Kalbar Resources

Entering a crucial phase to bring a major mineral sand project into production

About This Project

Having successfully proved-up and exited a bauxite project in Kalimantan Barat, Indonesia in 2012, Kalbar Resources executive chairman Rob Bishop recalibrated the company to acquire Rio Tinto’s Glenaladale Mineral Sands Project in 2013. Glenaladale is a large scale 2.7 billion tonne mineral sands deposit located 250km east of Melbourne near the town of Lindenow in the Gippsland region.

 

The deposit was discovered by Rio in 2004 and drilled and studied to a Scoping Study level. However, for a number of reasons including the  collapsing commodity prices of 2012, the Australian major decided to sell and when Kalbar gained formal control the management team took a different approach when it came to the drilling. Despite having this massive deposit, Kalbar approached it from a small company perspective. Over eight drilling programmes, Kalbar’s geologists led by Neil O’Loughlin, targeted areas where Rio had intersected very high grades and were able to extend and define what is effectively a new, contiguous, high grade orebody within the deposit. This orebody is called the Marker Horizon and is the basis of Kalbar’s flagship project Fingerboards Mineral Sands Project

 

Kalbar released a preliminary feasibility study (PFS) for Fingerboards at the end of 2016 which demonstrated the project will produce around 100,000 tonnes per annum of the valuable mineral zircon over 18 years. This is  around 8% of the world’s demand, making it a  ‘globally significant’ project. The Fingerboards project only consumes 10% of the total Glenaladale deposit, so mining could extend well past the 18 year life of the Fingerboards Mine. .

 

The PFS showed the project is a ‘world class’ mineral sands deposit, with strong economics driven by high grade and the well established infrastructure of the region.

 

“The area we are targeting in Fingerboards has some of the highest grade zircon in the ground. It averages 1.4% zircon for the whole 20-year mine life and that is one of the highest in the world,” says Bishop.

 

Some mineral sands deposits will demonstrate that level of grade but it is often the case that the grade trails off the further into the mine life you get. However, Fingerboards is a relatively homogenous orebody that will supply consistently high grades over the 18 years.

 

The operating costs will also be low thanks to the Fingerboards’ moderate strip ratio. This means Kalbar will not have to dig out and shift large quantities of waste material to reach the valuable ore. Also the mineral processing is simple which helps keeps operating costs low.

 

However, what determines profitability for a project like this, and can have a huge factor on the timeframe, is the capital cost required prior to production. With the project located in Gippsland near an existing population it benefits from having easy access to all the necessary infrastructure required to launch a mining project.

 

Kalbar has access to two ports, the Port of Melbourne and Port Anthony accessible by a 160km B-double approved road from mine to port, there is a rail line 6 km to the south of the mine, , multiple water sources, grid power and an existing local work force with mining experience. The requirement to build new infrastructure is minimal and is generally just upgrading work.

 

“These days new projects tend to be in Africa or other parts of the developing world and you often have to build a whole country [around the project] so your capital costs might be $300-400 million, whereas our PFS defined it as $106 million,” Bishop explains that Kalbar’s capital costs are reduced by almost three quarters to a comparable project, aided by the available infrastructure.

 

However, with the abundance of infrastructure comes the established agricultural and forestry businesses and their associated communities. Bishop says that Kalbar is aware of its responsibilities as the proponent of a major new business in the region and that it must ensure that the mine will have minimal impact on the surrounding businesses and communities, and indeed that the local community are key beneficiaries of this fantastic resource.

 

Kalbar is currently undertaking an Environmental Effects Statement (EES) to understand how the potential impacts of the mine can be mitigated or managed out. This is a major study taking around two years, and involves much community consultation, which gives an opportunity for everyone’s voice to be heard. Indeed there is currently a diversity of opinion about the proposed mine, with some vocal opposition to the project.  Bishop says that the key issues that concern locals are dust, noise and rehabilitation.

 

He says these are issues that many mines must overcome and there’s many tried and true solutions, and he is confident that the EES process will ease the concerns of the opponents. The EES is central to the approvals process. It is overseen by the state of Victoria, with the Federal Government’s requirements combined into this under a bilateral agreement. With the EES, Kalbar must demonstrate that it can mine the deposit in an environmentally conscious fashion, importantly rehabilitating the land once operations have been completed.

 

Mineral sands mining in Australia has a strong track record of successful rehabilitation. Importantly, the amount of mineral removed is around 4% and therefore no hole is left behind, enabling the landscape to be returned to original or in some cases better, as is planned to be the case at the Fingerboards, where the landscape currently suffers from severe erosion.

 

“Some will say that approvals are our biggest risk, indeed that would be the case for any project at this stage because if you don’t get approved then you don’t have a mine,” Bishop says. “In Victoria, there is a rigorous approvals process, and this is a good thing. We want to be held to the highest standard. What many people don’t realise is that Victoria was the most recent mineral sands province in Australia. While mining wound down in Western Australia, Victoria approved four major mineral sands mines, and several other projects. The last mine finished in 2014, and Iluka has recently announced the idling of the Hamilton Mineral Separation Plant. Consequently, the regulator has a good and up-to-date knowledge of mineral sands, and we are confident in the approvals process.

 

We started that [the EES] last year and we envisage submitting the statement mid-2018, that will allow for approval to be given at the end of 2018 and therefore we can get into production late-2019, as our construction is relatively simple. Right now our focus is the EES and a bankable feasibility study (BFS).”

 

Bishop adds that in order for Kalbar to get the EES through it has to show that it will mine the deposit responsibly and that it will not have serious negative impacts on the environment. Once established the business will be protected by Victoria’s well-established mining code and regulatory process.

 

“Whilst the approvals process is more rigorous than you might have in Africa, the rule of law applies which is better than a lot of places where you may be approved one day and lose it the next.

 

It is no exaggeration to suggest there are major benefits to the local community from this project. The Latrobe Valley has been a major employer of mining-trained locals for decades through its brown coal mines, however because of their impact on climate change and a government-led clean energy strategy they are being forced to shut down.

 

With a small population (around 40,000) job losses such as the 1,100 that came after the Hazelwood Brown Coal mine closed in April this year have a big impact. Bishop sees Gippsland as a region that has capacity for new mining projects and could significantly benefit from new business. Kalbar’s new project could be a ‘partial solution to these issues. In some ways it is fitting that the Hazelwood Brown Coal mine, could be somewhat replaced by our mine which will produce  minerals essential to fighting climate change’.

 

Kalbar anticipates it could receive a decision from the relevant ministers on the approvals process by the end of 2018, in the meantime the company will be proving up the technical side of the project and building a test pit to study mineability, and continue providing marketing samples to potential customers.

 

Instead of processing the ore into finished mineral sands products such as zircon, rutile and ilmenite on site, Kalbar will export heavy mineral concentrate to customers. There is strong growth in concentrate processing in Asia and the marketing samples from the test pit are part of the off-take/partnership negotiations.

 

So as long as Kalbar can ensure the project is given the greenlight from the approvals side, a matter of diligence on its impact and ongoing dialogue with local stakeholders, the project should be in full production by the beginning of 2020. The next two years will be critical as Kalbar secures the approvals, raises the required capital and reaches production at this globally significant mineral sands deposit.

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Category
Mining
Tags
Australia, Mineral sands, mining