AUS­TRALIAN MINES

Perth-based ju­nior ex­plorer Aus­tralian Mines has con­tin­ued its stel­lar year with re­cent drilling in­creas­ing the nickel-cobalt re­source at its flag­ship Sconi project and an an­nounce­ment that the North­ern Aus­tralian In­fra­struc­ture Fa­cil­ity (NAIF) was in­vest

The Australian Mining Review - - FRONT PAGE -

Q. You’re a ge­ol­o­gist and geo­physi­cist who spent a decade in gold ex­plo­ration, what led you into bat­tery met­als such as cobalt, nickel and scan­dium?

Evo­lu­tion I guess.

When I started in the in­dus­try back in the 1990s gold was the fo­cal point and largely over the last five years I’ve tran­si­tioned into bat­tery met­als.

For a com­pany like Aus­tralian Mines, which was an ex­plo­ration com­pany at the time, it was a good op­por­tu­nity to get into an emerg­ing field.

Q. In Oc­to­ber, Aus­tralian Mines re­ceived a nearly $300,000 re­search and de­vel­op­ment grant in re­la­tion to work com­pleted on the demon­stra­tion-size plant in WA. How im­por­tant is it for min­ing com­pa­nies to en­gage in R&D and for gov­ern­ments to fa­cil­i­tate those ef­forts?

It’s ab­so­lutely cru­cial, par­tic­u­larly in the bat­tery space.

If you com­pare it to gold as an ex­am­ple, gold has been around for such a long pe­riod of time and the pro­cess­ing tech­nol­ogy has been honed and re­fined over decades by mul­ti­ple com­pa­nies.

When you move across into the bat­tery metal space, be­cause it’s new, you’re look­ing for tech­nolo­gies that may have been ap­pli­ca­ble to other areas that you’re adopt­ing.

Sim­i­larly, there’s a lot of things that only ap­ply to cer­tain types of ore, so you can’t nec­es­sar­ily take some­thing and ap­ply it to your­self.

In our case there’s only a cer­tain per­cent­age of that tech­nol­ogy that’s ap­pli­ca­ble, so when it comes to an emerg­ing sec­tor like bat­tery met­als there has to be a large R&D com­po­nent to it.

Q. So what makes Aus­tralian Mines’ WA plant spe­cial?

Only two com­pa­nies in the world have ever done it.

It shows our in­ge­nu­ity and our abil­ity to take ore straight from the ground and then take it all the way to pro­cess­ing so that it’s a fi­nal prod­uct.

Be­ing able to cap­ture the full value add is im­por­tant and be­ing able to show that the com­pany has the ex­per­tise and knowl­edge to be able to, that is cru­cial to get­ting any sort of sig­nif­i­cant off­take part­ner.

Q. You do have that key off­take part­ner in SK In­no­va­tion, which has an agree­ment to buy 100 per cent of the cobalt and nickel from Aus­tralian Mines’ Sconi project over the next seven years, with a fur­ther six year ex­ten­sion. How im­por­tant was se­cur­ing that early on?

It was nec­es­sary for the project be­cause they un­der­pinned the abil­ity to get it fi­nanced.

You’re talk­ing project cap­i­tal costs to the or­der of $700 mil­lion to $1 bil­lion, which is three or times what a gold plant would cost you.

The abil­ity to bring in a big brother with deep pock­ets is the rea­son we needed an off­take part­ner, so the first two years of our project was all about get­ting some­one like SK on board.

If the off­take is a small com­pany, you might have con­cerns about their abil­ity to meet their fi­nan­cial com­mit­ments, or their longevity, so you might want to have a few part­ners.

Whereas SK makes $120 bil­lion a year so we didn’t have any con­cerns about them be­ing able to meet their obli­ga­tions in terms of the off­take.

What it does do is al­low us to op­ti­mise our pro­cess­ing plant, specif­i­cally tai­lored to one pur­pose.

Again with a gold plant, you just make gold be­cause gold is gold and ev­ery­one will buy it, but bat­tery met­als tend to dif­fer de­pend­ing on who you’re sell­ing it to.

So if you’re able to make just one prod­uct for one cus­tomer, it keeps the cost down.

Q. De­scribe the sig­nif­i­cance of re­cent drilling re­sults at the Green­vale de­posit at Sconi in QLD.

This drilling takes the min­er­al­i­sa­tion that we knew was there into some­thing that we can now an­nounce to the mar­ket.

It ef­fec­tively in­creases the life of the mine for­mally and quite sig­nif­i­cantly, and it also in­creases the head grade.

Q. Aus­tralian Mines re­cently ac­quired 100 per cent of the Flem­ing­ton cobalt nickel scan­dium project in NSW. What was the rea­son for that de­ci­sion and how does it im­pact Sconi?

The rea­son for the 100 per cent is that when we were en­gaged in the off­take dis­cus­sion for Sconi, we had 13 com­pa­nies in­volved, which means there were 12 com­pa­nies that didn’t get a part­ner­ship.

Some of those com­pa­nies are gone now, but there’s still a lot that we were talk­ing to.

By hav­ing 100 per cent in­ter­est we can con­tinue talk­ing to who­ever we want to and en­ter into agree­ments with­out hav­ing to rely on joint ven­ture part­ners to ap­prove it.

Q. There’s been a lot of talk in the past year about reach­ing peak lithium and whether or not the sec­tor has any cause for con­cern. Do you buy the idea of bat­tery met­als reach­ing a peak in the next few years and where would cobalt, nickel and scan­dium fit into that?

I think peak oil was meant to be 1974, 1975 and it didn’t hap­pen then.

Every­body likes to pick a peak, whether it’s for com­mod­ity pric­ing, the share price, what­ever it is, and they al­ways get it wrong.

The as­sump­tions that are used to de­fine what a peak are sub­ject to change.

It may orig­i­nally be a pen­e­tra­tion of 10 per cent, and then you find that it’s 6 per cent or 8 per cent and that changes it fun­da­men­tally.

Q. What does the fu­ture hold for bat­tery metal min­ing in Aus­tralia?

Min­ing in Aus­tralia has tra­di­tion­ally been fo­cused on iron ore and gold.

Iden­ti­fy­ing these bat­tery met­als mean that there are a whole heap of de­posits or land­scapes in Aus­tralia that may have been over­looked or con­sid­ered ex­hausted from an eco­nomic point of view, which may now be­come sig­nif­i­cant.

In Sconi’s case, what it means for Townsville is 300 jobs, and that will be repli­cated through­out other ru­ral areas.

There are hun­dreds of jobs be­ing of­fered in com­mu­ni­ties that haven’t had them in the past.

There is a fun­da­men­tal change com­ing out of non-tra­di­tional min­ing.

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