Department for Manufacturing, Innovation, Trade, Resources and Energy
South Australia’s Mineral and Resources Update
Resources and Investment Symposium Broken Hill – May 2014
Dr Paul Heithersay Deputy Chief Executive Resources and Energy
DMITRE
Metal demand continues to grow rapidly
This puts severe pressure on industry to find and develop new mines
2
0
10
20
30
40
1900 1920 1940 1960 1980 2000 2020 2040
Forecast Demand Based on 3% pa growth
Historic Demand Average growth rate of 2.8% pa over last 24 years
Copper Mine Production (Mt pa Cu)
Cumulative copper production for all history
(1000 BC to 2013 AD) = 629 Mt Cu
In the next 24 years 635 Mt of copper will need to be mined
… that’s equal to the total amount produced in all
history to-date !
… and half of this was mined in the last 24 years
Source: MinEx Consulting © May 2014 , based on historic data from USGS
Strong demand for some of the high tech metals – but their overall market is still quite modest
3
Growth rates for minerals and metals: 2003-2013
-10%
0%
10%
20%
0.01 0.1 1 10 100 1000
Compound Annual Growth rate (tonnes basis) Bulk MineralsIndustrial MineralsBase MetalsLight MetalsPrecious MetalsHigh TechOther
Total Sales Revenue in 2013 (US$ Billion)
Cement
Iron Ore
Thermal Coal Coking Coal
Tantalum
Gallium Germanium
Lithium
REE Copper
Aluminium
Gold
Nickel
Cobalt
Source: USGS Mineral Commodity Summaries
Uranium
PGM
Silver
Silicon
Lime
Zinc
Note: Compound Annual Growth Rate was calculated by comparing World mine production for a given commodity in 2013 against 2003.
Phosphate
Potash
Exploration is becoming more difficult & expensive
Exploration expenditures and discoveries in the Western World
4 Source: MinEx Consulting © February 2014
Note: Discoveries are Based on deposits > 100koz Au, >100 kt Cu, > 250kt Zn+Pb, >10kt Ni, >5 kt U3O8 or equivalent size Excludes Bulk Mineral discoveries and satellite deposits found within existing camps
Number of Discoveries 2013 US$ Billion
$2.4b
$18.8b
$12.3b
Even after adjusting for unreported discoveries, in the last 5 years a large gap
has opened up between expenditures and the
number of deposits found
… and we having to explore under deeper cover
Depth of cover for Base Metal discoveries in the World: 1900-2013
5
Note: Based on an analysis of 818 Primary Cu, Zn, Pb and Ni deposits > 0.1 Mt Cu-equivalent Bubble size refers to Mt Cu-eq of pre-mined Resource, as calculated using the average metal price for 2011-2013 Excludes satellite deposits within existing Camps. Excludes nickel laterite deposits
Source: MinEx Consulting © March 2014
The step increase in the depth of cover (post 1945)
was due to innovations in geophysics
Olympic Dam
Depth of Cover (Metres)
Talnakh Lubin
Pampa Escondida
Escondida
Innovations in GPx will play a key role in the future
Primary search method used at the prospect-scale for Base Metal discoveries (>0.1 Mt Cu-eq) in the World: 1900-2012
6 Source: MinEx Consulting © July 2013
0%
20%
40%
60%
80%
100% Serendipity
Prospector
Other
Drilling (Sole Method)
Visual
Conceptual/Geological
Geological Mapping
Extrapolated from KnownMineralisationGeochem
Geophysics + Geochem
Geophysics
Country & Social Risks are impacting on projects
It is taking longer to get a discovery into production, especially in emerging countries
7
7.1 Years
18.1 Years
9.8 Years
Years Delay
Discovery Year
Gold
Note: Bubble size refers to the pre-mined Resource Analysis based on 686 primary gold deposits >0.1 Moz found in the World
Source: MinEx Consulting © March 2014
•We need new tools to explore undercover 100m to 1000m •We need innovative approaches between exploration , mining and land owners and other stakeholders •We need supportive governments to provide certainty for long term decisions •Sustained commitment to partner with industry in recording , preserving and presenting precompetitive data
8
As professionals in the industry we have a grand challenge
South Australian Minerals and Energy Resources
1 Twelve months to January 2014
• Minerals ($144.7m) and Petroleum ($367.7m)
$512 million EXPLORATION EXPENDITURE
• ~$30 billion of potential capital for Minerals and Energy projects in the Major Developments Directory
$1.6 billion new CAPITAL EXPENDITURE
• Minerals ($5.4 b) and Petroleum ($1.6 b)
$6.9 billion resources PRODUCTION
• Minerals ($4.5 b) and Petroleum ($0.2 b) • 38% of South Australia’s total exports ($12.0 b)1
$4.7 billion EXPORTS
$188.7 million ROYALTIES
• more than double - 6,641 ten years ago
15,372 EMPLOYED
South Australian Mineral and Petroleum Production by Commodity – 2000 - 2013
10
0
1
2
3
4
5
6
7
8
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
$ Bi
llion
Copper Hematite Magnetite Gold Uranium CoalOther Metallics Industrial Construction Gemstones Caroline 1 CO2 (well) Condensate
Minerals and Petroleum production for 2013 was $6.9 billion ($5.4b – Minerals and $1.6b – Petroleum)
Record Production
South Australian Mineral Exploration Expenditure 1993 - 2013
11
0%
2%
4%
6%
8%
10%
12%
14%
16%
0
50
100
150
200
250
300
350
400
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
South Australian expenditure SA's percentage share of Australian expenditure SASP Target 41 - $200m to 2015 Former SASP Target T1.18 - $100m
Sout
h Au
stra
lian
min
eral
ex
plor
atio
n ex
pend
iture
($ m
)
SA's
sha
re o
f Aus
tralia
n m
iner
al e
xplo
ratio
n ex
pend
iture
(%
)
source: ABS data Cat. 8412.0 and DMITRE
Challenger discovery
PACE
Four Mile discovery
Olympic Dam Expansion
Carrapateena discovery
Olympic Dam drill-
out
PACE 2020
Prominent Hill
discovery
Jacinth-Ambrosia discovery
Hillside discovery
Impact of GFC
South Australian and Curnamona Province mineral exploration expenditure by commodity 2013
12
Copper$57.9m
40%
Iron ore$16.5m
11%
Other$43.6m
30%
Base Metals$22m 15%
Uranium $4.7m
3%
$144.7 million
Based on: ABS Cat. 8412, Dec 2013Based on: ABS Cat. 8412, Dec 2013Based on: ABS Cat. 8412, Dec 2013Based on: ABS Cat. 8412, Dec 2013
Uranium$4.3m 23%
Copper ± Gold$5.5m 30%
Iron Ore$4.1m 23%
Gold$2.8m 16%
Lead/Zinc$1.3m
7%
Other $0.15 1%
$18.2 million
Source: DMITRE, Mineral Resources Division
Curnamona Province represents a 12.6% of the South Australian Exploration Expenditure in 2013
South Australia Curnamona
Curnamona Province, South Australia Exploration Expenditure, 2004 - 2013
13
-
5
10
15
20
25
30
35
40
45
50
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013Milli
ons
Gold Iron Ore Lead/Zinc Copper ± Gold Other Commodities Uranium
Source: DMITRE, Mineral Resources Division
Total exploration expenditure $285.8 million in the last 10 years • Uranium $170.1 million – 60% of total • Copper ± Gold $63.9 million – 22% of total • Iron Ore $23.3 million – 8% of total • Gold $22.3 million – 8% of total
Explorers in the Curnamona Province – South Australia
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Alliance Craton Explorer
Renascor Resources
Havilah Resources
Uranium One Australia
Heathgate Resources
Marmota Energy
Minotaur Operations
Beverley
Honeymoon
White Dam
Over 50 deposits with a mineral
resource (Fe, U3O8, Au, Cu,
Mo, Ag, Pb, Zn & Co)
Minotaur Announce Gold intersections - 22 May 2014
15 Source; Minotaur Exploration Ltd, ASX Release 22 May 2014
• Significant gold intersections from inaugural Mingary (SA) drilling
• Mingary Mine located in the northern part of Minotaur Exploration’s 100% owned Bonython Hill EL 4745 ~75km southwest of Broken Hill
Highlights • Assays from 2 RC holes at
Mingary Mine return significant gold values over 600 m strike: 14RCBH07: 16m @ 1.07 g/t Au,
0.26% Cu from 80m 14RCBH09: 16m @ 0.66 g/t Au,
0.38% Cu from 104m
• Potential for mineralised horizon to extend for 2km
Exploration Activity – Curnamona 2014
16
PROJECT
COMPANY
COMMODITY ANNOUNCEMENT
Four Mile East
Alliance Resources / Quasar Resources
Uranium Start-up 14 April 2014
Croziers Dam
Havilah Resources /MMG Expl
Copper Drilling results: 12.5m at 0.46% cu from 213.5m (21/1/14)
Kalkaroo Havilah Resources
Copper-Gold
First draft of the mining lease proposal lodged with DMITRE in May 2014
Maldorky Havilah Resources
Iron Ore Second draft of the mining lease proposal lodged with DMITRE in April 2014
Razorback Premium Iron Project
Royal Resources
Iron Ore
PFS optimisation work near completion. Mining Lease Proposal progressing and geotechnical studies continuing. Geological mapping and sampling continues on Fe prospects within the Red Dragon Venture, March 2014
South Australian Resources
17
Gawler Craton
Curnamona
Includes Cu, U3O8, Au, Ag, Pb, Zn, HM
& Graphite
South Australian Iron Ore Resources
20
Gawler Craton
Curnamona
21 Source: Company websites, DMITRE, Deloitte Regional Infrastructure & Mining Plan
IRON ORE PRODUCTION IRON ORE RESOURCES
2012-13 Production
- JORC Resources
7,269Mt
Development/ Prospects
39Mtpa
Total 39Mtpa
IRON ORE IN SOUTH AUSTRALIA - BRAEMAR
BRAEMAR PROVINCE • Located East of South Australia, 250km from
Peterborough to Broken Hill near the New South Wales border.
• Estimated 20 billion tonnes of magnetite ore adjacent to the Broken Hill – Adelaide rail line.
• Currently 6 development projects and prospects with a combined forecast production of 39Mtpa by 2025
PROJECTS • Grants
• Lilydale
• Maldorky
• Mutooroo
• Red Dragon Venture (Razorback Ridge)
INFRASTRUCTURE • Adelaide – Broken Hill standard gauge railway
• Major road networks
• Linkages to existing and proposed ports
Braemar Iron Pty Ltd
22
• Project in pre concept
phase
• Estimated capital cost
$4.89 billion (mine and
infrastructure)
• Power connection to South
Australian network
• Slurrying allows low cost
• Construction period 2-3
years from approvals
Braemar Iron Pty Ltd
23
South Australia – New South Wales MOU
• October 2013 signed at Broken Hill between the South Australian and New South Wales governments
• Promote both governments as proactive jurisdictions that welcome overseas investment in minerals and energy projects
• Develop alignment where possible between the geological and regulatory information and systems in both jurisdictions
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Olympic Dam
• Copper a key pillar for BHP Billiton; Olympic Dam a Tier 1 asset
• Resource: 9.6 BILLION tonnes, 0.82% Cu, 0.26 kg/t U3O8 Worlds largest U deposit 4th largest Cu deposit
• Australia’s largest underground mine. 2013 production
174,400 tonnes copper (cathode) 4,009 tonnes U3O8 119,928 ounces gold 882,000 ounces silver
• U/G reserves: ~60 years at current production
25
Olympic Dam
• Focus on returning mine to profitability, despite negative trends in commodity prices
• Technology studies proceeding. Heap Leach testing continues
26
Olympic Dam
Working with BHPB on release of geo-scientific information • Papers published
• Soc Econ Geol Special Publication 16, 2012
• Presentations • Geol OD, SA Mining Nov 2013 • Geol Wirda Well, SA Mining Nov 2013
• HyLogger Data – in prep • Historical sulphur isotope and fluid inclusion data – in planning
27
Generating New Concepts In Copper Exploration in SA
0102030405060708090
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29
Cu (M
t)
PRO
MIN
ENT…
CARR
APAT
E…
HILL
SIDE
KAPU
NDA
KAN
MAN
TOO
EMM
IE B
LUFF
KALK
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O
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RID
MU
TOO
ROO
WAL
LARO
O
WIN
DABO
UT
MO
ON
TA
NO
RTH…
BURR
A
WES
T DO
ORA
PARA
BARA
NA
CAIR
N H
ILL
BLIN
MAN
MO
UN
T…
ANAB
AMA
MG
14
ELSI
E AD
AIR
CATT
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BREM
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AS
MO
UN
TAIN
…
POO
NA
WHE
AL…
Olympic Dam Total Remaining Cu Statistical under-representation of large 1-3Mt Cu occurrences and no giant 3-80 Mt Cu…. so far
28
Nyrstar Port Pirie Smelter Transformation
The issue • Nyrstar required to improve lead-in-air emissions levels from 2016,
through EPA licence variation in July 2012 • Reductions in % children with blood lead levels below Australian
guideline level had plateaued
2 options 1. INVEST - replace 60-year-old sinter plant smelting technology 2. CLOSURE - significant economic, environmental, social and
community impacts for the Port Pirie region and the State • Lose 965 regional jobs, • Lose 2,500 jobs across SA; • Lose $840 million in exports; • GRP reduced by $132 million in Port Pirie region; • GSP reduced by $304 million
29
Nyrstar Port Pirie Smelter Transformation
Government Support Package – 4 Elements 1. Financing support, via a guarantee, for third party funding
required for capital investment
2. Regulatory certainty for 10 years relating to lead-in-air concentrations for transformed smelter
• Port Pirie Smelting Facility (Lead-In-Air) Concentrations Act 2013 commenced operation on 1 May 2014
3. 10 year, $50 million ‘Targeted Lead Abatement Program’ for Port Pirie, jointly developed with Nyrstar
• Leverage air quality improvements to lower children’s blood lead levels through targeted interventions on lead exposure
4. Major Development Authorisation, granted in December 2013
30
Nyrstar Port Pirie Smelter Transformation
The solution • May 2014 - Agreement to transform smelter, secure Port Pirie’s
long-term sustainable and commercial future • $514 million investment by Nyrstar
• ~$103m from Nyrstar • ~$291m from 3rd party investor(s) underwritten by SA Government and
supported by EFIC guarantee • ~$120m from forward sale of silver metal output
Outcomes • Modern - best available enclosed bath smelting technology • Flexible - ‘advanced metals processing facility’ • Reduce emissions - lead reduced by 50%, sulphur by 90% • Lower blood lead; improve health outcomes for young children • Avoid major economic, environmental & community impacts
31
Nyrstar Port Pirie Smelter Transformation
Air quality improvement – before and after transformation
32
SOUTH AUSTRALIAN DRILL CORE REFERENCE LIBRARY
Evaluating PACE 2004-2014 – Major Findings
34
… for a ~ $50M investment … • Well managed and acknowledged globally as an
exemplar for government investment in stimulating exploration leading to new discoveries
• An additional $700m in private mineral exploration investment representing a leverage of at least 20:1 on expenditure
• An increase in State mining revenue of $2,400m • Increased mineral exploration expenditure • Exceeded SASP Target of $200m for several years • Fifteen significant successes resulting from
collaborative drilling including the Carrapateena copper-gold discovery
• Widely recognised as the benchmark exploration initiative with other jurisdictions adopting the a “PACE-like” model
Evaluating PACE 2004-2014 – Into the Future
35
Main themes for a future PACE 1. Improving land access for exploration 2. Multidisciplinary frontier terrane programs 3. Collaborative programs, particularly
drilling 4. Pre-competitive geoscience and value
adding 5. Capacity building in government and
industry With a Priority on: • Promoting exploration in frontier terranes • Encouraging junior sector participation • Enhancing land access
Olympic Dam
Carrapateena
All funding to be rolled into “PACE Frontiers” Initial PACE Frontiers budget ($4.0M; 2013/14 – 14/15) + Ongoing PACE 2020 commitment ($1.8M p.a.) + 2014 Election Commitment of $4.0M over 4 years ($1.0M p.a 2014/15 – 17/18) Focused on precompetitive data and delivery Incorporate recommendations of PACE review Strong commitment to collaborative opportunities – more diverse research opportunities
36
PACE Frontiers – 2014 to 2018
14/15 15/16 16/17 17/18 PACE Frontiers 2.0M - - - PACE 2020 1.8M 1.8M 1.8M 1.8M PACE Discovery 1.0M 1.0M 1.0M 1.0M
Total Investment 4.8M 2.8M 2.8M 2.8M
PACE Frontiers Mineral Systems Drilling on the Gawler Craton with DET-CRC
PACE 2020 Major regional geophysical surveys; Co-fund the Geoscientist Assistance Program; PACE Energy; APY Liaison Officer; Chair of Exploration Geology
PACE Discovery Collaborative opportunities including exploration drilling projects (through the PACE Discovery Drilling Program) and targeted research
37
PACE Frontiers – Forward Budget Model
14/15 15/16 16/17 17/18 PACE Frontiers 2.0M - - - PACE 2020 1.8M 1.8M 1.8M 1.8M PACE Discovery 1.0M 1.0M 1.0M 1.0M
Total Investment 4.8M 2.8M 2.8M 2.8M
Geoscientist Assistance Program (GAP)
• 33 placements with high retention rate • Additional funding for training • 22 companies involved • $750,000 paid up-front to SACOME; cost of
program ~$200,000 annually
July 2009 – December 2012
• > Current Discussion • Term: 3 – 4 Year program funded annually • Funding: Co-funded through PACE and
Centre for Excellence • Level: $175 – 250K p.a. • Delivered through partnership with
SACOME
GAP 2014
38
Mineral Exploration in South Australia 2012-13
39
Annual Review includes • Major mines and Developing projects
mineral resources and production • Detailed company exploration data
releases • Comprehensive mineral exploration
expenditure statistical analysis • Investor Opportunities Overview
Reasons to attend the 2014 national RESA Skills and Productivity Summit – 6th June Network with new and existing resources sector colleagues. Learn about the latest trends and creative perspectives. Hear what industry leaders have to say during the dynamic interactive panel discussion and case study sessions. Gain clarity on workforce and skilling issues from a diverse range of highly acclaimed presenters. Details – www.resa.org.au
Metal demand continues to grow rapidly
This puts severe pressure on industry to find and develop new mines
41
0
10
20
30
40
1900 1920 1940 1960 1980 2000 2020 2040
Forecast Demand Based on 3% pa growth
Historic Demand Average growth rate of 2.8% pa over last 24 years
Copper Mine Production (Mt pa Cu)
Cumulative copper production for all history
(1000 BC to 2013 AD) = 629 Mt Cu
In the next 24 years 635 Mt of copper will need to be mined
… that’s equal to the total amount produced in all
history to-date !
… and half of this was mined in the last 24 years
Source: MinEx Consulting © May 2014 , based on historic data from USGS
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Disclaimer
The information contained in this presentation has been compiled by the Department for Manufacturing, Innovation, Trade, Resources and Energy (DMITRE) and originates from a variety of sources. Although all reasonable care has been taken in the preparation and compilation of the information, it has been provided in good faith for general information only and does not purport to be professional advice. No warranty, express or implied, is given as to the completeness, correctness, accuracy, reliability or currency of the materials. DMITRE and the Crown in the right of the State of South Australia does not accept responsibility for and will not be held liable to any recipient of the information for any loss or damage however caused (including negligence) which may be directly or indirectly suffered as a consequence of use of these materials. DMITRE reserves the right to update, amend or supplement the information from time to time at its discretion.
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