A TOWN DIVERSIFIED
IT’S been boom-and-bust for Cobar since first copper was discovered in the region in 1869.
The town has witnessed great successes (at peak it had a population of 10,000) followed by incredible lows when commodity cycles took a dive.
Just two years ago this was the case when one of the town’s major employers, CBH Resources’ Endeavor mine, made almost half of its workforce (116 people) redundant as a result of declining zinc and lead prices.
It was a tough pill to swallow for the 5000-person town, and while not comparable to Ashanti Gold’s closure of the CSA mine between 1997 and 1999, sentiment was down — again.
Then there was news that Glencore, the current owner of the CSA mine, had intentions to sell the $US400 million project to reduce its debt pile; creating an additional layer of uncertainty.
The verdict was still out on whether Glencore will sell the CSA mine, but overall things were getting brighter for Cobar as commodity prices climbed.
In early 2017, production began ramping up again at Endeavor mine, restoring jobs that were lost. A swarm of junior to mid-tier miners were also pouring capital into new and established projects in the region.
And as commodity prices improve further, with copper fetching $US7270 per tonne in January, gold sitting at $US1342 an ounce, and zinc hitting 10-year highs at $US3423 a tonne, more green shoots were expected.
The next step will be safeguarding the region against a future downturn, and the solution looks to be diversification beyond base metals to other commodities such as gold and silver.
Aurelia Metals is the owner of the Hera-Nymagee project and soon to be owner of Peak Mines. In the outback town of Cobar rising commodity prices are restoring confidence at existing operations, as fresh exploration signals a break away from the region’s reliance on base metals towards a gold-focused future.
Managing director and chief executive Jim Simpson said because Cobar has been base metal dominant throughout its history, it has been stung by the fluctuation of base metal prices.
However, Mr Simpson said the region was beginning to see a shift towards gold, and his company was in a strong position to take advantage.
In November, Aurelia Metals entered a binding agreement with New Gold to purchase the Peak mines for $ US58 million which will close in the first quarter of 2018.
The Peak mines are in close proximity to its Hera- Nymagee project, which collectively contain a mix of gold and base metals including copper, lead and zinc.
“The leases adjoin the Hera/ Nymagee leases which now span over 100km along the strike length of the Cobar Basin establishing Aurelia Metals with a strong foothold in the prospective Cobar Basin,” Mr Simpson said.
“The key plan for Peak is to convert the extensive current resource base into ore reserves thereby increasing the life of the operation from its existing three year mine life.”
Nearby, the $ US87.1 million Nyngan scandium project was also in development, and is aiming for production in the first half of 2019, while Peel Mining was fast advancing exploration at its Mallee Bull and Wagga Tank projects.
Peel Mining managing director Rob Tyson said Mallee Bull, a JV with CBH Resources comprising the highly prospective polymetallic discovery and historic May- Day gold- base metal deposit, was its most advanced project.
“We are currently undertaking a feasibility study into development options,” Mr Tyson said.
“It has been an iterative process and we are hoping to complete the study by end of March.
“The project needs a considerable amount of exploration still, to define mineable reserves, so we are likely to pursue a staged exploration- focused development to enable deeper, cheaper underground diamond drilling.”
Since late 2017, Peel Mining shares have risen considerably, increasing from $ 0.23 a share in early October to $ 0.56 a share mid- January on the back of positive drilling results at the high- grade Southern Nights discovery within the Wagga Tank polymetallic project.
Gold miner St Barbara has also shown interest in the stock, purchasing an additional $ 1.5 million worth of Peel shares in November to increase its stake in the company from 9.6 per cent to about 10.8 per cent.
The region’s existing mines were also showing promise.
In November last year, CSA mine staff held a community consultation which gave an overview of the aging project’s mine operating plan ( MOP) for 2018- 2020.
It confirmed over the next three years, it planned to mine at a rate of between 1.25 and 1.3 million tonnes per annum (mtpa) of copper ore, which could be sustained beyond its MOP until at least 2026.
The company was in the process of ramping up exploration at CSA, spending about $ 6 million in 2017 and an estimated $ 10 million in 2018.
Endeavor was also “recruiting strongly and the life of mine is extending,” Ms Shephard said.
“There are new areas in the shire with good drilling results pointing to a strong mining future for the shire.”
“Cobar is a transient town – always has been,” Cobar Shire Corporate and Economic Development director Angela Shepherd said.