-Mc. C& G (US$) 38.17 0.7 33 36,199 Global Diversified Mining 903 -2.6 21 1,304 796 Grupo México (MP) 41.26 3.1 82 24,272 Global Base Metals 544 -1.8 25 821 452 200 Inmet Mining (C$) 56.43 -2.8 47 3,942 North American Base Metal† 912 -1.3 26 1,423 730 April 2011 April 2012 Ivanhoe Mines (C$) 13.04 -3.7 10 9,734 Global Gold Index 218 0.8 2 307 216 Jiangxi Copper (Yu) 25.35 1.4 25 11,698 Global Gold Ex South Africa 274 0.8 2 390 271 gLoBaL coaL Mining Kazakhmys (£) 8.70 -3.0 24 7,346 North American Gold 270 0.8 2 391 268 KGHM (Zt) 137.20 -4.1 36 8,609 † 1850 Global Coal Mining 1,126 -1.9 10 1,791 1,055 Mitsui Min. & Smlt. (¥) 206.00 -1.9 26 1,448 Other Metals/Minerals† 922 -1.9 17 1,324 841 Southern Copper (US$) 31.30 -1.8 58 26,604 Latin American Mining* 2,858 -2.2 28 3,742 2,523 Global Sumitomo Met. Min. (¥) 1,056.00 -2.0 23 7,533 Latin American (Ex CVRD)* 1650 1,608 -2.3 58 1,864 1,250 coal * 100 on 31.12.89 * Dual-listed companies, with effective cross-holdings † 100 on 31.12.85 mining 1450 all data on this page sourced from Bloomberg unless otherwise stated 1250 Mining Journal’s share constituents are reviewed on a quarterly basis. The companies in the gold section comprise the leading stocks by market capitalisation. The constituent companies in all other commodity sections are chosen on a subjective basis to 1050 include the major producers, and are allocated to sections based on revenue. Fast-track entry into the share table will apply in the

April 2011 April 2012 case of significant flotations or company-transforming mergers.

www.mining-journal.com April 20, 2012 Mining Journal 23

22_23MJ120420.indd 23 19/04/2012 18:15 WHERE CHINESE OUTBOUND INVESTORS SOURCE HIGH QUALITY GLOBAL MINING OPPORTUNITIES

China World Summit Wing, Beijing • June 19–21

The premier mining and investment event in China

19-21 JUNE 2012 – CHINA WORLD SUMMIT WING, BEIJING

EXPERT ANALYSIS ON THE EVOLUTION REGISTER FOR MINES AND MONEY OF CHINESE OUTBOUND INVESTMENT FROM: BEIJING 2012 TO ENJOY:

Amy Cheng Magnus Ericsson n An exhibition showcasing a wide selection MD & Vice Chairman of Senior Partner of international mining projects Investment Banking Head Raw Materials Group of Natural Resources n 60+ speakers over three action-packed days Bank of China International Charles Yan sharing investment and deal-making insights GM International Jianhua Jin Business Department n Keynotes from leading mining investors, Managing Director Zhongchuan project developers and market analysts Investment Banking International Mining n CITIC Securities Company spotlight presentations showcasing Yong Kwek Ping, mining projects for in-demand commodities Patrick Loftus-Hills Chief Executive Officer Head of Metals and Mining Inventis Investment n Analysis of risk and opportunity in the world’s Moelis & Company Holdings (China) most opportunity-rich mining countries Rui Feng n High-value networking bringing together Chairman and CEO Chinese outbound investors and international Silvercorp mining executives

Source natural resource suppliers ExploreTake a Mining look inside...Investment Opportunities in: Take a look inside and investment opportunities in: to find out more about this year’s Africa • Latin America • SE Asia conference Coking coal • I r o n o r e • Specialty ores for Mongolia • Kazakhstan and Central programme and steelmaking Copper Bauxite Uranium opportunities to • • • Asia • Canada • USA • Australia take part in this

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