SA Mines and Energy Journal : April-May 2011
APRIL/MAY 2011 SA MINES & ENERGY JOURNAL 20 EVENTS Linc Energy announced its big expectations for 2011 and praised the South Australian government's investment attraction strategy, in a presentation by Justyn Peters, Executive General Manager, Asia, at SACOME'S first breakfast briefing for the year. Linc Energy is a global, Australian--based energy company with operations in over 7 countries. Its South Australian tenements are located in the Arkaringa Basin. Mr Peters announced that 2011 would be a huge year for Linc, with cash reserves expected to increase from $500m to around $1½ to $2bn by the end of the year. "We'll move from an ASX 200 company last year to an ASX 100 this year, there's no doubt about that, " he said. Mr Peters said Linc's business model was simple; to add value on location and to own all its resources. "We don't joint venture, we buy, " he said. "We also own all our own technology. " He said South Australia was a big focus for the company, and after being the biggest explorers in the State last year, they expected to top the list again this year, although flooding has recently delayed their drilling program. The company's current production focus is in the United States where they have purchased three productive oil fields, producing 190 barrels of oil per day using Enhanced Oil Recovery processes. Mr Peters said cash generated from these projects would translate into significant company expenditure in South Australia over the next 5 years. He said international economics were picking up, with investors from Hong Kong and Beijing in particular very keen on South Australia. Mr Peters praised the South Australian government for their sound investment attraction strategy, whilst light-heartedly describing the Queensland and Western Australian governments as 'lazy'. "The SA government was very, very enthusiastic about attracting us here" he said. "Their model was really good. It wasn't about cash incentives. It was about what assistance they could give us in the permitting process; it was about being vocal as a supporter for the company so that when we brought our investors and major shareholders here, they could see the government was behind us. "That was far more important to us than offering cash handouts, " he said. Duncan McBain, Managing Director of IMX Resources, discussed Cairn Hill, upcoming projects and the State government's lack of support for remote communities. Mr McBain said the company was pleased with progress on the Cairn Hill iron ore project as it moved towards its third shipment out of Port Adelaide at the end of March. The Cairn Hill mine will commence twice monthly shipping from May as it ramps up to full production this April. Phase 1 ore at the mine has a 5 year life, which could be extended if prices remained strong. IMX are hoping to fast track Phase 2 of the mine, which contains around 8-12 million tonne of ore, by leveraging off existing approvals and infrastructure. Production is anticipated to commence in the first half of 2012. The company are currently in the approvals process for a 66 person mine village to be built in nearby Coober Pedy. "Our latest hiccup has been with the State government, who have capped the remote area energy supply subsidy, " Mr McBain said. "A big issue for remote communities is that power costs will rise considerably - by 130% for businesses and 25% domestic. "I don't think the State government is investing enough into local communities, " he said. "It's no good people seeing all the negatives of mining and none of the positives. " Mr McBain commented that despite feedback from the recent State royalties increase advocating some of the extra funds be returned to local communities, it all seemed to end up in central revenue. In addition to the Cairn Hill area, IMX has a joint venture with OZ minerals which requires $20M exploration investment by OZ over 5 years. "It's a good relationship, they have a lot of experience from Prominent Hill and can spend money much faster than we can afford to. " Mr McBain said. "Beyond that we also have Snake Hill which is shaping up to be a much larger project than first anticipated, " he said. "We're looking at 5 million tonne a year there, over 20 years. " Dr Peter Woods, Environmental Safety & Health Officer at Heathgate Resources talked about processes and exploration at Beverley. The Beverley uranium mine is adjacent the Northern Flinders Ranges and produces between 500 and 1000 tonnes of uranium per year, currently representing around 7% of the nation's uranium production. Dr Woods discussed the mine's unique In Situ method of mining using a leaching process which the company has found to be the safest, most environmentally friendly and economical way of extracting the uranium in that deposit. "We take natural ground water, acidify it with a bit of hydrogen peroxide which slowly dissolves the uranium, "he explained. "This weak solution goes round 50 to 100 times or more. " Dr Woods said the mine was highly automated with most processes controlled from a central control room. "We do need people in the field as well" he said, "to make changes, monitor systems and do repairs. " Extensive reporting and checking is a feature of any uranium mine and Dr Woods said radiation protection is an important part of their processes. "We have fulltime radiation protection people and our monitoring consistently shows we meet all the rules and regulations with plenty of room to spare, " he said. "We have to report spills over a certain threshold which are reported on the PIRSA website, our other main regulator is the EPA. "These groups can inspect our mine whenever they want, it's all very transparent. " The In Situ leach process is relatively unusual. Beverley was the first mine of its type in Australia and Heathgate regularly hosts national and international visitors who are keen to learn more about the method. Heathgate underwent trial mining at deposits to the North of the main body in 2010, which commenced production earlier this year. The company allocates substantial funds to exploration and with the main resource almost exhausted, is currently undertaking a multi-million dollar exploration program in the area. This is expected to result in additional significant finds in the near future. Breakfast club Updates from SACOME'S breakfast briefings, by Megan Andrews.