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
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.