DeepGreen closer to mining battery metals from the sea after $150m injection

Canada’s DeepGreen Metals, a start-up planning to extract cobalt and other battery metals from small rocks covering the seafloor, has secured the bulk of the $150 million it needs to carry out its first feasibility studies.

The financing, provided by Switzerland-based offshore pipeline company Allseas Group, is a welcome sign of progress for the deep sea mining sector, which has been stalled due regulatory uncertainty and environmental concerns.

Unlike other seafloor mining companies, including pioneer Nautilus Minerals, the Vancouver-based explorer doesn’t want to drill, blast or dig the bottom of the ocean. DeepGreen’s main goal is to scoop up small metallic rocks located thousands of metres below the surface in the North Pacific Ocean.

Unlike other seafloor mining companies, the Canadian start-up doesn’t want to drill, blast or dig the bottom of the ocean, but to scoop up small rocks containing cobalt, nickel and other battery metals.

Its exploration focus is the Clarion-Clipperton Zone (CCZ), a mineral-rich, 4,000-kilometre swath of the Pacific that stretches from Hawaii to Mexico, where billions of potato-sized metals-rich rocks lie in a shallow layer of mud on the seafloor.

The deep sea, more than half the world’s surface, contains more cobalt, nickel, copper, manganese and rare earth metals than all land reserves combined, according to the US Geological Survey.

Companies exploring or already developing projects to mine the seafloor argue the extraction of those deep-buried riches could help diversify the sources currently supplying metals needed for electronics and evolving green technologies, such as electric vehicles (EVs) and solar panels.

Academics and scientist, however, are concerned by the lack of research on the possible impacts of high seas mining. They fear the activity could devastate fragile ecosystems that are slow to recover in the highly pressurized darkness of the deep sea, as well as having knock-on effects on the wider ocean environment.

Not enough studies

Last year, the European Parliament called for a ban on seabed mining until the environmental impacts and risks of disturbing unique deep-sea ecosystems are understood. In the resolution, it also urged the European Commission to persuade member states to stop sponsoring and subsidizing licenses to explore and exploit the seabed in international waters as well as within their own territories.

Shortly after, an international team of researchers published a set of criteria to help the International Seabed Authority (ISA), a UN body made up of 168 countries, protect biodiversity from deep-sea mining activities.

So far, it has granted 29 licences to governments and companies, authorizing them to explore in international waters.

Nautilus, however, is the only company that has gone beyond the exploration stage and has gotten close to open the first polymetallic seabed mine off the coast of Papua New Guinea. Its Solwara 1 project, however, has been slowed by funding issues and local opposition.

Anglo American (LON:AAL) sold its 4% stake in Nautilus a year ago, as part of efforts to retain only its most profitable assets. And, in March, it had to delist from the Toronto Stock Exchange.

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Barrick meets new PNG leader about Porgera mine lease extension

Barrick Gold (TSX:ABX) (NYSE:GOLD) president and CEO Mark Bristow, along with the executive director of JV partner Zijin Mining Group, today met with Papua New Guinea's new prime minister James Marapa about extending the current special mining lease on the Porgera gold mine, which is set to expire on August 16, 2019. This marks the second time that Bristow has visited the country this year to reaffirm its commitment to the Porgera JV.

Bristow also met with the governor of Enga province, the Porgera landowners and other stakeholders to discuss the proposed lease extension.

The Porgera mine, located 130km west of Mt. Hagen and 600km northwest of Port Moresby, first poured gold in 1990, producing over 20Moz of gold over the life of mine. It contributes to about 10% of the nation's exports and employs over 3,300 Papua New Guineans.

Barrick and Zijin each owns 47.5% of the mine, while the landowners and the Enga provincial government hold the remaining 5% interest.

“The proposed extension to its lease will allow the mine to remain productive for at least another 20 years," says Bristow. "To sustain mine operations, however, it will require a significant capital injection, and it is difficult to justify that kind of investment without the security of an extended mine lease."

Shares of Barrick advanced over 5% on Monday morning as the gold market kept its momentum from last week, hitting a 10-week high earlier today. The company's market capitalization now sits at approximately $21.8 billion.

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K92 Mining reports early result from Blue Lake prospect in Papua New Guinea

K92 Mining (TSXV: KNT) has intersected 175 metres of 0.28 gram gold per tonne and 0.22% copper from 259 metres downhole at its Blue Lake porphyry prospect, 4 km southwest of its Kora deposit at the Kainantu gold mine in Papua New Guinea.

The hole ended in mineralization.

The company discovered the prospect in 2017 after a surface mapping and sampling program. It completed a soil grid at 50-metre spacing over a 2-sq-km area and collected more than 1,000 samples, revealing a large coincident gold and copper anomaly.

The company expects the mine will produce 68,000 to 75,000 ounces of gold-equivalent this year

Silicified breccias in outcrop were initially encountered in September 2017, with samples assaying up to 20 grams gold per tonne and 15% copper.

K92 plans to complete a 2,400-metre diamond drill program at the porphyry prospect this year. The program will consist of six 400-metre deep holes.

Earlier this month, the company announced its decision to double capacity at its Kainantu gold mine to 400,000 tonnes a year by the end of the fourth quarter, increasing production to an average of 120,000 ounces of gold-equivalent annually over the next 13 years.

The company expects the mine will produce 68,000 to 75,000 ounces of gold-equivalent this year and 115,000-125,000 ounces of gold-equivalent in 2020.

Capital costs for the expansion are estimated to be $15 million over a 12-month period.

A preliminary economic assessment of the expansion plan completed in January demonstrated the expanded operation would produce almost 650,000 ounces of gold and 10,000 tonnes of copper over the next five years and over 1.3 million ounces and 60,000 tonnes of copper over a mine life of 13 years. The study estimated cash costs of US$429 per gold-equivalent ounce and all-in sustaining costs of US$615 per gold-equivalent ounce.

The Kainantu mine is in the Eastern Highlands province of Papua New Guinea. The property was previously mined by Highlands Pacific and Barrick Gold (TSX: ABX; NYSE: GOLD) in the early 2000s. After being commissioned in 2006, the processing facilities operated for just under a year before Barrick put them on care and maintenance in December 2008.

The 410-sq-km property is about 180 km west-northwest of Lae.

(This article first appeared in The Northern Miner)

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30 countries face higher resource nationalism risk — report

According to global risk consultancy Verisk Maplecroft's latest Resource Nationalism Index (RNI) report, a total of 30 countries have registered a significant increase in resource nationalism risk metrics over the past year, 21 of which are considered major producers of oil, gas and minerals. The RNI is aimed to measure the risk of expropriation, the imposition of more stringent fiscal regimes, and the pressure for companies to source goods and services from local providers. Countries are also rated and ranked based on these risk metrics.

Specifically, the RNI report names Russia and the Democratic Republic of Congo (DRC) as the two notable movers on the list, with both being downgraded to 'extreme risk' to indicate that the risk of governments taking greater control of natural resources is the highest. In DRC's case, the risk bump was mostly a byproduct of its new Mining Code, which allowed more government interventions and oppressive fiscal terms for existing operators. Eight countries now have the 'extreme risk' rating (starting from highest risk): Venezuela, DRC, Tanzania, Russia, North Korea, Zimbabwe, Swaziland and Papua New Guinea.

Government interference poses threat to operators

Although outright expropriation has become a less likely scenario than before, government measures such as tax pressures, changing contractual terms and strict regulations can still make countries difficult to operate in.

Africa has long been recognized as a high-risk jurisdiction. It has gotten worse over the past year as 10 nations experienced growth in risk factors, according the RNI report. Other countries such as Mexico, India, Malaysia, Turkey and Iraq also saw increased risks as governments took measures to erode the revenues of operators.

Improvement in Zimbabwe, Ecuador

On the upside, the RNI report shows that 24 nations have seen improvements in their index performance, including Zimbabwe (joint 5th), Vietnam (25th), Ecuador (46th) and Guinea (94th). Even though Zimbabwe is still far away from what is considered a stable mining destination, its score has improved thanks to a new government regime that has been actively encouraging foreign investment. The country boasts the world's second largest platinum and chromium reserves, according to Verisk Maplecroft, and could attract meaningful investment from abroad and even shed its 'extreme risk' tag.

Ecuador has made more significant progress. Since President Lenín Moreno came to power in 2017, Ecuador has jumped from ranking 3rd and ‘extreme risk’ in the Resource Nationalism Index two years ago to 46th and ‘medium risk’ in 2019.

Read the full report here. 

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Barrick’s CEO visits Papua New Guinea to support extension of the Porgera mining lease

The new President and CEO of Barrick Gold (NYSE:GOLD)(TSX:ABX), Mark Bristow, said the company wants to strengthen its partnership with the government and local communities of Papua New Guinea where the Porgera gold deposit is located.

Barrick and Zijin Mining Group each own a 47.5% interest in the Porgera Joint Venture, while Mineral Resources Enga owns the remaining 5% interest. At present, the firms involved in the project are negotiating an extension of the Special Mining Lease that will allow the mine to remain productive.

In a press release, Barrick quotes Bristow as saying that Porgera is a long-term asset for both Barrick and Zijin that will require significant capital investment to sustain operations. “Without the security of an extended mining lease, it would be difficult to justify further significant investments in the mine,” the statement reads.

Porgera operation in Papua New Guinea. Photo by Barrick Gold.

Porgera, located in the northern Enga province of Papua New Guinea, hosts an open pit and underground gold mine that produced 204,000 ounces in 2018 and whose 2019 guidance is somewhere between 240,000 and 260,000 ounces of the yellow metal.

Bristow’s visit to the area was his first as head of the world's top gold producer by volume. During his four-day tour, the executive met with Deputy Prime Minister Charles Abel, representatives of the Porgera Landowners Association, Enga’s Provincial Governor Sir Peter Ipatas, and other government officials.

“At Barrick, we believe that our host countries must be true partners, sharing both the responsibility and the benefits that come with mining,” Bristow wrote in the media brief, where he added that the company is ready to engage with the Papua New Guinean government “to breathe new life” into Porgera.

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Bougainville’s $58B gold-copper mine safe for now as Mining Act changes rejected

The autonomous Papua New Guinea region of Bougainville has rejected controversial changes to its mining law, said to be aimed at letting a new company extract the island’s riches.

The modifications would have jeopardized land rights currently held by Australia’s Bougainville Copper Ltd. (BCL), which used to run Panguna, one of the world's biggest open-pit copper operations, shut by a civil war in 1989.

Speculation about the future of Panguna mine peaked in late 2017, when an application to restart it was put to a vote, and later placed in the back burner.

“There were no reasons that could explain or rationalize the attempt to steal our minerals and deny us all our rights under the Bougainville Mining Act,” said Martin Miriori, chairman of the Special Mine Lease Osikaiyang Landowners Association (SMLOLA), a group of 2,000-odd landowners who hold rights not only to the region's topsoil but also the minerals underground.

The proposed legislation included an amendment that would have given all available mining rights to a new company, Bougainville Advance Mining, according to documents provided by BCL to Bloomberg News.

Speculation about the future of the idled operation peaked in late 2017, when an application to restart it was put to a vote, and later placed in the back burner as the result were almost evenly split.

Authorities feared the reopening of Panguna, donated by Rio Tinto in 2016, could open old wounds. When in operations, the mine was one of the world’s largest, accounting for 44% of PNG’s gross domestic product.

Arguments over mine pollution and compensation to locals were central to the conflict that turned violent in 1989, revitalizing an independence movement that killed tens of thousands of people.

BCL finally shut the mine. A peace agreement in 2001 set up the region’s autonomy and paved the way for an independence vote.

It’s believed the mine still holds about 5.3 million tonnes of copper and 19.3 million ounces of gold. The Bougainville Government estimates it would cost up to A$10 billion to restart production.

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Cobalt 27 to acquire ASX-listed Highlands Pacific

Cobalt 27 Capital has entered an agreement to acquire ASX-listed Highlands Pacific. The acquisition, valued at $96 million, will increase Cobalt 27’s exposure to nickel through the Ramu nickel-cobalt mine in Papua New Guinea. Highlands Pacific owns an 8.56% interest in the mine, which is majority owned by Metallurgical Corp. of China Ltd.

Cobalt 27 has agreed to pay A10.5¢ in cash per share for Highlands. If nickel prices meet a certain threshold before the end of 2019, an additional A1¢ per share will be paid.

Cobalt 27 and Highlands Pacific have agreed to terminate a US$113-million streaming agreement announced in May 2018.

“The acquisition of Highlands will allow Cobalt 27 to gain a direct interest in the Ramu nickel-cobalt mine and materially increase its attributable exposure to the mine’s nickel production from 27.5% to 100% and cobalt production from 55% to 100%, relative to the previously announced Ramu cobalt nickel stream,” said Anthony Milewski, chairman and CEO of Cobalt 27. “It does so at nearly half the cost of the previously announced Ramu cobalt nickel stream, provides increased balance sheet flexibility, and enhances value for Cobalt 27 shareholders. It also brings cash flow to our business, something we have told our shareholders was important from the beginning.”

Following repayment of Highlands’ attributable Ramu construction and development loans, Highlands’ ownership would increase to 11.3%.

In October, Highlands announced that MCC is evaluating a potential expansion of the Ramu mine, which could cost around US$1.5 billion. Ramu is a large scale nickel-cobalt mine with total estimated reserves of 1 billion lb. nickel and 100 million lb. cobalt.

Highlands also holds interests in the Star Mountains Copper Gold exploration project in PNG and is evaluating the Sewa Bay laterite nickel project in PNG in conjunction with Japanese trading house Sojitz Group.

For more detail on the terms of the acquisition see www.cobalt27.com.

This article first appeared in the Canadian Mining Journal. 

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