Mineral Resources and Production in the Goldfields ......Tropicana#2 73.62 1.99 146.3 Anglo Gold70%, Independence Group30% South Kalgoorlie 68.723 2.0 137.4 Avoca Resources100% Higginsville

Mineral Resources and Production in the Goldfields-Esperance Region: Projecting Future Scenarios

G M Mudd, S Mohr - Monash University Page 1 December 2010


Dr Gavin M. Mudd, Dr Steve Mohr

Monash University 1. Overview Monash University was engaged to compile and analyse mineral production and economic resource trends in the Goldfields Esperance Development Commission (GEDC) region, review exploration prospectivity, and develop potential mineral production scenarios for the GEDC. A location map of the GEDC region, including all shires, cities and towns, is given in Figure 1. Where reasonable, mines strictly outside the GEDC but who use the GEDC for infrastructure and other support were included in this study. This report presents the findings of this study, including the data used to analyse and model mineral resource and future production across the GEDC and adjacent areas.

Figure 1: The Goldfields Esperance Development Commission (GEDC) region – shires (grey

shading), cities (white shading) and towns (squares) (all approximate only) 2. Global Trends and Issues in Mining 2.1 Nickel Nickel is commonly present in two principal ore types – sulfide or laterite. Sulfide ores are typically derived from volcanic or hydrothermal processes and usually include copper (Cu) and/or cobalt (Co), and often precious metals such as gold (Au) or platinum (Pt), palladium (Pd) and rhodium (Rh) (the platinum group metals or PGMs) (Naldrett, 2002; Hoatson et al., 2006). Laterite ores are formed near the surface following extensive weathering of ultramafic rocks, and occur abundantly in tropical climates around the equator, the arid regions of central Western Australia or humid areas of Eastern Europe (Elias, 2002).



Globally, the western world’s dominant nickel supply came from the Sudbury Basin of northern Ontario in Canada. The Sudbury field is a super-giant nickel-copper-precious metals province, and to date has produced some 968 Mt of sulfide ore grading 1.33% Ni and 1.24% Cu to produce 11.1 Mt Ni, 10.8 Mt Cu and significant quantities of gold, silver, platinum group metals, cobalt and others (Mudd, 2010). Other major producers since the 1950s include New Caledonia, Russia, Cuba, Indonesia, the Philippines and Columbia, amongst numerous smaller producers. Although production throughout the 1900s was dominated by sulfide ores, by the early 2000s laterite projects had regained a strong position of about half of the global industry. In terms of estimated global resources, the USGS report that ~120 Mt Ni is contained in laterites with ~100 Mt Ni in sulfides (based on allocating each country by ore type) (USGS, 2009). The principal trends in the global nickel industry were recently analysed by Mudd (2010), and include:

• declining ore grades • increasing mine depths • energy security and costs • economic market volatility • water consumption and efficiency • increasing role of laterite projects • mitigating and managing pollution issues

(especially sulfur dioxide, or SO2) • greenhouse gas emissions intensity

(especially carbon dioxide, or CO2) In general, sulfide ores are relatively straight forward to process, smelt and refine to Ni, while laterite ores require extensive chemical and energy intensive processing (Mudd, 2010). Historical global nickel production is shown in Figure 2, with nickel prices in real and nominal terms in Figure 3. Overall, the nickel industry is well placed with respect to availability of known resources, however, the trends noted above are causing material challenges to numerous nickel projects (especially laterite projects).

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Figure 2: Global nickel production over time by country and ore type (Mudd, 2010)



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Figure 3: Nickel prices over time – nominal (thin line) and real price in US$1998 (thick line)

(Kelly et al., 2010) 2.2 Gold Although gold is found all over the world, the global gold industry is dominated by a small number of major producers, including South Africa, Australia, Canada, China and the United States of America (USA), amongst others. The vast majority of gold is extracted from hard rock deposits, routinely using a variant of cyanide leaching technology. The most common processing technology is ‘carbon-in-pulp’ (or CIP). There are a wide variety of hard rock gold ore types, and these will not be reviewed here. Only a very minor proportion of gold is produced from alluvial and small scale mines globally, and since these are extremely minor in Western Australia, they will not be assessed in this study. The mining of gold ore is through underground or open cut techniques, with ore crushed and processed either through a conventional CIP plant (or variant thereof) or through heap leaching. It is common for a mill to be sourcing ore from numerous mines, especially in Western Australia. Most of the issues facing the nickel industry are also prevalent for the gold industry, although there are concerns about exploration success in recent years not keeping pace with demand and production (Schodde, 2010). Another major issue for gold mining is increasing strip ratios, that is, the increasing amount of waste rock mined for every tonne of ore – leading to massive quantities of waste rock to be managed at projects (in some cases 100s Mt). It should be also noted that the two aspects which lead to the 1980s gold boom – CIP technology and the sustained rise in the price of gold – would be hard to replicate again. Historical global gold production is shown in Figure 4, with average ore grades for some countries and prices in real and nominal terms shown in Figure 5. Overall, the gold industry is reasonably placed in Australia with respect to availability of known resources (see later), however, the trends noted above are causing material challenges to numerous gold projects.



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Figure 4: Global gold production over time by country (data updated from Mudd, 2007)

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Figure 5: Gold ore grades over time by country (left); nominal (thin line) and real price in US$1998 (thick line) (right) (data updated from Mudd, 2007)

3. GEDC Mineral Production and Economic Resources in 2009 The list of mining projects which were in operation during 2009 (all year or partially) are compiled in Tables 1 and 2 for gold, Table 3 for base metals and Table 4 for nickel. The reported remaining economic resources are also included in each respective table. All data is sourced primarily from company annual and quarterly reports, or in some cases company websites. In addition, key statistics and other information was sourced from WADMP (2010) and the online ‘MINEDEX’ database through WA Department of Minerals and Petroleum1. For gold, although every attempt has been made to include all reported resources, the vast number of deposits and project ownership changes, as well as constant name changes, means that some resources are likely to be missing from Tables 1 and 2 (see later). 1MINEDEX is the “Mines and Mineral Deposits” online database maintained by WA DMP, and contains historical and current production and resource data; http://minedexext.doir.wa.gov.au/minedex/external/common/appMain.jsp



Table 1: Gold production and economic resources in 2009 in the Goldfields-Esperance region

Production Economic Resources Project t ore g/t Au kg Au t waste rock Mine Mt ore g/t Au t Au

Company

SuperPit 11,786,342 2.09 21,459 70,177,363 OC 136.3 1.92 261.6 Newmont50%, Barrick Gold50% Agnew 1,066,000 5.60 5,974 UG 63.8 2.8 178.6 GoldFields100% St Ives 7,262,000 1.83 13,322 24,801,000 OC/UG 21.2 5.1 108.1 GoldFields100%

Yilgarn South#1 2,886,710 4.11 10,947 UG/OC 14.2 5.27 74.9 Barrick Gold100% Kanowna 1,687,392 5.79 8,832 4,462,517 UG 11.8 5.36 63.1 Barrick Gold100%

Sunrise Dam#2 3,871,000 3.22 12,477 42,394,380 OC/UG 44.79 3.64 162.9 Anglo Gold100% Tropicana#2 73.62 1.99 146.3 Anglo Gold70%, Independence Group30%

South Kalgoorlie 68.723 2.0 137.4 Avoca Resources100% Higginsville 1,205,148 4.82 5,695.7 UG 14.292 3.4 48.6 Avoca Resources100% Frog's Leg 114,244 4.80 528.3 UG 4.347 5.11 22.2 La Mancha51%, Avoca Resources49% White Foil OC 8.009 2.16 17.3 La Mancha100% Coolgardie 249,730 6.74 1,562.9 UG 23.884 2.6 62.1 Focus Minerals100% The Mount 2 5.5 11 Focus Minerals100% Paddington 3,171,504 1.45 4,208.6 16,900,800 OC 100.0 1.91 191.0 Norton Goldfields100% Norseman 409,295 5.72 1,984.1 UG/OC 20.0 5.5 110.0 Norseman Gold100% Laverton 528,869 1.83 847.5 5,966,401 OC 22.184 1.45 32.2 Crescent Gold100%

Gwalia-Leonora 752,778 4.62 3,295.1 OC/UG 90.49 3.15 284.6 St Barbara100% Burbanks 111,280 9.74 1,075 UG 0.391 3.24 1.3 Barra Resources50%, Mulgabbie50%

Phillip's Find-Newminster 0.116 4.03 0.5 Barra Resources100% Mt Monger/Daisy Milano 211,796 7.91 1,594.2 UG/OC 1.454 8.3 12.1 Silver Lake Resources100%

Wattle Dam 0.677 5.5 3.7 Ramelius Resources100% Bronzewing UG/OC 13.65 2.1 28.7 Navigator Resources100%

Leonora 12.4 1.9 23.6 Navigator Resources100% Duketon-Moolart Well 111.8 0.99 Regis Resources100%

Totals 35.3 Mt 2.84 93,803 164,702,461 860 2.43 2,092

Notes: #1 Yilgarn South includes Lawlers, Darlot and Granny Smith; #2 includes sub-economic resources.



Table 2: Gold production and economic resources in 2009 in adjacent areas to GEDC

Production Economic Resources Project t ore g/t Au kg Au t waste rock Mine Mt ore g/t Au t Au

Company

Jundee-Nimary 1,603,930 8.40 12,751 UG 6.7 5.45 36.6 Newmont100% Wiluna 692,860 4.14 2,219.7 UG 8.03 6.6 53.0 Apex Minerals100% Gidgee 3.27 6.0 19.6 Apex Minerals100%

Youanmi 8.234 3.6 29.6 Apex Minerals100% Plutonic 1,760,875 2.85 3,950 UG 13.1 6.55 86.1 Barrick Gold100%

Southern Cross-Marvel Loch 1,875,815 2.78 4,425.6 OC/UG 26.10 3.56 93.0 St Barbara100%

Totals 5.93 Mt 4.48 23,346 65.5 4.85 317.9

Table 3: Copper-zinc-lead production and economic resources in 2009 in the Goldfields-Esperance region and adjacent areas

Production Economic Resources Project t ore %Zn %Cu g/t Ag/Au t Zn t Cu kg Ag Mt ore %Pb %Zn %Cu g/t Ag/Au kt Pb kt Zn kt Cu

Company

Jaguar 470,667 10.81 3.11 ~60 / - 40,198 12,032 22,445 2.55 0.27 5.6 2.4 78 / - 7.0 143 61.2 Jabiru Metals100% Bentley 2.45 8.64 1.46 106 / 0.53 212 35.8 Jabiru Metals100%

Magellan#1 #1 32.4 4.5 1,474 Ivernia West100% Kundip 4.23 0.5 - / 4.3 21 Tectonic Res.100% Trilogy 6.24 2.0 1.2 1.0 47 / 1.2 125 75 62 Tectonic Res.100%

Totals 47.9 3.4 0.9 0.4 16 / 0.51 1,605 429 180.6

Notes: #1 Production resumed early in 2010, located just outside the GEDC region, north of Wiluna.



Table 4: Nickel production and economic resources in 2009 in the Goldfields-Esperance region and adjacent areas

Production Ore Economic Resources Project t ore %Ni Other t Ni Other Mine Type Mt ore %Ni kt Ni

Company

Nepean Sulfide 0.59 2.2 13.0 Focus Minerals100% Leinster#1 ~2,750,000#1 ~1.9#1 ~44,400#1 OC/UG Sulfide 189.9 0.88 1,668 BHP Billiton100%

Ravensthorpe not reported Laterite 386 0.61 2,367 First Quantum100% Yakabindie Sulfide 434 0.6 2,604 BHP Billiton100%

Jericho (BHPB) Sulfide 28 0.6 168 BHP Billiton100% Jericho (Norilsk) Sulfide 34.5 0.4 138 BHP Billiton100%

Murrin Murrin 2,734,999 1.36 0.103% Co 32,977 2,350 t Co OC Laterite 283 1.02 2,887 Minara60%, Glencore40% Mt Margaret Laterite 517 0.67 3,464 Minara60%, Glencore40% Kambalda#2 999,507 3.24 ~0.24% Cu#2 28,463 ~2,102 t Cu#2 UG Sulfide 16.58 3.06 507 BHP Billiton100%,#3

Lake Johnston#4 192,000 1.53 2,083 Sulfide 8.44 1.73 146 Norilsk Nickel100% Black Swan#4 315,000 0.64 1,367 Sulfide 6.73 0.99 66.6 Norilsk Nickel100%

Waterloo#4 Sulfide 0.67 1.95 13.1 Norilsk Nickel100% Cawse#4 Laterite 172.73 0.69 1,197 Norilsk Nickel100%

Lounge Lizard/Flying Fox 246,298 3.70 8,097 Sulfide 17.00 2.1 357 Western Areas100%

Windarra Sulfide 6.50 1.61 105 Poseidon Nickel100% Nebo-Babel Sulfide 392 0.3 1,176 BHP Billiton100%

Yerilla Laterite 135.4 0.77 1,043 Heron Resources100% Wingellina Laterite 183.2 0.98 1,795 Metals X100% Wiluna Ni Laterite 80.5 0.77 620 Newmont100% Canegrass Laterite 29.6 0.71 209 Heron Resources100%

Kalgoorlie Ni Laterite Laterite 890 0.7 6,230 Heron Resources100%

Totals ~2.75 Mt 2.735 Mt

2.19 1.36 85,010

32,977 Sulfide Laterite

1,135 2,677

0.61 0.74

6,961 19,812

Mt Keith#1 ~11,000,000#1 ~0.55#1 ~42,500 Sulfide 422 0.53 2,217 BHP Billiton100% Cliffs#5 Sulfide 2.4 4.3 103 BHP Billiton100%

Honeymoon Well Sulfide 189.0 0.68 1,279 Norilsk Nickel100%

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Cosmos Sulfide 59.0 0.86 507 Xstrata100%

Totals ~11 Mt ~0.55 ~42,500 Sulfide 672 0.61 4,107

Notes: #1 Assumed only (BHP Billiton do not report production data, nor do they release it when repeatedly requested); #2 Based on junior miners' sales to the Kambalda mill; #3 Kambalda resources based on compiled junior company resources; #4 Placed on care and maintenance in early 2009, future re-start probable; #5 Production included in Mt Keith.



4. Resource and Production Modelling All modelling was based on the mineral supply-demand model developed by Mohr (2010) to assess future global scenarios of fossil fuels. The model has been adapted to work on a mine-by-mine basis, and also within a sub-regional reporting framework. Specifically, the model operates by using idealised mines which increase production during the first four years of operation to a mine production capacity that is maintained for a specified number of years before declining for four years at the end of the ideal mines life. The model then applies an algorithm and determines when these idealised mines are brought on-line. For an individual shire, the annual production of each mine in the shire is known as well as remaining economic resources. By analysing the data, the average annual mine production value can be determined and used as the idealised mines production capacity, and an estimate of the average mine life can also be made. This information then determines the profile of an idealised mine in the shire. The historic production data for the shire is then used to determine the rate constant applied in the algorithm. By combining all shires, total mineral production in the GEDC over time can be modelled. Historic annual production data by shire is included in all models (as diamonds) to show correlation of historical and modelled data. The model does not incorporate economic conditions, land use conflicts (eg. indigenous issues), transport logistics, energy costs, process configuration, technology choices, etc, or other factors, all of which can have a material impact on the opening, operation or closure of mining projects. It is assumed that these aspects have effectively been addressed through the classification of a deposit as a mineral resource based on the JORC Code. Overall, the model provides a realistic scenario whereby all mines could be developed with the primary constraint being the available resource. 5. Future Gold Production All gold mines and deposits included in this study are shown in Figure 6 and compiled in Tables 1 and 2. In addition, further resources reported via MINEDEX were included, to create shire/city cumulative resource totals, shown in Table 5 – this includes all production from 1980 to 2100. At present, existing gold production was modelled based on existing production capacity and remaining resources, shown in Figure 7. The cumulative resource data in Table 5 should be interpretated as indicative only when comparing to formal resources from Tables 1 and 2.

Table 5: Modelled gold ore resources by GEDC and adjacent areas and recent production

Remaining Resources Production Shire/City Mt ore g/t Au t Au t Au (1980-2009)

Ngaanyatjarraku - - - - Laverton 280.34 1.93 539.9 393.2 Leonora 2,161.65 1.07 2,321.6 321.4 Menzies 174.96 1.97 344.8 38.8

Kalgoorlie-Boulder 395.72 2.24 888.0 901.7 Coolgardie 194.90 2.57 500.3 356.1

Dundas 50.08 3.32 166.2 84.9 Esperance - - - -

Ravensthorpe 14.06 2.01 28.3 -

Yilgarn 52.16 2.48 129.1 164.7 Wiluna 35.42 3.97 140.7 182.6

Totals 3,359 1.51 5,059 ~2,443



Figure 6: Gold mines and deposits (locations approximate only)

Figure 7: GEDC modelled gold production from 1980 to 2100 by local shire/city



As can be seen, gold production in the GEDC can be expected to be relatively constant until about 2030, when both the Kalgoorlie-Boulder and Laverton mines are anticipated to close due to resource exhaustion. The period after 2030 would be dominated by Leonora shire, although it remains unclear if this would be economic given the low grades involved (see Table 5, see also later sub-section on exploration). Conversely, this model gives a measure of the required exploration success if there is to be steady state production, or even an increase. To maintain production at 100 t Au/year after 2030 and until 2100 would require approximately an additional 4,250 t Au of economic gold resources to be discovered – equal to the current economic resources of about 5,059 t Au (Table 5). In particular, it is worth noting that the resources in Table 5 of 5,059 t Au (based on shire totals reported by the MINEDEX database) are considerably higher than those reported by individual mines/deposits in Tables 1 and 2 (2,410 t Au). The MINEDEX shire/city totals include more than 300 individual deposits, most of which are grouped together as one project or field. As such, it would be extremely time consuming to manually check all deposits in MINEDEX to find the source of the ~2,650 t Au difference in gold resources. However, by using the higher MINEDEX resource totals to model future production, they provide a realistic upper estimate over and above the principal deposits companies are reporting at present. Given the production from 1980 to 2009 of about 2,443 t Au, it is reasonable to expect that a further 5,059 t Au could be produced over the coming decades. 6. Future Nickel Production All nickel mines and deposits included in this study are shown in Figure 8 and compiled in Table 4. A compilation of cumulative nickel production to date by mine is shown in Table 5. The long term production trends for the Kambalda field is shown in Figure 9. At present, nickel production was modelled based on existing production capacity and resources (ie. 2009 data), shown in Figure 10. As can be seen, the vast majority of Australia’s total nickel production by 2009 of ~4.63 Mt Ni (data updated from Mudd, 2009) has been sourced from mines within the GEDC – led by fields such as Kambalda and Leinster or the Mt Keith mine. The Kambalda field was re-structured by WMC in the late 1990s, eventually selling off all mines and deposits and only operating the Kambalda mill under ore purchasing arrangements with each mine. Based on junior miners such as Mincor Resources, Independence Group, View Resources and others, all have reported growing the economic resource base at their respective mines – leading to an equivalent resource position a decade later since WMC sold off the mines. In general, it appears that Kambalda is maintaining economic resources reasonably well and has strong prospects for ongoing extensions and discoveries (see later section). Base on the model results, the nickel industry in the GEDC has strong prospects for growth – and could achieve a tripling of production by about 2050. This production would be widespread through most shires of the GEDC, with the exception of Coolgardie due to the potential exhaustion of resources in the Kambalda field by about 2030. The most critical aspect of future nickel production, however, is the major change from sulfide to laterite ores by about 2025. The processing of laterite ores requires complex chemical and energy intensive processing, such as the high pressure acid leaching (or ‘HPAL’) technology currently used at the Murrin Murrin project. Three former HPAL projects in the GEDC region, Bulong, Cawse and Ravensthorpe, all failed technically and financially, since they had both greater than expected capital and operating costs. Although Murrin Murrin eventually overcame its problems, this period of recent nickel mine development shows the inherently high risks involved in laterite projects. The potential growth of laterite-derived nickel would have to be done in conjunction with careful planning of energy and water requirements.



Figure 8: Nickel mines and deposits (locations approximate only)

Table 5: Cumulative production from existing and former nickel mines in the GEDC and

adjacent areas (data updated from Mudd, 2009)

Project Mt ore %Ni %Cu %Co kt Ni kt Cu kt Co Period Kambalda Field#1,2 ~47.8 3.10 ~0.23 - ~1,306 ~169.3 - 1967-present Leinster (Agnew)#1 ~46.8 ~2.05 - - ~788 - - 1978-present

Mt Keith#1 ~159.5 ~0.59 - - ~634 - - 1994-present Lake Johnston§ 4.35 2.00 - - 65.0 - - 2001-present§ Murrin Murrin 14.25 1.35 - ~0.090 153.1 - 10.0 1999-present

Cawse#3,§ »4.1 ~0.7 - ~0.1 »24 - »2 1998-2008 Black Swan§ 9.19 2.01 - - 151.2 - - 1997-present§

Rav8 0.467 3.39 - - 14.2 - - 2000-2007 Forrestania 3.81 ~2.0 - - 55.5 - - 1992-1999

Flying Fox/Lounge Lizard 0.501 3.68 - - 16.6 - - 2007-present Waterloo§ 0.496 2.73 - - 10.0 - - 2006-2008§ Cosmos 2.23 5.31 - - 106.1 - - 2000-present Bulong 1.23 1.79 - 0.139 17.2 - 1.0 1999-2002

Redross 0.403 3.37 0.09 - 13.0 0.4 - 1973-1978 Spargoville 0.601 2.37 0.05 - 12.6 0.3 - 1975-1980 Mt Windarra 7.47 1.34 ~0.1 - 85.0 »3 - 1974-1991

Total ~303 ~1.4 - - ~3,452 »173 »13

Notes: #1 Due to lack of mine-site reporting by BHP Billiton, data from 2005-2009 is approximate only; #2 Based on junoir miner’s sales to Kambalda only (2005-2009); #3 Production data incomplete. § Currently on care and maintenance, and likely to reopen in the near future (when suitable economic conditions prevail).



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Figure 10: GEDC modelled nickel production from 1960 to 2100 by local region (left) and ore type (right)

7. Future Base Metals Production All base metal mines and deposits included in this study are shown in Figure 11, namely copper, zinc and lead, and compiled in Table 3. At present, copper, zinc and lead production was modelled based on existing production capacity and resources (ie. 2009 data), shown in Figure 12.



Figure 11: Base metal mines and deposits (locations approximate only)

Figure 12: GEDC base metal production from 1980 to 2100 by local region (left) and metal (right)



8. Exploration Prospectivity The nature of mineral exploration is that it is a risky endeavour – exploration requires significant capital without any guarantee of reward in terms of discovery. Over the past century, exploration has moved from simple prospecting (such as the discovery of the Golden Mile of Kalgoorlie by prospectors, or the giant Broken Hill lead-zinc-silver orebody in New South Wales by pastoral workers) to a complex team involving structural geologists, geochemists, geophysicists, field specialists, drillers, statisticians, economists, and so on, and ranging from small junior explorers to large multi-national backed teams. Overall, Australia has had excellent exploration success across almost all commodities since the 1960s, but particularly in gold and nickel in the GEDC region. For many commodities, new discoveries continue, such as copper, while others are simply re-assessment of previously known mineralisation now being classed as economic rather than mere curiosity. Australia’s mineral resources are now assessed and updated annually by Geoscience Australia (GA) (see GA, var.). The two principal categories GA report are Economically Demonstrated Resources (EDR) and Inferred Resources (ie. sub-economic resources), both in common with the formal JORC Code for reporting mineral resources. The recent trends in Australia’s nickel and gold resources are shown in Figure 13, showing strong increases since the 1970s. For gold, a significant portion of the economic resources are within the GEDC (as shown in Tables 1 and 5), while for nickel the vast majority is found in the GEDC region (see Table 4). The sudden nickel increase in the mid-1990s is related to the emergence of nickel laterites being viewed favourably as well as large low grade disseminated sulfide deposits being considered for the first time. Importantly, for both gold and nickel, there is about an equal amount of sub-economic resources already known. In addition, data for Western Australia’s nickel resources by ore type and resource category are given in Figure 14.

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Figure 13: Australia’s economic and sub-economic resources – gold (left) and nickel (right) The overall Australian trends for mineral exploration and economic resources are clear, but what is perhaps less recognised is the individual fields and companies which have also been having success in exploration. For example, in the broad Kambalda region, the junior miners such as Mincor, Independence Group and Panoramic Resources have found new nickel deposits as well as extensions of previously mined out deposits – leading to a strong trend of growing nickel resources over the past several years, as shown in Figure 15. Elsewhere in the GEDC or nearby, new nickel discoveries include the Flying Fox and Lounge Lizard deposits in the Forrestania area, the Collurabbie Ni-Cu-PGM prospect east of Wiluna, or the large Nebo-Babel Ni-Cu-PGM deposits east of Warburton. The potential for discovery of new nickel deposits was supported by Hoatson et al. (2006) and Mamuse et al. (2010).



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Mincor Resources

Figure 15: Contained nickel resources for Mincor Resources, Independence Group and

Panoramic Resources at their mines and deposits in the Kambalda nickel field Conversely, for gold a major new greenfields discovery in 2005 was the Tropicana deposits, some 330 km east north-east of Kalgoorlie. Given that no gold had been mined in this area historically, Tropicana is very significant in that it shows that there is still excellent exploration prospectivity in many areas across the GEDC (even Australia in reality). The 2009 reported resource for Tropicana was about 4.7 million ounces (or 146.3 t Au, see Table 1), with exploration ongoing and considered very likely to prove up both deposit extensions and new ore zones. In general, however, exploration is facing some increasing challenges, such as: • Sedimentary cover – being able to explore through sedimentary cover (ie. soils and highly

weathered rocks) to examine underlying basement geology; • Structural geology – understanding the depressions, feeder conduits, faults and related

structural aspects of the geology of a province helps to target exploration; • Increasing depth – in established fields such as Kambalda, new discoveries are

commonly occurring at greater depth than existing mines. Increasing depth is a major issue for gold and nickel in particular across the GEDC.



A further critical issue is ore processability – that is, the ability to develop a process flow sheet to treat a particular ore. For some deposits, this may be due to the fine-grained nature of the sulfide mineralogy, while for others the impurities may be more critical. A very recent example of the risks of impurities affecting processability is the Armstrong nickel project in the Kambalda field. The Armstrong deposit was never developed by (then) WMC due to the high arsenic content and low iron to magnesium oxide ratio of the ore. Junior miner Titan Resources began open cut mining in mid-2004, only to find that the ore exceeded agreed tolerances for sale to the Kambalda mill – and WMC promptly rejected all Armstrong ore. The collapse of the project almost sent Titan Resources bankrupt (and it was later taken over in July 2006) – and the mine still remains in mothballs in 2010. The ongoing strength in the gold price is also a critical factor for the gold sector, though it should be considered in Australian dollar terms (Aus$/oz) and not simply $US/oz. The factors which affect the price of a mineral commodity are variable and complex, especially for gold which is widely in use as a financial mechanism for value. Based on the current status of the global gold industry, it is hard to see the gold price declining, with real potential for the price to continue to increase. This will make currently uneconomic deposits potentially economic, especially very low grade ores (ie. <1 g/t Au), as well as opening the door for further tailings reprocessing to extract residual gold (as has been practiced for decades across the GEDC in any case, although it remains a very small source of new production). In summary, it is highly likely that exploration will continue to prove up new mineral resources as economic, or at least convert sub-economic resources to economic status. The outlook for the gold and nickel sectors is strong for the medium term, over say two to three decades, but beyond this is difficult to predict with confidence.

9. Conclusions and Key Findings This report has compiled a wide range of data on mineral production and economic resources in the Goldfields-Esperance Development Commission region – an area dominated by gold and nickel mining. Detailed data sets on 2009 production and reported economic resources were compiled and future production modelled to 2100 using a supply-demand resource model. Overall, the key findings of this report are: • Gold production likely to remain stable until at least 2030 – based on existing production and

resources, gold is likely to remain in the range of 100 to 125 t Au/year until about 2030, at which point major fields close and most future production shifts to Leonora shire;

• Nickel production has significant potential to nearly triple by 2050 – based on existing production and resources, nickel could reach about 600 kt Ni/year by 2050, and would be widely distributed through the GEDC (with the Coolgardie shire being the exception due to potential resource exhaustion at Kambalda);

• Nickel ore type will be increasingly dominated by laterite ore rather than sulfide ores – by 2025, sulfide ores will have peaked in their production, and from this point laterite ores will dominate nickel production. This is critical since laterite projects have much greater energy, chemicals and water requirements than sulfide projects;

• Base metals are likely to remain small in scale – the prospects for base metals remains low, given the few projects in the GEDC and surrounds, although exploration prospectivity is strong.

• Exploration prospectivity remains strong for gold and nickel – based on the past few decades of strong success, mineral exploration remains highly likely to maintain the existing resource base, as well as convert sub-economic and marginal projects to economic status. Exploration is facing significant challenges, such as increasing depth and declining ore grades, and it is not clear whether past success can be confidently assumed to be similar in the future.



10. Acknowledgements This project was completed for the Goldfields-Esperance Development Commission. Key staff to thank include Ray Ciantar, Robert Hicks and Carol Mann. In addition, Jill Gregory from the WA Department of Minerals and Petroleum was extremely helpful in providing a range of statistics, information and replying to email requests. 11. References Elias, M, 2002, Nickel Laterite Deposits - Geological Overview, Resources and Exploitation. In “Giant

Ore Deposits: Characteristics, Genesis and Exploration”, D R Cooke & J Pongratz (Ed's), Centre for Ore Deposit Research, University of Tasmania, Hobart, TAS, CODES Special Publication 4, pp 205-220.

GA, var., Australia’s Identified Mineral Resources. Geoscience Australia (GA), Canberra, ACT, Years 1999 to 2009, www.ga.gov.au.

Hoatson, D M, Jaireth, S & Jaques, A L, 2006, Nickel Sulfide Deposits in Australia: Characteristics, Resources and Potential. Ore Geology Reviews, 29(3-4): pp 177-241.

Kelly, T D, Matos, G R, Buckingham, D A, DiFrancesco, C A, Porter, K E, Berry, C, Crane, M, Goonan, T & Sznopek, J, 2010, Historical Statistics for Mineral and Material Commodities in the United States. US Geological Survey (USGS), Data Series 140 (Supersedes Open-File Report 01-006), Version 2010 (Online Only), Reston, Virginia, USA, Accessed 9 February 2010, minerals.usgs.gov/ds/2005/140/ (Last updated 14-Jan-2010).

Mamuse, A, Beresford, S, Porwal, A & Kreuzer, O, 2010, Assessment of Undiscovered Nickel Sulphide Resources, Kalgoorlie Terrane, Western Australia - Part 1: Deposit and Endowment Density Models. Ore Geology Reviews, 37: pp 141-157.

Mohr, S, 2010, Projection of World Fossil Fuel Production With Supply and Demand Interactions. PhD Thesis, Dept. of Chemical Eng., Uni. of Newcastle, Newcastle, NSW, 783p.

Mudd, G M, 2007, Global Trends in Gold Mining : Towards Quantifying Environmental and Resource Sustainability? Resources Policy, 32(1-2): pp 42-56.

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Naldrett, A J, 2002, Requirements for Forming Giant Ni-Cu Sulfide Deposits. In “Giant Ore Deposits: Characteristics, Genesis and Exploration”, D R Cooke & J Pongratz (Ed's), Centre for Ore Deposit Research, Uni. of Tasmania, Hobart, TAS, CODES Special Publication 4, pp 195-204.

Schodde, R, 2010, Global Discovery Trends 1950-2009: What, Where and Who Found Them. Proc. “PDAC 2010 - Prospectors & Developers Association of Canada Annual Conference”, Prospectors & Developers Association of Canada (PDAC), Toronto, Canada, March 2010, 31p.

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Mineral Resources and Production in the Goldfields ......Tropicana#2 73.62 1.99 146.3 Anglo Gold70%, Independence Group30% South Kalgoorlie 68.723 2.0 137.4 Avoca Resources100% Higginsville