A TOWN DI­VER­SI­FIED

The Australian Mining Review - - FRONT PAGE - EL­IZ­A­BETH FABRI

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.

Re­cent ac­tiv­ity

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.”

Re­gional Chal­lenges

“Co­bar is a tran­sient town – al­ways has been,” Co­bar Shire Cor­po­rate and Eco­nomic De­vel­op­ment di­rec­tor An­gela Shep­herd said.

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