Australia Mining Trends 2019: Humps, Bumps and Trumps

The Investing News Network takes a look at Australia mining trends for 2019, with a macro view of the issues that came to the fore.

Click here to read the latest Australia mining trends article.

Globally, the overall trends in the resources industry in 2019 were the ongoing impact of the US-China trade war coupled with general uncertainty — as shown by the rising gold price and a mixed bag of results across base metals.

For Australia, it was a year that saw the resources industry holding up the numbers in the country’s economy, with mineral exports keeping the national budget in a surplus (albeit a thin one) and out of a recession, despite faltering national economies the world over.

Overall, the country’s government forecasts that its mining export revenue will be a cool AU$282 billion for the 2019/2020 financial year, a record number.

Even so, analysts approached by the Investing News Network (INN) agreed that 2019 was not an easy year for the sector, talking of growth, but difficulty in financing. Read on for more of their thoughts on Australia mining trends this past year.

Australia mining trends 2019: The year in perspective

To sum up attitudes, Owen Hegarty, who is executive chairman of EMR Capital, told INN at the International Mining and Resource Conference (IMARC) in November, “The trend in 2019 was one of consolidation — the world has seen a few ups and downs, a few humps, bumps and Trumps.”

Hegarty pointed to all the usual suspects impacting the industry: the trade war, the ongoing uncertainty of Brexit as the year wore on and, of course, US President Donald Trump himself.

Despite a year of caution and uncertainty, Hegarty said that there is still good, strong demand for resources around the world.

“You’ve still got demand in the developing economies, in China, India and Indonesia. All of those countries that are near (Australia). They are all good and growing.”

Warren Pearce, CEO of the Association of Mining and Exploration Companies, said that sentiment was more positive in the lead up to 2019, but the year only partially held up to expectations.

“Heading into 2019, we were confident that the coming year would see a strong recovery for the mining and exploration industry, but that has only partially occurred,” he said.

“Strong commodity prices generally have certainly buoyed mining companies and spurred growth and expansion efforts, (and) exploration has continued to grow. However, over the course of the year, we have seen the balance between greenfield and brownfield exploration shift towards brownfield as explorers struggle to raise capital for greenfield projects.”

For his part, Pearce commented, “(This has) partly reflected the fortunes of the industry, with 2019 seeing an extremely difficult investment environment for the resources sector, primarily driven by ongoing uncertainty in the global economy.”

Paola Rojas, managing director of Synergy Resource Capital, said that the two main themes of 2019 in the development of the industry were lithium’s volatile story and the shift away from thermal coal, which she said she doesn’t think is a temporary shift.

“Australia’s energy matrix is still heavily reliant on (coal), but climate change concerns continue to provide incentives to divest from the sector, including shutting down plants.”

That said, Rojas expressed surprise that the Carmichael coal mine in Queensland was approved in 2019.

“Politics carries weight still,” she said.

The other change she noted was the shift to new energy sources and the concurrent decrease in lithium prices — and, given Australia is the world’s largest lithium producer, this is having an impact.

“The increased availability of lithium globally has affected the local miners, pushing valuations to terribly low levels,” she said. For investors, this is noteworthy, said Rojas.

“There are some great opportunities in the space, and also with cobalt and nickel. I believe next year will be ripe with (mergers and acquisitions) in lithium, albeit not only in Australia.”

When asked about the biggest developments in the Australian resources industry over the last 12 months, Rojas said Australian miners have been focused on getting into production, rather than doing exploration and “adding up value to their deposit so they get acquired by a major” like Canadian companies.

Rojas believes the traditional financing model for junior and intermediate companies is “dead.”

“Investors are reluctant to invest when it is a pure gamble as it’s been in the past, adding up that both cannabis and cryptocurrencies are competing for those investors with tolerance for high-risk alternatives (and winning),” she said. “I think juniors should take a page out of the tech startups’ book and come up with a pathway to cash flow, either through their projects or some other adjacent option. In my mind, grade is not king, cash flow is.”

Willem Middelkoop, who is the founder of the Commodity Discovery Fund, told the Investing News Network that heading into 2019, he had expected a broader recovery in metal markets. “This might happen in 2020,” he commented.

When asked about the main theme in the Australian resources industry, Middelkoop said that the “very high margin for gold miners” is hard to go past, while the biggest developments in the year were mergers and acquisitions across the sector overseas, some of which impacted Australian companies.

“This trend could continue in 2020,” said Middelkoop.

Looking more closely at the states, David Smith, who is the director general for Western Australia’s Department of Mines, Industry Regulation and Safety, argued that the industry is alive and well despite general media coverage saying the mining boom in Australia is over.

“There’s been a reduction in activity associated with construction, but now what’s come onstream is the production as a result of the investment that was put in place to deliver,” he said.

Australia mining trends 2019: Quarterly highlights

Here’s a look at some of the big stories over the year in Australian mining.

January to March: Disaster in Brazil boosts Australian mining

In January, the collapse of the Brumadinho tailings dam in Brazil killed 256 people, and another 14 are missing and presumed dead. The tragedy may have happened in South America, but it greatly impacted the Australian economy. This is because it propped up income from iron ore exports as the price of iron ore rocketed in the immediate aftermath, and took hundreds of thousands of tonnes of iron ore output offline for the dam’s owner, Vale (NYSE:VALE) — a direct competitor with Australia’s iron ore giants.

The result was increased interest in Australian iron ore exports as end users sought alternatives.

April to June: Election brings EVs and nuclear to the fore

In the next three months, Australia was hit by a cyclone that trimmed Australian iron ore output, while the mid-May federal election sucked a lot of oxygen.

The election lurched from issue to issue. At one point, the incumbent prime minister talked up nuclear power, but then back pedalled extremely fast following backlash, and electric vehicles (EVs) made an appearance in a culture war-like argument over what Australians want to drive to work. Not losing focus over the course of the election was the future of coal in Australia; it was always top of mind over the course of the election as Queensland inched towards approving the Carmichael mine.

July to September: Rare earths front and centre

In Q3, Australia was still talking about how it could step in to fill the gap left by Vale, while attentions within the sector were turning back to rare earths again, with Australia in talks with the US.

It was mostly a quiet quarter, with the world’s only major rare earths producer outside of China, Lynas (ASX:LYC,OTC Pink:LYSCF), sniffing around Kalgoorlie looking to establish a rare earths processing plant — something that was locked in during the fourth quarter.

Meanwhile, Australian lithium companies were doing deals with Chinese battery end users.

October to December: Climate protesters target mining

In the last quarter of the year, protest politics came to the fore, as police in Melbourne were accused of excessive violence against climate protesters outside IMARC.

Meanwhile, Australia and the US signed a formal agreement to begin cooperating on their respective critical mineral supplies. While Australia does not mention China in its release, the US has made it clear that it’s looking for alternative partners — like Australia.

The Minerals Council of Australia (MCA) took the opportunity to close out the year by reminding policymakers and the general public that it likes nuclear energy and wants the onerous regulations on exploration and development to be lifted, along with the outright ban on nuclear energy generation. According to the MCA, the public feels the same way.

Don’t forget to follow us @INN_Australia for real-time updates!

Securities Disclosure: I, Scott Tibballs, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

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Winsome Resources CEO Chris Evans

Winsome Resources CEO Chris Evans said, “Canada and the US are working feverishly to develop an internal battery materials supply chain and we think we're going to play a critical role in that.”

Winsome Resources CEO Chris Evans: Sustainable Hardrock Lithium Opportunities in Quebec youtu.be


Winsome Resources (ASX:WR1) CEO Chris Evans joined the Investing News Network to discuss the company and its Cancet lithium project in Quebec, Canada.

"We listed on the ASX on November 30, 2021," he explained. "We're lithium focused but based in Canada, and we've been pretty successful in the last six months — our share price has done well. I think I've been putting this down to the success factors which we possess as a company, including the fact that we're into lithium at a moment with high demand. Any mining company that's associated with lithium has tended to do well.

“Our assets are in Quebec, a fantastic mining jurisdiction for all sorts of reasons. Also, being listed on the ASX — Australian investors tend to like early stage plays a bit better. They've certainly woken up to the electric vehicle and lithium revolution that's occurring in the world. And it's a pleasure having the assets in Canada.”


Next, Evans got into specifics about the company's flagship project. “The Cancet project is our flagship, in the James Bay region of Quebec. All our projects are hard-rock lithium; that's digging the rocks out of the ground and concentrating the lithium in them. Then it gets converted into the final product, which is lithium carbonate or hydroxide, that then goes into electric vehicle batteries,” he explained.

“Cancet’s had about 5,500 metres of drilling done on it historically, so we know that there's a great deposit of lithium at fantastic grades. It outcrops on the surface, the lithium-containing spodumene from the pegmatite rock, where we have 3.7 percent lithium oxide over a 17 metre interval from the surface at our most successful drill hole. We just completed 2,000 metres of drilling ourselves, increasing our knowledge of the orebody that's there, and also looking for extensions to the orebody. We've got 395 claims, and our drilling and exploration is only over about 15 of the claims. So we've got a lot further to look here and a lot more to develop.”

As for supply location, and the company's relationship with the international market, Evans said, “We think it's fantastic for us, and our shareholders, that we have assets in Quebec. Roughly 50 percent of the world's hard-rock lithium comes from Australia, where it’s mined and concentrated. The problem is that final conversion into lithium carbonate or hydroxide all occurs at the moment in China ... lithium is on the critical minerals list in Canada, the US and Australia, and Canada and the US are working feverishly to develop an internal battery materials supply chain. We think we're going to play a critical role in that.”

Elaborating on the sustainability industry that drives the battery revolution, he said, “(Nearly) all power in Quebec is generated by hydroelectricity and renewable forms of electricity. That’s very important, because the mining and concentration process for lithium products traditionally produces a large carbon footprint, because it's energy intensive. The EU, from 2024, has mandated that all batteries are labeled with the carbon footprint of all the materials that are contained within them. Then, by about 2026, there's specific targets that batteries have to meet in order to be sold in the EU. If you don't have a renewable source of energy to produce your lithium products that go into those batteries, it's going to severely restrict your markets — and that's another bonus for us being in Quebec.”

Evans said that Winsome Resources’ approach is to develop a mine itself, rather than selling or partnering. “We will approach this as if we are going to be developing the Cancet project, and producing lithium ourselves, in four or so years. And I think that'll best serve our shareholders.” With regards to other ways the company could benefit investors, Evans said, “Being listed on the ASX, and having access to a lot of capital, I think there's a great opportunity for us to acquire other projects in Canada. We're about to start our summer exploration. And we're on the lookout for a new project. So I think the good news is really to come.”

Watch the full interview of Winsome Resources CEO Chris Evans above.

Disclaimer: This interview is sponsored by Winsome Resources (ASX:WR1). This interview provides information that was sourced by the Investing News Network (INN) and approved by Winsome Resources in order to help investors learn more about the company. Winsome Resources is a client of INN. The company’s campaign fees pay for INN to create and update this interview.

INN does not provide investment advice and the information on this profile should not be considered a recommendation to buy or sell any security. INN does not endorse or recommend the business, products, services or securities of any company profiled.

The information contained here is for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of securities. Readers should conduct their own research for all information publicly available concerning the company. Prior to making any investment decision, it is recommended that readers consult directly with Winsome Resources and seek advice from a qualified investment advisor.

This interview may contain forward-looking statements including but not limited to comments regarding the timing and content of upcoming work programs, receipt of property titles, etc. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements. The issuer relies upon litigation protection for forward-looking statements. Investing in companies comes with uncertainties as market values can fluctuate.

WR1:AU

Where are the silver mines in Australia? You might be surprised to learn that the country is home to one of the world’s top primary silver producers.

Mining is a big part of Australia’s history, and it continues to shape the country’s economy and position in the world today. The nation is one of the world’s top producers and exporters of resources, with coal, uranium, copper and gold being some of its best-known commodities.

Australia is also a key producer of silver — it was the world’s fifth-largest producer of the metal in 2021, tied with Russia, putting out 1,300 MT. Interestingly, most of Australia's silver is produced from silver-bearing galena, but some is also produced from copper and gold mining.

Refined silver comes mainly from the Port Pirie lead smelter and refinery in South Australia, though silver is also refined at gold refineries in Perth, Kalgoorlie and Melbourne.


But where are the silver mines in Australia, exactly? While it’s interesting to know what types of deposits the precious metal is found in, many investors want to know what companies are producing silver and where their mines are located geographically. Read on to find the answers to those questions.

Where are the silver mines in Australia?

Silver has played a role in Australia since the mid-1800s — Wheal Gawler, Australia’s first metal mine, was a silver-lead mine developed in South Australia in the 1840s. And that’s not Australia’s only early silver-mining operation — the Broken Hill deposit in New South Wales and the Mount Isa deposit in Queensland are two other early Australian silver discoveries.

Broken Hill, a lead-zinc-silver deposit, was discovered in 1883 by German immigrant Charles Rasp, and the Broken Hill Proprietary Company was born in 1885; it ultimately merged in 2001 with another mining giant, Billiton, to form BHP Billiton (ASX:BHP,NYSE:BHP,LSE:BLT). BHP Billiton is no longer involved with Broken Hill, but ore is still being extracted there today. Perilya now runs the southern and northern operations.

For its part, Mount Isa was discovered in 1923 by John Campbell Miles, and like Broken Hill is still producing today. It was acquired by Glencore (LSE:GLEN) in 2013 and in addition to silver is also a producer of zinc.

These major early Australian silver discoveries are not the country’s only sources of silver. Other silver mines in Australia include Cannington, one of the world’s top primary silver producers. It’s a fly-in, fly-out mining and processing operation that is owned by South32 (ASX:S32,LSE:S32), a diversified resource company spun out from BHP Billiton in 2015. Cannington also produces lead and zinc.

Australia holds the McArthur River mine as well, which opened in 1995 and is owned by Glencore subsidiary McArthur River Mining. The mine is one of the world’s largest zinc-lead-silver mines, and is located in Australia’s Northern Territory.

Glencore’s 2021 annual report claims total silver production reached 31.519 million ounces for the year, representing a 4 percent drop from 2020. That includes 625,000 ounces from McArthur River.

The Century mine, which previously belonged to MMG (HKEX:1208), shut its doors at the end of 2015, but was a major producer of zinc (and silver) until that time. It was reopened in mid-2018 by New Century Resources (ASX:NCZ) and the company says it now has an estimated annual production capacity of 264,000 tonnes of zinc and 3 million ounces of silver.

Independence Group (ASX:IGO) also produces silver, along with copper and zinc, at its Jaguar operation in Western Australia. Gold producer Silver Lake Resources (ASX:SLR) owns some projects with silver reserves as well. As you can see, there are and have been many silver mines in Australia.

Future silver mines in Australia?

In addition to being home to a slew of large silver mines, Australia also plays host to many companies that are exploring and developing silver projects. Below are a few that have made recent progress.

Please let us know in the comments if we’ve forgotten to mention any Australia-focused silver companies. All companies listed had market caps of at least AU$5 million on May 19, 2022.

Argent Minerals (ASX:ARD) — Argent Minerals’ main asset is its 100-percent-owned Kempfield polymetallic project in New South Wales. In May 2018, the company announced an updated resource estimate for the asset — its silver equivalent contained metal now stands at an estimated 100 million silver equivalent ounces at 120 g/t silver equivalent; that’s approximately double the previous estimate.

In total the company has three projects, with all of them being in New South Wales.

Investigator Resources (ASX:IVR) — Investigator Resources is advancing silver, copper and gold deposits in South Australia. Currently its properties include the Peterlumbo/Paris silver project, the Eyre Peninsula and Stuart Shelf projects and the Northern Yorke Peninsula projects.

The total resource for Paris stands at an estimated 18.8 million tonnes at 88 g/t silver and 0.52 percent lead for 53.1 million ounces of contained silver and 97,600 tonnes of contained lead (at a cut off of 30 g/t silver). The indicated component is 12.7 million tonnes of silver (95 g/t) and represents 73 percent of the total estimated resource ounces.

Horizon Minerals (ASX:HRZ) — Horizon Minerals owns the Nimbus silver-zinc project in Western Australia. Nimbus has a high-grade silver-zinc resource estimate of 255,898 tonnes at 773 g/t silver and 13 percent zinc; the total Nimbus resource stands at 1.21 million tonnes at 52 g/t silver, 0.9 percent zinc and 0.2 g/t gold.

Silver Mines (ASX:SVL) bills itself as a leading Australian silver exploration company, and has spent a considerable amount of time acquiring Australian silver projects. Those include Malachite Resources’ (ASX:MAR) Conrad project and Kingsgate Consolidated’s (ASX:KCN) Bowdens silver project.

While the company’s main focus has been on the Webbs silver project in New South Wales, the Bowdens project represents the largest undeveloped silver project in Australia, and Silver Mines is working to get the project through the feasibility, environmental impact statement and permitting stages.

In a 2018 report, the feasibility study demonstrated an average silver production of 3.4 million tonnes per annum for the project, with 5.4 million during the first three years of operation. Estimations also included 6,900 tonnes of zinc and 5,100 tonnes of lead.

This is an updated version of an article first published by the Investing News Network in 2018.

Don’t forget to follow us @INN_Australia for real-time updates!

Securities Disclosure: I, Ryan Sero, hold no direct investment interest in any company mentioned in this article.

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