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					         WESTERN AUSTRALIA’S INTERNATIONAL RESOURCES DEVELOPMENT MAGAZINE




     June–August 2004 $3 (inc GST)




Nickel
Ravensthorpe go-ahead


                                                                   Mid West
                                                                   comes alive




Woodside turns 50
DEPARTMENT OF INDUSTRY AND RESOURCES
Investment Services
168 St Georges Terrace
                                                                                                                   including iron ore,
PERTH Western Australia 6000
Postal address: Box 7606 • Cloisters Square
                                                             FROM THE MINISTER                                     copper, gold, ilmenite,
Perth Western Australia 6850                                                                                       talc and garnet.
Tel: +61 8 9327 5555 • Fax: +61 8 9222 3862


                                                          W
Email: investment@doir.wa.gov.au
                                                                      estern Australia was once again                  Within three to four
www.doir.wa.gov.au                                                    endorsed as one of the world’s most          years, the combination of
INTERNATIONAL OFFICES                                                 attractive resources investment              hematite and magnetite
Europe                                                    destinations when BHP Billiton gave the green            projects planned for the
European Office • 5th floor, Australia Centre
                                                          light to a A$1.4 billion laterite nickel project — the   region will see throughput
Corner of Strand and Melbourne Place
LONDON WC2B 4LG • UNITED KINGDOM                          company’s biggest global nickel venture since its        at Geraldton Port jump to Clive Brown, MLA
Tel: +44 20 7240 2881 • Fax: +44 20 7240 6637                                                                                                     Minister for State
                                                          merger — at Ravensthorpe in the State’s southeast.       more than 8Mt/a.               Development
Email: agent_general@wago.co.uk
                                                              The Western Australian Government will                   And pending successful
India — Mumbai
Western Australian Trade Office                            contribute A$18.4 million towards the provision          development of new oil fields in the Perth Basin,
93 Jolly Maker Chambers No 2                              of infrastructure and services needed to support         Geraldton could also become the base for oil
9th floor, Nariman Point • MUMBAI 400 021 INDIA
Tel: +91 22 5630 3979/74/78 • Fax: +91 22 5630 3977
                                                          the Ravensthorpe Nickel Project, demonstrating a         exports to Asia and Europe.
Email: sonia.grinceri@doir.wa.gov.au                      preparedness to work with industry to deliver local          These are exciting times in Western Australia,
India — Chennai                                           jobs and opportunities throughout the State.             and recent industry reports estimate the State’s
Western Australian Trade Office - Advisory Office               The Government continues to invest in our
1 Doshi Regency • 876 Poonamallee High Road                                                                        resources sector could grow by 175% over the next
Kilpauk • Chennai 600 084 • INDIA                         regions, with the Mid West, centred around               25 years.
Tel: +91 44 2640 0407 • Fax: +91 44 2643 0064             the port city of Geraldton, the focus of this edition
E-mail: kvrdctwa@md2.vsnl.net.in
                                                                                                                       The Western Australian Government has
                                                          of Prospect, receiving major infrastructure              initiated policies to continually enhance
Indonesia — Jakarta
Western Australia Trade Office                             improvements.                                            Western Australia’s international position
JI H R Rasuna Said Kav C15 - 16, Kuningan                     The recent A$103 million port upgrade                as a rich resources province, including committing
Jakarta 12940 • INDONESIA
Tel: +62 21 2550 5331 • Fax: +62 21 522 7103
                                                          at Geraldton has already seen the successful             A$12 million over the next four years to double the
E-mail: trevor.boughton@austrade.gov.au                   development and export of iron ore from the new          area of the State covered by high-tech geoscientific
Indonesia — Surabaya                                      Tallering Peak hematite mine — the first iron ore to      aerial imaging.
Western Australian Trade Office                            be exported from the Mid West in 30 years.
Graha Pena 17th floor • Jalan Ahmad Yani 88                                                                             Growing global demand for minerals and energy
Surabaya 60234 INDONESIA                                      Mount Gibson Mining also intends to develop          commodities, particularly from China, is helping
Tel: +62 31 829 9979 • Fax: +62 31 829 9975               a 1.5 Mt/a hematite mine on the Extension Hill           Western Australia maintain its position as a primary
Email: lydia.agam@doir.wa.gov.au
                                                          and Iron Hill deposits within the Mt Gibson              supplier of resources to the world, as well as building
Japan — Tokyo
Australian Business Centre (WA Govt Office)                Range, with the first shipments of ore planned            its capacity to establish downstream industries that
28th floor, New Otani Garden Court                         for the third quarter of next year. And, there are       add value to these resources.
4-1 Kioicho, Chiyoda-Ku • TOKYO 102-0094 JAPAN
                                                          several other hematite and magnetite mining                  This is leading to a resources upswing as export
Tel: +81 3 5214 0791 • Fax: +81 3 5214 0796
Email: tokyo@wajapan.net                                  developments planned by Mount Gibson and                 volumes increase across a range of commodities,
Japan — Kobe                                              others for the Mid West.                                 including LNG, iron ore, alumina, nickel, salt,
Western Australian Government Office                           In addition, the Geraldton port upgrade was a
6th floor, Golden Sun Building • 3-6 Nakayamate-dori                                                                copper and zinc.
4-Chome Chuo-Ku • KOBE 650-0004 JAPAN                     major catalyst in creating export agreements with            This ongoing growth in the resources sector is
Tel: +81 78 242 7705 • Fax: +81 78 242 7707               China that are expected to underpin the long-term        helping Western Australia maintain its position as
Email: kobe@wajapan.net
                                                          growth of the region’s iron ore industry.                Australia’s leading State economy and creating jobs
Malaysia
Western Australian Trade Office                                Add to this an A$88 million transport corridor       and opportunities for all Western Australians.
4th floor, UBN Tower • 10 Jalan P Ramlee                   providing a new southern road and rail link to the
KUALA LUMPUR 50250 MALAYSIA
                                                          port, and Geraldton is now positioned to diversify
Tel: +60 3 2031 8175/6 • Fax: +60 3 2031 8177
Email: elaine.yong@doir.wa.gov.au                         its throughput from grain (currently the second
Middle East                                               largest in Australia) to a plethora of minerals
Western Australian Trade Office • Emarat Atrium
PO Box 58007 • Dubai • UNITED ARAB EMIRATES
Tel: +971 4 343 3226 • Fax: +971 4 343 3238
E-mail: chris.heysen@wato.ae
                                                          FROM THE DIRECTOR GENERAL
People’s Republic of China — Shanghai
Western Australian Trade & Investment Promotion
Shanghai Representative Office • Room 2208, CITIC Square
                                                          Nickel project a winner

                                                          B
1168 Nanjing Road West • Shanghai 200041                           HP Billiton’s decision to commit to the massive Ravensthorpe laterite nickel
PEOPLE’S REPUBLIC OF CHINA                                         project sees Western Australia poised to become the second biggest nickel
Tel: +86 21 5292 5899 • Fax: +86 21 5292 5889
Email: bj.zhuang@doir.wa.gov.au
                                                                   miner in the world, behind Russia.
People’s Republic of China — Hangzhou
                                                              The A$1.4 billion investment in Western Australia is a major vote of confidence
Western Australian Trade & Investment Promotion           in the Western Australian resources industry and will have wide benefits to the         Jim Limerick
Hangzhou Representative Office                             State and the local communities for at least two decades.                              Director General
Room 910 • World Trade Office Plaza                                                                                                               Department of Industry
Zhejiang World Trade Centre
                                                              Perhaps more importantly, following on from BHP Billiton’s successful trial        and Resources
15 Shuguang Road • Hangzhou 310007                        mining and local pilot scale testing, leading to the adoption of the combination
PEOPLES REPUBLIC OF CHINA                                 of pressure acid leaching and atmospheric pressure acid leaching processing technology, will be the
Tel: +86 571 8795 0296 • Fax: +86 571 8795 0295
E-mail: stella.bu@doir.wa.gov.au                          confidence to further expand the processing of the State’s massive lateritic nickel ore reserves. Minara
South Korea
                                                          Resources for instance has already flagged the possible expansion of its treatment facilities at Murrin
Mr Young Chan Yu, Regional Director                       Murrin.
Western Australian Trade & Investment Office                   It is a breakthrough which may unlock the successful development of the huge laterite nickel
11th Floor, Kyobo Building
1 Jongro 1-Ga, Jongro-Gu                                  resources present in WA.
Tel: +82 2 722 1217 • Fax: +82 2 722 1218                     The Department of Industry and Resources has been closely involved in the development of the
E-mail: young.yu@doir.wa.gov.au                           Ravensthorpe project since its inception, working in partnership with BHP Billiton to bring the project
Taiwan                                                    to fruition.
WA Business Development Manager
Australian Commerce & Industry Office                          This edition of Prospect magazine details the stories behind the Ravensthorpe development. It also
Suite 2606, International Trade Building                  looks in detail at one of the fast-growing regions of Western Australia, the Mid West, where the successful
#333 Keelung Road Section 1 • TAIPEI 110 TAIWAN           completion of a A$103 million port upgrade at Geraldton has provided the impetus for several world-
Tel: +886 2 8780 9118 ext 216 • Fax: +886 2 2757 6707
Email: nicholas.mckay@austrade,gov.au                     class resource projects.
Thailand                                                      Included in that is the shipment, the first for more than 30 years, of Mid West iron ore through
WA Business Development Manager                           Geraldton, bound for the hungry steel mills of China. Elsewhere in Prospect, we celebrate Woodside
Australian Trade Commission • Australian Embassy          Petroleum’s 50th anniversary through a special feature presentation.
37 South Sathorn Road • BANGKOK 10120 • THAILAND
Tel: +662 287 2680 Ext 3307 • Fax: +662 287 2589
E-mail: siraphop@austrade.gov.au
                                                                                          in this issue 8



                                                                                                         Mid West on the boil
                                                                                                         The Mid West region of Western
                                                                                                         Australia is coming alive on the
                                                                                                         resources front, underpinned by the
                                                                                                         A$103 million upgrade of the Geraldton
                                                                                                         port. New iron ore, gold, base metals
                                                                                                         and oil and gas projects are also
                                                                                                         coming on stream.




2     Nickel bonanza                                                      18 Woodside celebrates
      The A$1.8 billion Ravensthorpe nickel development by                        Woodside Energy has turned 50. This issue of
      BHP Billiton will see Western Australia emerge as the                       Prospect contains a special feature on the company
      second biggest nickel miner in the world, as well as                        and the vital role it plays in the North West Shelf
      provide a major fillip to other lateritic nickel projects.                   development.



6     Westonia set for comeback                                           27 Oil and gas acreage releases
      The historic Westonia gold mine is poised to come                           Six petroleum exploration areas, ranging from
      back into production after exploration work identified                       highly prospective to frontier, have been released by
      a resource of more than one million ounces.                                 the Department of Industry and Resources.



8     Diamonds: facets of future                                          35 Subscribe now
      John McIlwraith examines the future of the Argyle
      diamond mine, where A$70 million is being spent on a
      feasibility study for future underground development.               36 Resource Map


                         Front cover:    Prospect
The new Tallering Peak iron ore mine,    Western Australian Prospect magazine is published quarterly by the Western Australian Government’s Department of
north of Mullewa in Western Australia,   Industry and Resources (DoIR) and Ray Burns Media.
 is setting the pace for a development   Editorial management: Mark Dixon, DoIR Communications & Marketing Division. Tel: (08) 9327 5555 • Fax: (08) 9327 5500.
          boom in the Mid West region.   Advertising management: Ray Burns Media, PO Box 1230, South Perth Westerm Australia 6951
                                         Tel: (08) 9227 6688 • Mobile: 0408 474 328 • Email: rayburns@rayburnsmedia.com.au
                                         Prospect has been compiled in good faith by the Department of Industry and Resources from information and data
                                         gathered in the course of the magazine’s production. Opinions expressed in Prospect are those of the authors and not
                                         necessarily those of the Department of Industry and Resources. No person or organisation should act on the basis of any
                                         matter contained in this publication without considering, and if
                                         necessary taking, appropriate professional advice from other sources.            Department of
                                         The Department of Industry and Resources, its employees and                      Industry and Resources
                                         contracted personnel undertake no responsibility to any person
                                                                                                                 www.doir.wa.gov.au
                                         or organisation in respect of this publication.

                                                                                                                 Prospect June–August 2004           1
                              Western Australian
                                          nickel
                                          soars




2 Prospect June–August 2004
                                                                                        Residential
                                                                                        workforce
                                                                                        still on cards
                                                                                        K
                                                                                               ey negotiations between BHP Billiton
                                                                                               and the Western Australian State
                                                                                               Government could shortly decide
                                                                                        the workforce nature of the Ravensthorpe
                                                                                        nickel project.

                                                                                        The negotiations centre on the State facilitating
                                                                                        assistance to allow BHP Billiton to establish
                                                                                        a residential workforce in the Ravensthorpe


RAVENSTHORPE
                                                                                        district. Both parties, and the Shire of
                                                                                        Ravensthorpe, are keen to avoid the use of
                                                                                        fly-in, fly-out operations.


gets the green light
 By MARK DIXON
                                                                                        The State Government initially, in October
                                                                                        2001, committed A$18.4 million towards the
                                                                                        provision of infrastructure. The company
 Department of Industry and Resources                                                   committed A$8 million and the Federal
                                                                                        Government was invited to also contribute
                                                                                        towards the total A$55 million cost.


 T
          he massive Ravensthorpe nickel project, representing BHP Billiton’s biggest
          global nickel venture since its merger, has emerged as one of the largest     However, the Federal Government has refused
          greenfields mineral resources developments in Australia’s history.             to back that aspect of the project and has
     At a development cost of A$1.8 billion it will provide a major boost for two       instead suggested the shires of Ravensthorpe
 States, Western Australia and Queensland, and when it comes on stream in 2007          and Esperance apply for Federal money
 will firmly entrench BHP Billiton in the major league of nickel producers, as the       through existing or new programs.
 third biggest in the world.
     It will also establish Western Australia as the world’s second biggest nickel
                                                                                        The Department of Industry and Resources
 miner, behind Russia, while the success of innovative technology has already seen
                                                                                        has been involved in the development
 significant upgrade proposals for other laterite nickel projects.
                                                                                        of needed infrastructure and associated
     The flow-on effects from the project will be most dramatic for the previously
                                                                                        population increase for the project for more
 sleepy Ravensthorpe district, about 540 km southeast of Perth, as 1000 workers
                                                                                        than four years and has been instrumental in
 flock on site during the construction phase.
                                                                                        helping pave the way in a number of key areas.
     A permanent workforce of about 300 is envisaged, with BHP Billiton’s strong        It has guided the Shire of Ravensthorpe in
 preference lying with a residential, rather than fly-in, fly-out operation. That         many ways, especially the development
 aspect and the need for community infrastructure to support a residential project,     of a new town planning scheme to cater
 is still under negotiation with the State Government.                                  for a permanent workforce and associated
     According to a recent regional economic model referred to by the local             population increase.
 government authority, the Ravensthorpe Shire, the project will create a flow-on of
 more than 800 jobs within the southeast coastal region. These will complement          Planning has involved both the towns of
 those on site and see the district return to its more famous days of a major mining    Ravensthorpe, as the service centre, and
 centre, in the late 1800s. (see article at right)                                      Hopetoun, where most of the project’s
     It will also underpin expansion at the town of Esperance, 155 km east of the       workforce will live, and also included a new
 project, through which BHP Billiton plans to import raw materials and export the       waste water treatment plant in Hopetoun to
 nickel concentrates to Yabulu, near Townsville in Queensland.                          ensure the coast remains pristine.
     The Ravensthorpe project is based on three laterite nickel orebodies, which
 will be mined by open cut. Those deposits, Halleys, Hale-Bopp and Shoemaker-           The multi-user nature of the infrastructure
 Levy (named by original owner Comet Resources) contain a proved reserve of             includes the upgrade of local roads, a new
 125.3 million tonnes at 0.73% nickel and 0.032% cobalt; a probable reserve of          shire airstrip, emergency services, education,
 137.9 Mt at 0.57% nickel and 0.026% cobalt: sufficient reserves for a mining            power and other basic services.
 operation lasting 25 years.
                                                                                        Project infrastructure includes a major
     The ore will be treated through a hydrometallurgical process plant
                                                                                        chemical processing plant, accommodation
 incorporating atmospheric leaching, to produce up to 50 000 tonnes a year
                                                                                        village, communications, internal mine and
 of contained nickel and 1400 tonnes of contained cobalt in an intermediate
                                                                                        plant roads, construction camp and port
 concentrate product known as mixed hydroxide product, or MHP.
                                                                                        facilities at Esperance.
     Up to 220 000 tonnes of MHP will be exported each year from Ravensthorpe for
 processing at the Yabulu refinery, representing an increase in production at that       BHP Billiton said the project created a unique
 facility of 140% for nickel and 70% for cobalt, or 76 000 tonnes of nickel and 3500    opportunity to advance development on the
 tonnes of cobalt a year. 4                                                             south-east coast of Western Australia. P


                                                                                                    Prospect June–August 2004    3
Project go ahead: Trial mining at Ravensthorpe proved robust economics.               A heritage
    The production process has been the subject of extensive testwork for the
past six years, during which time BHP Billiton has spent A$112 million on
defining the mining reserve, pilot testing, engineering design, environmental
studies and land acqusition. There has also been wide-ranging community
                                                                                      of mining
consultation, and the company estimates about A$8 million has been spent

                                                                                      R
                                                                                            avensthorpe, now a small wheat
directly on wages and services in the shires of Ravensthorpe and Esperance.                 and sheep town, started life as a
    And while the effects on the Ravensthorpe community will be wide-ranging,               copper and gold mining centre.
the town of Esperance is also in line for a more intense time. The traditional port
and holiday destination, famed for its beaches and lifestyle, is already used to      The district was first settled in 1868 after
iron ore and nickel exports, but BHP Billiton’s plans will see a quantum leap.        pioneer John Dunn became interested in
    That will come from the import of about 500 000 tonnes a year of prill, (a type   the area after being marooned there while
of sulphur) to be imported from Canada, 40 000 tonnes a year of magnesia from         sealing off the coast. He was killed by local
Queensland and China and the shipment to Townsville of 220 000 tonnes a year          Aborigines in 1880 after establishing a
                                                                                      sheep farm and his grave lies to the west
of the MHP product.
                                                                                      of Ravensthorpe.
    The project’s key strengths, said BHP Billiton, include low mining costs and
high feed grade. Ravensthorpe, it believes, has the best risk/reward profile in        But it was the discovery of gold by his
the world for a greenfields laterite nickel project through the combination of         brother Jim Dunn, pictured below, in 1898,
pressure acid leaching and the efficiency of Yabulu’s refinery circuit.                 during Western Australia’s first great
    There are two distinctive ore types at Ravensthorpe: limonite and saprolite.      gold boom, which saw prospectors and
The limonite is especially valuable in that it can be upgraded to almost twice the    miners pour into the area to work the
mined grade through a beneficiation plant, while the saprolite ore can also be         Phillips River goldfield.
upgraded, although to a lesser extent. P
                                                                                      In 1900 Ravensthorpe was surveyed
                                                                                      and gazetted the following year, with a
                                                                                      population of 500. By 1908 the population
                                                                                      had reached 3000, supporting 53 gold
                                                                                      and copper mines in the region.

                                                                                      But by 1919 the smelter and mines had
                                                                                      closed and most prospectors had moved
                                                                                      away. Some mines continued to operate,
                                                                                      depending on the price of copper, until
                                                                                      the 1970s. P




Big winner: The port of Esperance will be upgraded for the new nickel development.



4 Prospect June–August 2004                                                           Pioneer: Jim Dunn.
  A Bright Future                   Planned for Investors in Victoria Petroleum N.L.
                                                       Victoria Petroleum N.L. looks set to increase oil production
                                                       after joining the ranks of Australia’s oil producers. Participant
                                                       in onshore North Perth Basin 5 MMBO Jingemia Oil Field
                                                       production testing at 2100 bopd in 2004.

                                                       4 Development drilling program in Jingemia Oil Field with
                                                         aim to increase production to 4000 bopd in 2nd half
                                                         of 2004
                                                       4 Largest exploration acreage holder in South Australia and
                                                         Queensland Cooper/Eromanga Basin
                                                       4 Five well drilling program in South Australia Cooper Basin
                                                         in mid 2004 against industry background activity of
                                                         27 wells in 2004
                                                       4 Industry exploration success in SA Cooper Basin of 40%
                                                       4 Testing potential 1 TCF Coal Bed Methane play in Wyoming
                                                         USA in June 2004
                                                       4 Australia and US net oil production of 125 bopd in 1st Qtr
                                                         2004 with 14 wells planned in 2004
                                                       4 Exploration drilling well funded with $5 million cash on
                                                         hand at start 2004




CONTACTS John Kopcheff Managing Director Chas Lane Exploration Manager
PHONE 08 9220 9800 FACSIMILE 08 9220 9801 E-MAIL admin@vicpet.com.au
ADDRESS Level 36 Exchange Plaza, 2 The Esplanade, Perth Western Australia 6000
VICTORIA PETROLEUM ASX CODE: VPE FOR MORE INFORMATION PLEASE VISIT www.vicpet.com.au

DHA - VP0103
     Westonia poised for a new life

     T
              he adage that great old mines                   BY MARK DIXON                        While the Edna May deposit is
              don’t disappear, but get better        Westonia has bought the 2.2 million       firmly the focus for Westonia,
              with age and a reasonable gold     tonnes/year Big Bell treatment plant          the company has been active in
     price is once again being proved in the     and is relocating it from its Cue base,       topping up its landholding in the
     Yilgarn district of Western Australia.      in a move estimated to fill more than          region, now controlling more than
         Westonia Mines Ltd intends pouring      500 semi-trailer loads. The company           700 square kilometres of the Westonia
     its first gold from its namesake mine        intends to add a gravity circuit to           greenstone belt.
     in the middle of next year, the fourth      recover the free gold which is a feature          It has also had a couple of intriguing
     production phase for the mine, 350 km       of the non-refractory orebody.                sniffs of nickel mineralisation, which
     east of Perth. At a current resource of         On latest figures, Westonia has an         led to a brief share market flurry last
     more than one million ounces, with a        indicated resource of 18.9 Mt to a depth      year before follow-up drilling proved
     minimum open cut life of six years and      of 300 metres, which at a grade of 1.33       disappointing. But Mr Drummond is
     a rich underground potential, Westonia      g/t yields 810 000 oz. At the same grade,     confident about the prospectivity
     is emerging as one of the bright stars on   including the inferred category,              of the region for gold and nickel and
     the gold mining horizon.                    the project is looking to 24.3 Mt for         says the first potential satellite gold pit
         It is the sort of overnight success     1.04 million ounces. Underground              has been targeted.
     story that has taken nearly a century to    potential, which has been initially               There have also been a couple of
     reach fruition. First mined in 1911 as a    tested to 700 metres depth, has               intriguing challenges to overcome,
     high-grade (more than 20 grams/tonne)       encouraged the company to think               not the least being the rare plant
     underground deposit, it has taken a         long-term, probably based on a                species eremophilla resinova rearing its
     broader outlook of the commercial           mechanized mining approach.                   head. Not an especially attractive plant,
     feasibility of a bulk-tonnage, low-grade                                                  with a small pink flower, it grows on the
     operation to bring Westonia back
     into production.
         The Westonia mine has historically
     produced more than 600 000 ounces of
     gold from the deposit, centred on the
     Edna May orebody. Westonia Mines is
     aiming for around 90 000 oz/year from
     the open cut, mining dirt at a cut off
     grade of about 1.3 grams/tonne.
         With a A$40 million capital cost,
     the mine will directly employ about
     100 people, who will be housed in the
     hamlet of Westonia and the nearby
     town of Merredin and bussed to work
     for what is likely to be a five-day
     working week.
         Westonia is negotiating financing
     for the project, based on a debt to
     equity mix of 60:40, which will include     Fresh start: The old open pit at Westonia. Above: The original head frame.
     sufficient production forward sold to
     satisfy the bankers. Managing directory        It is underground where Westonia’s         Westonia leases and few other places.
     Andrew Drummond is bullish on the           mining heritage comes up trumps for           A management plan, which included
     subject of the bullion price, believing     the new company. There is an existing         close work with the Kings Park Board,
     at current prices Westonia has a robust     workable decline to 264 metres,               Western Australia’s principal botanical
     economic future, with any gold price        courtesy of previous owner ACM                authority, secured the plant’s future and
     increase the icing on the cake.             Ltd, which Mr Drummond said will              paved the way for mine development.
         “We know we have a great gold           be extended to depth. Underground                 The company’s major shareholder
     system here,” Mr Drummond said.             resources have yet to be estimated,           is the respected Lion Selection
     “We have a robust resource, good            but the overall system contains about         Group, with 36% of the capital, a stake
     ground conditions and very favourable       5000 oz/vertical metre.                       it acquired before Westonia listed
     stripping ratios.”                                                                        in 2002. Issued capital is currently
                                                                                               101 million shares. P




6 Prospect June–August 2004
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Church 1355
     Underground option looms large at Argyle
     By JOHN McILWRAITH



     W      estern Australia’s diamond industry,
            one of the world’s biggest, is poised
     for a second wave of growth as the giant
                                                    quality, although much of the rest is cut
                                                    and polished in India for jewellery that
                                                    can be afforded by most people.
                                                                                                  and three years ago bought, for a very
                                                                                                  modest sum, tenure of the Ellendale
                                                                                                  prospects. Mining began two years ago
     Argyle mine moves closer to a major                However, the sprawling AK1 open cut       and in the first year 240 000 diamonds
     phase of development, and new                  near Kununurra will be exhausted within       were recovered, totalling 47 931 carats at
     projects emerge.                               three or four years; it is hoped that an      an average price of about A$220 a carat,
         Rio Tinto, owner of Argyle Diamond         underground mine, developed from the          much higher than the figure used in the
     Mines Pty Limited, is carrying out a           floor of this huge hole, will prolong the      mine’s feasibility study.
     A$70 million feasibility study into an         project’s life until at least 2020.               Last year the company began work
     underground mine below the vast open               Rio Tinto is optimistic about the         on a 2.2 Mt/a production plant and next
     cut in the Kimberley region, a venture         prospects for the second stage of             year a second mining and production
     which would prolong the project’s life by      development, but factors such as the          centre will be commissioned at Ellendale ,
     at least 13 years.                             strength of the Australian dollar will        greatly increasing diamond production.
         Kimberley Diamond Company is               be crucial.                                       There are a number of attractive
     expanding its existing mining operations           At least in the short term, the rise in   prospects at Ellendale and nearby Blina,
     in the region, and plans a new company to      world diamond prices has more than            which Kimberley Diamonds plans to
     exploit discoveries near Ellendale, the site   offset the stronger local dollar, according   exploit, partly through a new company.
     of the first major discoveries nearly three     to Kimberley Diamonds and Striker                 In late May, Kimberley announced
     decades ago.                                   Resources.                                    it had found the first new economically
         Argyle has been a legendary repository         As they establish new mines in the        viable diamond pipe in 30 years on the
     of diamonds, the biggest producer, by          Kimberley, they are encouraged by high        Ellendale project and would move to
     volume, in the world for nearly two            average prices for the relatively small       mine it as soon as possible. Although
     decades and a powerful influence on             parcels they have sold so far. Prices have    small, the pipe, named Kimberley 28,
     world markets.                                 risen by at least 10% in recent months.       had a grade estimated at 5.07 carats/100
         The operators not only successfully            Kimberley controls the Blina diamond      tonnes and an average value per carat of
     marketed much of their huge output             project, located in the lamproite-rich        more than US$300. All three previously
     independently of the Central Selling           Ellendale region of the Kimberley region,     known economic pipes at Ellendale were
     Organisation, but also played a vigorous       some 100 km east of Derby.                    discovered by CRA in the 1970s.
     role in creating new markets in the                But it has also had great success             Striker Resources is about to launch
     US for its diamonds, in conjunction with       in reviving the fortunes of the nearby        a major trial mining operation on its
     the Indian jewellery industry, one of its      Ellendale diamond prospects, which            Seppelt-2 prospect, one of a number in
     main customers.                                launched Australia’s first diamond boom        the Kimberley regarded by the company
         By last year, Argyle had produced a        30 years ago.                                 as highly promising.
     staggering 130 tonnes of diamonds, in              The pegging rush, that followed the           About 20 000 tonnes of ore near
     an industry where production is usually        announcement of discoveries there, by a       the surface is expected to yield more
     measured as a few carats per hundred           consortium which was the forerunner to        than 15 000 carats of diamonds worth
     tonnes of ore (a carat is a fifth of a gram).   the group which later launched Argyle,        A$1 million and a 1000-tonne sample
         When Argyle diamonds were first sold        was reminiscent of the hectic gold and        will also be extracted from the
     in Antwerp, the volumes were so great          nickel booms of previous decades.             Seppelt-5 deposit.
     that millions of dollars worth of the stones       The rush to the remote hinterland of          Striker Resources will also be mining
     were wheeled through the streets in large      Derby came to nothing, and the Ellendale      from the Merlin group of orebodies in the
     trunks, with a nonchalance that startled       consortium decided the diamond values         Northern Territory (formerly operated
     the austere traders.                           were insufficient to justify mining,           by Ashton Mining) and it has plans to
         Such a gesture was possible because        a decision reinforced when, soon after,       examine many attractive prospects
     although the volumes were huge, the            they found the Argyle treasure trove.         in the Kimberley. P
     value per carat was modest in most cases.          The management of Kimberley
     Only 5% of the mine’s output is good gem       Diamonds were more optimistic,




8 Prospect June–August 2004
Western Australian diamonds
                         Clean and free of conflict
 Love and emotion have long been associated with the marketing of diamonds. But, it is a different story
 at the pit face in some parts of the world, with blood and misery often linked to these sparkling gems of
 the earth. DoIR’s JOHN TERRELL expands...




I
    t is a troubled world out there with                                                           A spokesperson for Argyle Diamonds
    tension and conflict at seemingly                                                           said conflict diamonds were essentially
    every point of the compass.                                                                an African problem reflecting poverty,
   The resources sector has not escaped                                                        conflict, corruption and lack of
the turmoil, with some commodity prices                                                        governance. While they accounted for less
fluctuating wildly over the past year.                                                          than 4% of world production, they still
   For the diamond industry, the word                                                          affect the global image and acceptability
conflict is significant. The term                                                                of diamonds.
“conflict diamonds” has sinister                                                                    “As a result of the conflict diamond
undertones in some parts of the                                                                issue, we have seen a heightened interest
world, and is something from which                                                             in the development of brands which offer
Australian diamond producers are keen         Legitimate diamonds: Western Australian          a guarantee as to their country of origin,”
to distance themselves.                       diamond producers, Argyle Diamonds and           the spokesperson said.
   According to the United Nations,           Kimberley Diamonds, clearly support the latest       “Clean and green is rapidly emerging
conflict diamonds or “blood diamonds”          international diamond certification process.      as a potential marketing advantage.
as they are sometimes called, are uncut                                                        Argyle Diamonds and our sister mine
stones traded by rebel movements to           target systematic and organised theft            in Canada are well placed to use
finance weapons, fuel and other materials      as well as offer support to companies to         this advantage.”
that are used to undermine legitimate         resolve security problems.                           Argyle Diamonds began mining its AK1
governments.                                      Western Australian diamond                   orebody in 1985 and has since produced
   For example, in Sierra Leone,              companies Argyle Diamonds and                    more than 650 million carats of diamonds,
a vicious rebel army terrorised civilians     Kimberley Diamonds are right behind              ranging from gem quality to industrials.
by systematically hacking off their limbs.    the certification process, which requires             Currently, the Argyle mine produces
Many of the victims were children.            documentation of rough diamond                   about 30 million carats per annum,
   In 2000, ministers from several African    shipments to provide a paper trail from          or about 25% of the world’s rough
countries met in Kimberley, South Africa,     the mine to the retailer.                        diamonds by volume. Sales of rough and
where they agreed to take collective              The process has been likened to              polished diamonds from Argyle are worth
action to stop the flow of smuggled            registered mail, where the origins and           about US$370 million annually.
diamonds. They came up with an                destinations of parcels of diamonds are              Australia has introduced import
international diamond-tracking scheme         certified as they pass along various stages       and export controls on rough
called the Kimberley Process, which           of the supply chain. Participants agree          diamonds in order to participate
not only protects the interests of big        to keep documentation on file for no less         in the Kimberley Process.
diamond exporting countries like South        than three years.                                    Since January 2003 every shipment
Africa, Australia and Canada, but also less       While many jewellers say conflict             of Argyle rough diamonds must be
well-off countries which rely heavily on      diamonds are not a major issue for their         accompanied by a certificate issued by
diamond trading for their economic and        customers, the retailers, like most others       the Federal Department of Industry,
social development. The process, ratified      in the diamond trade, are keen to sell           Tourism and Resources. This certificate
by the World Diamond Congress in 2002,        diamonds that are sourced legally.               specifies that the shipment of diamonds
now embraces 60 countries involved                The illicit diamond trade constitutes        is of a non conflict nature and has
in extracting, processing and trading         only a small percentage of the total             been handled in accordance with the
diamonds. The control system is               industry. It is said to be in the order of 3%    Kimberley Process Certification Scheme
largely self regulating.                      to 4% of global diamond production, or           for rough diamonds.
   At a state level, a new Western            about US$8 billion per year.                         In a nutshell, both Argyle Diamonds
Australian Police Service Unit, named the         Conflict diamonds are usually mined           and Kimberley Diamonds are always
Diamond and Pearl Investigation Unit,         in African countries that lack strong            striving to achieve best practice in
has been formed to focus on investigating     central governments, allowing warlords           their industry, and they clearly support
crime and identifying security issues         and terrorists to raise tens of millions of      the latest international diamond
specific to the diamond and pearling           dollars to undermine governments and             certification process. P
industries. The unit will specifically         place civilians in danger.



                                                                                                         Prospect June–August 2004      9
     Jaguar leaps
    as new top cat on historic belt




                                                  Fast tracking: After intersecting massive sulphides containing 4.3% copper, 16.1% zinc
                                                  and 173 g/t silver during the discovery drill hole at Jaguar, north of Leonora, Pilbara Mines
                                                  Limited is now gearing up to commercialise the resource.




     O
                ne of the most productive        copper, 169 690 tonnes of zinc and 4.73        Bore between 1980 and 1985,” he said.
                mineral belts in Western         million ounces of silver.                      Mr Comb expects the Jaguar operation
                Australia, the 300 km stretch       Mining of the Jaguar orebody will           will have a similar five to six year mine
     between Wiluna and Leonora, has             be carried out though a standard               life as Teutonic Bore, and employ about
     turned up another highly promising          decline access method and mechanised           100 people full time when operating.
     mineral resource that should come into      mining, using contractors. The old                 He envisages it will take
     production as a fully fledged mine later     Teutonic townsite, 2 km from that              approximately nine months for
     next year.                                  mine, will form the basis for the              Jaguar to get into production, once a
         It’s the Jaguar base metal prospect,    Jaguar camp and the new plant                  go ahead is given, meaning that a likely
     54 km north of Leonora and about            will be built on the old plant site            start-up date is around September or
     4 km south of the historic Teutonic Bore    to minimise environmental and                  October 2005.
     base metal mine.                            rehabilitation issues.                             Since the nickel boom of the late
         Found by Pilbara Mines Limited             Similar to other base metal                 1960s and early 70s, the North Eastern
     during a regional drilling program in       operations in the area, the plan is to         Goldfields has proved itself to be one of
     early 2002, Jaguar is now the subject       truck concentrates to Leonora and have         the most productive base metal regions
     of a bankable feasibility study,            them railed to Esperance for export.           in Western Australia, hosting mines
     but work to date has indicated viable          The Goldfields gas pipeline passes           such as Mt Windarra, Leinster,
     project economics.                          20 km to the west of Jaguar,                   Mt Keith, Teutonic Bore, Cosmos,
         “The (prefeasibility) study indicates   which opens the possibility of a               Murrin Murrin, and, more recently,
     that the high-grade Jaguar copper, zinc     cheaper power source than a diesel             exciting new discoveries at Waterloo
     and silver resources at Teutonic Bore       fired station.                                  and Jaguar.
     will support a robust underground              Pilbara Mines managing director                 There have also been a number
     mining operation over a six year mine       Gary Comb said the Jaguar deposit              of significant gold discoveries
     life,” the company said.                    was amenable to an underground                 in the area during the last 30 years
         The A$43.4 million project was          operation, starting at a depth of around       including Bronzewing, Mt McClure,
     forecast to generate a profit of             250 m, and dipping at about 76 degrees         Granny Smith, Sunrise Dam and,
     A$87.7 million over the life of the mine,   to a depth of around 600 m.                    more recently, Thunderbox. P
     at an exchange rate of A$0.76 to the           “Jaguar is a totally sulphide
     US dollar, based on a 1.87 million tonne    orebody, almost identical to the deeper
     resource containing 55 400 tonnes of        sulphides that were mined at Teutonic




10 Prospect June–August 2004
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is one of three rigs in Atlas Copco’s Open     The ROC L8 keeps-up and out-          A grade control kit (RC) allows   Compare investment cost
Pit Series, the other two rigs – the ROC F9    drills far bigger rigs. And due to    maximum hole depth of 34m.        of any other rig in the same
& ROC L7 are tophammer rigs. All Open          its built in flexibility it has far   Conversion time from RC           class and you will find that
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     Emeralds: The envy of many
     E
             meralds, prized since ancient       trending towards establishing a world
             times as a symbol of immortality    wide outlet for finished jewellery.”
             and power, have hardly been a          Emerald is the transparent gem
     glittering success on the mining front in   variety of the mineral beryl, with the
     Western Australia.                          green colour resulting from trace
         However, given the State’s sound        amounts of chromium.
     production record for diamonds and             Most of the world’s commercial
     other precious and semi-precious            production currently comes
     gems, it could be only a matter of time     from Colombia.
     before local emeralds are mined and            In Western Australian occurrences,
     marketed in a significant way.               beryl in pegmatite veins is altered by
         Emeralds were first discovered in        contact metamorphism when the veins
     Western Australia at Poona, near Cue,       intrude typically ultramafic rocks
     in 1912. Since then, the main emerald       (the source of the chromium). The
     production sites have been Poona and        resulting emeralds are found in both
     Wonder Well, near Menzies.                  the contact schists and the pegmatite
         Intermittent production until 1980      veins. Another mode of occurrence
     totals 48 165 carats (9633 g) with a        for emerald, exhibited by the world’s
     recorded value of A$109 000. Between        finest Colombian varieties, is in low-
     1986 and 2001, recorded production          temperature veins in sediments.
     was 14 409 g with a disclosed value of         At Poona, initial mining exploited        The difficulty of separating the
     A$36 000, with most having been mined       near-surface material with the            emeralds from the mica schists made
     at Wonder Well. Western Australian          gemstones weathering out of the           the mine uneconomic and led to its
     emeralds mined to date have tended to       rock matrix. Only in 1979 did the Aga     closure in 1980. Production for the two
     be small and of low unit value.             Khan underground mine commence            years was 2 505 carats, valued at about
         At Wonder Well, owner Roger             operating in unweathered rock.            A$85 000. P
     Lindsay has hopes of starting a
     commercial operation. In 2002 he took
     a sample of emeralds to Thailand in
     search of a marketing deal. His visit
     coincided with a downturn in world
     economic conditions, but the Wonder
     Well emeralds attracted praise as being
     of similar quality to those from the
     Munzo mine in Columbia, regarded as
     the best in the world.
         Wonder Well has been defined
     to a depth of 30 metres, but similar
     geological structures in Zimbabwe
     and Brazil give Mr Lindsay confidence
     it extends to at least 100 metres.
     Preliminary production has yielded
     2 200 grams of emeralds from a
     270 tonne parcel, with a market value of
     A$226/tonne or A$28/gram.
         Marketing holds the key to the future
     of the mine.
         “I believe we have a world class
     emerald deposit waiting to be
     developed to its full potential,”
     Mr Lindsay said. “The next step is
     to establish a satisfactory marketing
     arrangement followed by expansion of
     operations moving up to value adding        Wonder Well: New commercial hopes emerge at Western Australia’s sole emerald mine
     of the high quality emeralds and            near Menzies.




12 Prospect June–August 2004
    Mid West
    ...on the boil


     Expansion proves a catalyst for growth
     A
             major infrastructure upgrade       George. It could ultimately also see            The port is hampered to a degree
             in the Mid West town of            Geraldton, currently the second             by having just one shiploader, a factor
             Geraldton is expected to spark     biggest throughput tonnage grain            which may have to be addressed should
     a strong economic upturn for the           port in Australia, become a minerals-       the export expansion continue at the
     region, becoming the catalyst for the      dominated port with exports including       expected rate. For example, once iron
     development of several important           iron ore, lead concentrate, copper,         ore has been loaded on board,
     resources projects.                        ilmenite, talc and garnet. Potentially,     the shiploader must be washed
         A recently completed A$103 million     depending on the successful                 down, a process which takes up to three
     port upgrade has already seen the          development of new oil fields in the         days. The ideal option, according to the
     successful development and export of       Perth Basin, it could also become the       port, would be to have a separate, iron
     iron ore from the new Tallering Peak       base for oil exports to Asia and Europe.    ore-dedicated, loader.
     hematite mine, the first iron ore to           The upgrade has, in effect,                  The Western Australian State
     be exported from the Mid West in           unplugged a stoppage which could lead       Government has forecast that the
     30 years. More importantly, it allowed     to a torrent of investment. “Previously,”   new wave of expansion could see
     the creation of export agreements with     said Mr George, “We couldn’t even load      Geraldton’s population double to
     China which are expected to underpin       Handymax ships” which have a draft          50 000 within 10 years. It also provides
     long-term growth of the Mid West iron      of between 9.5 and 12.4 metres and          the Mid West region with a focused
     ore industry.                              a deadweight of up to 50 000 tonnes.        facility for export which apart from
         The upgrade of facilities is being     Even the smaller Handysize ships            allowing new resource developments
     boosted by an A$88 million transport       (draft 7.7–11.5 metres and deadweight       could potentially lead to value-adding
     corridor, providing a new southern         up to 35 000 tonnes) were often partly      industries as crucial project economics
     rail and road link into the city and       loaded in the port and then sailed          are enhanced by more efficient
     overcoming a serious bottleneck            south to other ports in the State to be     transport costs.
     imposed by the existing foreshore          “topped up”.                                    “The port expansion has opened
     system. This will also have the benefit        Handymax ships now taking on             the floodgates for its ability to cater for
     of removing the physical barrier           iron ore from the new Tallering Peak        the whole Mid West region, said the
     between city and sea which has been a      project are also an ideal fit with           city’s mayor, Vickie Petersen. “The port
     blight on Geraldton’s development for      their destination ports in China’s          itself has been inundated with inquiries
     decades. Work on the corridor,             Yangtze delta, an important factor in       from potential users.” The A$88 million
     by Thiess Pty Ltd, began in March          the export deals struck by Tallering        southern transport corridor allowing
     with practical completion expected         owner Mt Gibson Iron. “It has made          the associated redevelopment of the
     in April 2006.                             a huge difference,” Mr George said.         Geraldton foreshore was regarded as a
         The port upgrade, which included       In targeting its services to Mid West       major incentive for the community.
     deepening the harbour and the creation     enterprises, over alternative ports         “It is amazing to be part of Geraldton at
     of new berths, has put Geraldton port on   Esperance, Kwinana or the Pilbara, the      the moment,” Ms Petersen said. P
     par world-wide for handling medium-        port is promoting potential land and
     sized vessels, according to Geraldton      sea freight savings.
     Port Authority chief executive Peter


14 Prospect June–August 2004
China bound: Tallering Peak iron ore being shipped from Geraldton at a rate of 1.65 Mt/a.




Mount Gibson the face of the future
T
        he new face of the resources              Ore is currently mined from the T4 pit,       “What has changed in the past couple
        industry in Western Australia’s        with an on-site workforce of 50 on a         of years has been the huge growth of steel
        Mid West was unveiled in February      10 day on–four day off roster, and trucked   production in China,” Mr Johnson said.
as the Fei Feng Shan sailed out of             80 km to the Mid West town of Mullewa             In particular, that production has
Geraldton harbour with 38 000 tonnes           to be railed 100 km to Geraldton.            become more technically sophisticated,
of iron ore destined for Nanjing, China.       Tallering ore is a high-grade product with   with blast furnaces requiring more pellet
    The first shipment in 30 years, the         low phosphorus by Australian standards       feed in their burden, or blend as it is
boat to China carrying the Tallering Peak      and low sulphur content. All production      known in the trade. It is that scenario
hematite iron ore represented a key step       has been forward sold to the Hong Kong-      which forms the basis for Mount Gibson’s
in the development of deposits which           based Asia Iron.                             long-term plans. Those plans include
have lain dormant for decades. It also            “Tallering Peak is our first mine.         potential magnetite operations at Mount
marked a coming of age for producer            We’re now moving to develop the              Gibson, where 200 million tonnes of
Mount Gibson Iron Ltd.                         hematite resource at Mount Gibson,           resource have been positively identified
    Tallering Peak was to have been            where we will produce 1.5 million            and a further possible billion tonnes
the cornerstone of a billion dollar            tonnes a year for at least 10 years,”        considered as a potential resource.
development by the controversial               Mount Gibson managing director Brian             That future development plan would
Kingstream/An Feng consortium,                 Johnson said. Mount Gibson, 85 km from       be based on beneficiating the ore on
beneficiated then shipped through a             Perenjori, should be on steam by next        site and piping slurry through a 300 km
new port at Oakajee. When that proposal        year and will also be exported through       pipeline to Geraldton.
failed, it left the deposit untapped until     Geraldton, with the ore forward sold for         “At that stage we would also look at
picked up by Mount Gibson.                     the life of mine to Stemcor Pte Ltd and      a direct reduction pellet plant in the
    Tallering Peak, where mining               Sinom (Hong Kong) Ltd.                       Mid West,” Mr Johnson said.
operations commenced in October 2003,             However it is the voracious Chinese           The company is also, in conjunction
has a resource sufficient for a mine life       demand for steel mill feed which paves       with Asia Iron, looking to develop the
of a minimum of five years, based on            the way to the future for Mount Gibson,      Walla Walla iron ore deposit and the
producing 1.65 million tonnes of iron          the company. It has signed a deal with       old Koolanooka deposit, 40 km north
ore for export a year. Like the former         Asian Iron to sell 10 million tonnes of      of Perenjori. P
“Mount” Whaleback at Newman and the            magnetite iron concentrate per year for
former “Mount” Tom Price, both now             a minimum 15 years to supply a planned
mined to vast open pits, the Peak should       four pellet plants in China.
simply be known as Tallering by then.




                                                                                                      Prospect June–August 2004     15
    Mid West
     New golden glow over the region
     T
             wo new gold projects in Western     soil cover and Troy claimed it as a         said the chairman, Peter Jermyn.
             Australia’s Mid West could          victory for persistent geologists on the        “This is similar in size to the belts
             substantially add to the region’s   complex Sandstone greenstone belt.          hosting the Plutonic and Big Bell gold
     existing healthy output, which has              Its proximity to Troy’s existing        mines. We have a chance for a world
     already been given a major boost by         Bulchina treatment mill also had            class discovery.”
     two important recent discoveries at         analysts pencilling it in for almost            AXG hopes to prove sufficient
     Wiluna and Sandstone.                       immediate development. Company              resources for a stand-alone project,
        The discoveries, by Agincourt            chairman, John Jones, said drilling had     and has earmarked A$1.5 million in the
     Resources and Troy Resources                proved mineralisation over 210 metres       first two years for the hunt, but has
     respectively, have been acknowledged        strike length and was confident it           several existing plants within trucking
     as among the most significant in those       would be extended to at least               distance should early cashflow need
     areas for many years. Agincourt struck      500 metres. Lord Nelson also                to be generated.
     almost immediate reward with its new        appears reasonably high grade,                  AXG commissioned Geoinformatics
     high grade Calais orebody, which is         with drilling including 17 metres at        Exploration Australia for the review,
     between the East Lode and Bulletin          7.67 g/t gold, 16 m at 9.5 g/t and 24 m     which identified 30 targets after
     orebodies, both of which host more          at 9.86 g/t.                                conducting an extensive survey of
     than one million ounces of gold.                Three fledgling projects are Batavia’s   the Warda Warra greenstone belt.
        Regarded as potentially the most         Gullewa gold/copper development             It also found about 50% of the area was
     important strike since Bulletin was         near Yalgoo, AXG Mining’s Western           under transported cover and strongly
     discovered in the 1990s, Calais was an      Queen near Mt Magnet and Goldcrest          leached regolith materials, which AXG
     unexpected find and came less than           Resources’ re-evaluation of the historic    said presented an excellent opportunity
     two months after Agincourt completed        Youanmi field.                               for new discoveries.
     a management buyout from former                 Batavia’s exploration program           (See regolith article, Page 23).
     owner Newmont Mining.                       at Gullewa has outlined a resource              The historic Youanmi field is once
        It is just 100 metres from existing      equivalent to 319 000 oz of gold with       again under the microscope, this
     underground workings in an area that        drilling at the Deflector deposit aimed      time by Canadian company Goldcrest
     was not considered a major target.          at proving up more than 500 000 oz          which is searching for reoccurrences
     Managing director Tim Sugden said the       equivalent. Bankable feasibility work       of the rich Penny West deposit in the
     discovery would add to reserves and         was due to be completed at the end          30 km corridor between that mine and
     lower overall gold production costs at      of the June quarter ahead of                Youanmi.
     Wiluna, where gold was first discovered      a decision to commence mining.                  Goldcrest has inherited the village
     in 1896. Calais includes bonanza zones      The resource so far consists of             and gold plant, including the bacterial
     of 18.5 metres at 26.9 g/t gold.            1.42 million tonnes at 4.7 g/t gold,        oxidation plant, but would
        Further drilling results reported in     1.1% copper and 8.1 g/t silver.             initially target oxide resources,
     May showed the strike length at Calais          AXG, which floated and joined the        said Mike Higgins, the company’s
     exceeded 1000 metres and remained           ranks on the Australian Stock Exchange      vice-president of exploration and
     open at the north, south and at             in May, is bringing into play a new         business development.
     depth. More importantly, the orebody        analysis of 30 years of geophysical,            “It’s a challenge,” he said,”But the
     appeared to be strengthening in both        geochemical and geological data from        beauty of the Penny West/Youanmi field
     grade and width towards the previously      the Warda Warra (Western Queen)             is that it is high grade.”
     unexplored southern zone. The latest        belt, 80 km northwest of Mt Magnet.             Head grades at Penny West ran to
     hits included 65 metres at 4.49 g/t.            The Western Queen, with the             around 22 g/t and were notable for
        Troy’s Lord Nelson discovery             Western Queen South deposit, has            their abundant visible gold. Goldcrest
     at Sandstone has been hailed as             gold resources of 130 000 oz, with both     also has a remaining 40 000 to 60 000 oz
     containing more than 0.5 million            deposits open at depth and along strike.    of gold in an oxide resource left when
     ounces of gold and is amenable to               “The company has identified              previous mine owner Gold Mines of
     development by low cost open cut.           numerous other targets earmarked for        Australia shut up shop in 1997. P
     The discovery was hidden under heavy        immediate RC and RAB drilling,”




16 Prospect June–August 2004
                                                                                             Mid West
    Garnet proves its cutting edge
    A
           quiet success story on the Batavia       Two years later Target was approached    an ilmenite by-product. In 2002 GMA
           coast continues to develop with      by a syndicate which held leases             acquired the ISO accreditation for its total
            the Port Gregory garnet sands       containing garnet a few kilometres inland    operations.
    mine proving its worth on world markets.    on Lynton Station. At that time garnet was       GMA is now jointly owned by Garnet
       In a highly competitive field the         regarded by the mineral sands industry       International Resources Ltd and Barton
    mine, operatd by private company            as little more than a nuisance mineral of    International Inc, which distribute the
    GMA Garnet Pty Ltd, has demonstrated        no value and traditionally garnet used for   product throughout the world.
    the Western Australian product              sandpaper, grinding powders and other            The company in 1998 required a new
    can match it with the best, despite         abrasive uses                                wet plant capable of increased
    aggressive price under-cutting by           came from hard rock resources in the         production rates to meet growing
    south Indian producers.                     United States.                               demand. That led to a facility,
       Garnet sand of the type mined near           But trial batches of Port Gregory        known as the Hose plant, to be built on
    Port Gregory (almandine garnet) is highly   garnet sand prepared for market              nearby land, which has since its inception
    regarded for its abrasive properties as a   evaluation drew positive responses           exceeded design expectations.
    sandblasting medium although in more        from both local and overseas potential           Although GMA faces increasing
    recent years the use of garnet sand for     customers leading to a decision for          overseas competition in its operations,
    water-jet cutting has emerged as another    a commercial operation.                      made worse by current unfavourable
    important market.                               The mine from then went through          exchange rates and high shipping costs,
       The project is centred on the Port       several major upgrades, with wet-            its long-term reputation for consistent
    Gregory resource, about 100 km north        processing equipment at the minesite         quality of product and reliability of
    of Geraldton, where the founding            and dry-processing equipment in              supply is helping to meet the challenge. P
    company Target Minerals NL first pegged      Geraldton being continually improved to
    several mining tenements for mineral        treat the exceptionally rich Lynton ore.
    sands in 1971.                              By 1997, the deposit was also yielding




                                                                               MORE THAN $60m RAISED


 INVESTMENT MARKET LEADERS
                                                     In the current financial year, Montagu has raised capital in excess
                                                     of $60 million for emerging companies, including the following:

                                                     A1 MINERALS LIMITED • AUSMET MINERALS LTD • BATAVIA MINING LTD
                                                     UNIVERSAL RESOURCES LTD • NAMAKWA DIAMOND COMPANY LTD
                                                     RED METALS LTD • SANDFIRE RESOURCES LTD • TANAMI GOLD LTD
                                                     LEGEND MINING LIMITED • SHERLOCK BAY NICKEL CORPORATION LTD
                                                     DE GREY MINING LTD • KIMBERLEY DIAMOND COMPANY LTD

                                 adam davey          If you would like to receive further information or one of our Research
                          Managing Director          Reports call us on (08) 9225 2800.




                                                                                               www.montagustockbrokers.com.au

Citibank House, Level 2, 37 St Georges Tce Perth Ph (08) 9225 2800 Fax (08) 9325 4311 PO BOX Z5005 Perth, St Georges Tce WA 6831
                                                                                                                    AFS LICENCEE NO. 238333
     Woodside
     an Australian adventure

  W
               oodside was born out of the
               oil fever that gripped the
               nation in the months following
  Australia’s first oil discovery at Rough
  Range near Exmouth in Western Australia
  in December 1953.
      Beginning life on 26 July 1954 as
  Woodside (Lakes Entrance) Oil Co NL,
  the company was one of many speculative
  junior explorers to raise money and start
  the uncertain search for black gold.
      Taking its name from the South
  Gippsland town of Woodside, it was a
  favourite among many farmers in the
  region, and the initial 375 000 pound
  (A$750 000) share issue in September 1954
  was over-subscribed by more than
  200 000 pounds (A$400 000).
      Its first oil exploration permit covered
  520 sq km of coast along the Ninety Mile
  Beach, near the small hamlet of Woodside,
  in Victoria. In 1956, it secured the first
  offshore exploration licence to be granted
  in Victoria – a 2600 sq km stretch of the
  Ninety Mile Beach that took it 2 km into
                                                  Shell later sold half its share to what is now   In September 1980, Woodside signed
  Bass Strait.
                                                  ChevronTexaco, while Burmah sold half its        an agreement with the State Energy
      At the time, it was looking at drilling
                                                  share to BP.                                     Commission of Western Australian that
  in water up to 60 metres deep,
                                                      Exploration drilling began in 1967,          included a 95% take-or-pay provision that
  an unremarkable depth today, but a
                                                  and it was not until 1971 that Woodside          was critical to the project proceeding.
  world-record drilling depth in the 1950s
                                                  made the major gas and condensate                On 16 August 1984, the first deliveries
  with the then record at just 33 metres,
                                                  discoveries at Scott Reef, 425 km north          of gas were made to Perth via the
  and that from a jetty-mounted rig in the
                                                  of Broome, and North Rankin and Angel,           commission’s 1500 km pipeline from
  Gulf of Mexico.
                                                  north of Dampier. In 1972 the Goodwyn            Dampier to Bunbury.
      The company had looked at extending
                                                  gas and condensate field was discovered              The coming of age for the North West
  the acreage further into Bass Strait, but the
                                                  to the west of North Rankin.                     Shelf project and for Woodside came on
  technology to explore such rough water
                                                      In 1979, the project participants signed     28 July 1989 with the first liquefied natural
  did not then exist.
                                                  an agreement with the Western Australian         gas cargo departing for Japan from the
      Fate, it seems, had determined
                                                  Government for the development of                Burrup Peninsula.
  Woodside’s future to be on the other side
                                                  the North West Shelf project and the                Today, Woodside is a leading Australian
  of the continent.
                                                  Commonwealth Government issued a                 resources company and one of the nation’s
      In June 1963, Woodside received
                                                  permit to export liquefied natural gas for        most successful explorers, developers and
  permits for more than 367 000 sq km
                                                  20 years from 1986.                              producers of hydrocarbon products.
  off the Western Australian coast.
                                                      This led to Woodside raising a massive          Underpinned by world-class Australian
      Under no illusion about the magnitude
                                                  A$1.4 billion loan to fund its share of          assets and people who have highly
  of the task ahead, Woodside set about
                                                  the development. This was the biggest            competitive professional skills it is
  selecting potential joint venturers. A joint
                                                  unsecured loan for a private company in          poised to grow into a truly international
  venture agreement was signed in January
                                                  the world, and set a record that stands          business. P
  1964 with Burmah Oil and Shell, each
                                                  today, ensuring Australian operatorship
  taking a one third share.
                                                  and participation in the project.




18 Prospect June–August 2004
 Looking to
 the future GOING GLOBAL
A   fifth LNG train, with China
    supply to begin in 2006,
and an increased domestic
                                   A$4 billion
gas market are on the cards
for Woodside Energy.

The company’s game plan
                                   in investment
also intends to increase the
North West Shelf reserves
base through exploration and
sustain the oil production
                                   to come
levels of Cossack Pioneer.


                                   W
                                             oodside is no longer just a local
That comes after a busy year,                company.                                  explore for oil and gas over about 20 000 sq km,
one in which Woodside has                                                              Algeria where the company’s first revenue
set several key objectives,           By building its existing business, turning       has begun flowing from non-Australian
including maximising               discoveries into new projects and creating          operations, and the Canary Islands,
production and further             new business, it has more than A$4 billion in       Kenya and Sierra Leone.
reducing unit costs while it       investment planned over the next few years.             Woodside’s Australian exploration program
commissioned its second               These include the:                               covers 62 permits and retention leases and 15
trunkline and brings the LNG       • A$1.5 billion Enfield Oil Project, 130 km west     production licences covering more than
Train 4 on stream.                   of Onslow, with start-up expected in late         185 000 sq km. Internationally, Woodside’s
                                     2006;                                             portfolio covers 165 exploration blocks – 34 in
Outside of the North West                                                              Africa, 129 in the Gulf of Mexico, and two in
Shelf venture, Woodside’s          • A$500 million Blacktip gas project, off the
                                                                                       Papua New Guinea.
share of combined reserves           Wyndham coast, which will supply natural
                                                                                           Woodside’s strength is underpinned by the
of the Enfield and Vincent oil        gas to the Alcan alumina refinery in Gove in
                                                                                       North West Shelf Venture, one of the world’s
discoveries, about 130 km            the Northern Territory by 2007;
                                                                                       premier LNG projects.
west of Onslow, increased last     • A$750 million Otway Basin project, in
                                                                                           As one of Australia’s major oil and gas
year to 171.5 million barrels at     Victoria, which is expected to supply up
                                                                                       companies, Woodside operates facilities that
the proved category. The lift        to 10% of south east Australia’s current gas
                                                                                       account for more than 40% of Australia’s
came largely through technical       demands from 2006;
                                                                                       hydrocarbon production.
and commercial studies             • Development of a fifth production train on             Its expansion together with a number of
associated with the Enfield           the North West Shelf; and                         other projects in Australia and the Timor Sea
development.                       • The Chinguetti oil and gas field off               will see Australia will remain central to
                                     Mauritania in west Africa, one of the world’s     Woodside’s operations, accounting for 70% of
Further exploration drilling         most promising new petroleum provinces.           its production by 2015 even with the expansion
is planned with Woodside
                                      Elsewhere, Woodside is working on gas            of overseas activities.
planning for a start-up in the
                                   market development in the Timor Sea through             This growth strategy was one of the factors
fourth quarter of 2006.
                                   the Sunrise gas project, 450 km north west of       that led Don Voelte to join Woodside in April
A shorter time frame is            Darwin, and the Browse gas project off the          2004 as Chief Executive Officer and Managing
planned for the Mutineer-          Kimberley coast, 425 km north of Broome.            Director. US born, Mr Voelte has extensive
Exeter oil project, 150 km            In the United States, it is working to develop   global experience in the oil and gas industry,
north of Dampier, with             the Midway gas project and the Neptune oil          having held senior positions in Mobil and
development drilling leading to    project in the Gulf of Mexico.                      Atlantic Richfield Company. P
an expected project start-up          In Africa, exploration is centred on Libya,
in the middle of next year. P      where Woodside has a 30-year agreement to




                                                                                                       Prospect June–August 2004      19
Celebrating 50 years of an Aussie icon
A
        ustralia’s premier oil company      As well, it has several Australian-based     employs about 2100 people and has
        celebrates its golden               projects under development, and a            its headquarters in Perth.
         anniversary in July.               rapidly expanding international business.        In 2003, the company’s revenue from
    Starting as a junior explorer in           The company has doubled in the past       LNG, natural gas, LPG, condensate
Victoria’s Gippsland, Woodside Energy is    five years. Today, it is the operator         and crude oil totalled A$2019 million.
now the operator of Australia’s             of more than 40 joint ventures on behalf     Operating cash flow after tax and net
single biggest resource project, the A$14   of 34 participants and has                   interest was A$1203 million, and net
billion North West Shelf project.           grown from its single-asset base on the      profit after tax (before significant
                                            North West Shelf to interests across three   items) was A$527 million. Return on
                                            continents.                                  average capital employed (before
                                               Woodside is Australia’s biggest           significant items) was 14.9%.
                                            publicly listed independent oil and gas          Woodside’s core areas of focus
                                            exploration and production company           are Australia, the United States
                                            and is one of the nation’s most successful   and Africa.
                                            explorers, developers and producers of           In Australia, the company’s producing
                                            hydrocarbons.                                assets are based on the North West Shelf
                                               The company, which is listed              venture, where it produces LNG, natural
                                            on the Australian Stock Exchange,            gas, LPG, condensate and oil from fields
                                                                                         off Western Australia. Woodside also has
                                                                                         major exploration and development
                                                                                         interests in Western Australia, including
                                                                                         the major new oil province based on the
                                                                                         offshore Vincent, Enfield and Laverda
                                                                                         fields, and significant gas discoveries
                                                                                         in waters off Victoria and the Northern
                                                                                         Territory.
                                                                                             In the United States, Woodside has
                                                                                         interests in several deepwater and
                                                                                         shallow water exploration blocks in the
                                                                                         Gulf of Mexico, including the Neptune oil
                                                                                         and Midway gas discoveries.
                                                                                             In Africa, Woodside is operator of the
                                                                                         Chinguetti, Tiof and Banda oil and gas
                                                                                         discoveries in offshore Mauritania.
                                                                                         It also has exploration interests in Libya,
                                                                                         Kenya, Sierra Leone and the Canaries,
                                                                                         and is a partner in major producing gas
                                                                                         and condensate fields in Algeria.
                                                                                             Woodside operates two floating
                                                                                         production, storage and offloading
                                                                                         facilities, including the Northern
                                                                                         Endeavour which is based on one
                                                                                         of Australia’s largest oil fields, Laminaria
                                                                                         and Corallina in the Timor Sea, and the
                                                                                         Cossack Pioneer based on the North West
                                                                                         Shelf. It also operates the Legendre,
                                                                                         North Rankin and Goodwyn platforms off
                                                                                         Western Australia. P




                                                                                                   Prospect June–August 2004      21
    Perth showcase for GAAP

     G
             as is the rapidly emerging         The Western Australian Premier,
             fuel of choice, with the           Dr Geoff Gallop, has endorsed the
             Australasian-Pacific region         event. “Perth is rapidly emerging as
     showing some of the strongest              a centre of technological excellence
     demand in the world for natural gas        and business for the region’s oil and
     and Western Australia fast becoming        gas industries,” he said. “Our location
     the regional hub for trading in the        and record for reliable supply
     energy source.                             make Western Australia an ideal           That is expected to be driven by
                                                location of first choice for basing        industrial and consumer demand of
     In the region there are seven major        additional gas processing business,       the major regional economies such
     suppliers and the same number of           operations and research to service        as Japan, China and the United
     major buyers. All will be represented      the region’s markets.”                    States, where natural gas demand
     at a major event being staged in Perth                                               is growing at an unprecedented rate
     from the 11th to the 13th of October,      Organisers point to the very              prompting the nation to search for
     the Gas AustralAsia Pacific Exhibition      significant gas projects either under      new suppliers.
     and Conference.                            way or at the point of implementation
                                                as representing real opportunities        For more details contact Colin
     With a theme of expanding horizons         for growth for companies supplying        Swain (Exhibition Manager for the
     and developing opportunities, it           to the gas industry. Demand for           CWC Group, London) by email,
     will be the first international gas         LNG alone is expected to double           cswain@thecwcgroup.com or Renee
     conference and exhibition to be held       in the region by 2010, with the Asia      Ralph in Perth on +61 8 9389 5833,
     in the State’s new convention centre       Pacific area responsible for 69%           email rralph@thecwcgroup.com or
     and is bringing together a global          of world trade.                           visit www.gaap2004.com P
     group of speakers, delegates and
     exhibitors.




     New hot spot survey
     T
            he Western Australian
            Government and a wide range
            of industry are working together
                                                wins wide support
                                                Key goals for the survey include:
     to support research, identification,                                                      PIEC recommended that this
     management and recording of                • Data on distribution of the flora
                                                                                          information be recorded in a database
     biological data in the Pilbara.              and fauna in the region,
                                                                                          and that CALM should be the data
         The Department of Conservation         • Appraisal of the biodiversity
                                                                                          custodian. CALM scientists are
     and Land Management (CALM),                  conservation in the region,
                                                                                          progressively undertaking the data
     assisted by the Western Australian         • A list of threatened species and
                                                                                          capture of these reports.
     Museum, has commenced a                      ecological communities and look
                                                                                              Industry is supportive of both the
     A$12.5 million five-year biological           at recovery programs,
                                                                                          survey and database and recently
     survey program for the Pilbara region.     • An improved basis for assessing
                                                                                          contributed funds towards maintaining
         The survey involves four years           environmental impacts of
                                                                                          the database with additional
     of field research followed by one             development proposals.
                                                                                          funding support coming from
     year of analysis, interpretation and          Complementary to the survey is
                                                                                          the Department of Industry and
     documentation. More than 800 sample        CALM’s bibliographic database that was
                                                                                          Resources on behalf of PIEC.
     sites having a range of soil types and     initiated by the Government’s Pilbara
                                                                                              The information being collated in
     landforms, climate and vegetation          Iron Ore Environment Committee
                                                                                          the survey and the bibliographic
     communities will be selected to provide    (PIEC) in 2000. The initial review
                                                                                          database will provide a useful
     information about the ecological           of all available biological survey
                                                                                          resource tool for industry operating
     diversity of the Pilbara region.           data and reports undertaken by
                                                                                          in the region.
         The Pilbara region is a national       Biota Environmental Services
                                                                                              For more information about the
     biodiversity hot spot and the survey is    on behalf of PIEC in 2000 indicated
                                                                                          Pilbara Biological Survey and the
     necessary because the overall pattern of   that approximately 1300 biological
                                                                                          bibliographic database, please refer
     biodiversity knowledge in the Pilbara is   reports had been produced for the
                                                                                          to CALM’s nature base website at
     not well understood.                       Pilbara region.
                                                                                          www.calm.wa.gov.au/science/pilbara_
                                                                                          biosurvey.html P

22 Prospect June–August 2004
Rich rewards in and under the regolith
BY PAUL ATHERDEN
DEPARTMENT OF INDUSTRY AND RESOURCES




R
         egolith, the technical term for              Many organisations are involved             also play critical roles in developing an
         the layer of younger, weathered          in the generation, dissemination and            understanding of the Earth’s often taken-
         rock and dirt that overlays the          application of this knowledge.                  for-granted, blanket of dirt.
Earth’s bedrock, continues to provide             Western Australian government agencies             One highly respected institution is
a huge slice of Western Australia’s               play an important role, with the                the Cooperative Research Centre for
resource pie.                                     Department of Industry and Resources            Landscape Environment and Mining
    The Department of Industry and                (DoIR) in particular maintaining                Exploration, whose name is often
Resources estimates that last year                and providing access to volumes of              shortened to LEME. LEME recognises
more than 40% of the State’s mineral              hard-won data through its web site.             that exploration geoscientists need to
production was extracted from this                At www.doir.wa.gov.au you can                   understand chemical, physical and
disordered layer of transformed, often            interrogate data stores such as WAMEX           biological processes acting in geological
transported material.                                                                                             time, so that they can
This production included                                                                                          interpret field data such
more than A$10 billion                                                                                            as drill cores, geophysical
worth of iron, alumina,                                                                                           surveys and regolith
mineral sands and lateritic                                                                                       mineralogy. Scientists
nickel, as well as a portion                                                                                      working under LEME’s
of the State’s gold.                                                                                              Mining Exploration arm
    In recent decades,                                                                                            can identify the traces and
however, geoscientists and                                                                                        effects of desert processes
explorers have become                                                                                             and of ancient rivers and
convinced that the regolith                                                                                       lakes, both fresh and
hides mineral riches in                                                                                           corrosive, enabling them
quantities that dwarf the                                                                                         to explain, eliminate and
tonnages already extracted.                                                                                       predict areas of mineral
    For more than a century                                                                                       prospectivity.
geologists, prospectors and                                                                                          They use fluid
savvy investors have known                                                                                        dynamics, elemental
that huge tracts of Western                                                                                       microanalysis and
Australia are covered by                                                                                          sophisticated mapping
a rich layer of broken                                                                                            techniques and
and weathered material.                                                                                           collect state of the art
The residue of millions                                                                                           electromagnetic, magnetic
of years of erosion, the                                                                                          and gravity data from
regolith varies in depth                                                                                          airborne equipment.
from centimetres to several                                                                                       Data derived from
hundred metres. While it                                                                                          helicopter-based electro-
contains valuable mineral                                                                                         magnetic technology
deposits, it casts an earthen                                                                                     (HOISTEM) was recently
veil over the unbroken                                                                                            integrated with other
bedrock below, the source                                                                                         exploration data to
of the regolith’s riches                                                                                          produce a holistic
and host to undisturbed                                                                                           approach to regolith
primary deposits.                                                                                                 mining in the manganese-
    Dealing with Western             Reading the regolith: This Hills-hoist like antenna dangling                 rich Woodie Woodie area.
Australia’s regolith is a            beneath the helicopter probes deeply into wide areas of regolith,           LEME geoscientists
huge task and many                   identifying hidden ore bodies and structures.                           and those working with
dedicated people in a                                                                                        other local organisations are
diverse range of organisations are                which contains detailed exploration            developing innovative techniques to “see
striving to see into it and through it,           activity data. You can also buy                through” the regolith in a bid to identify
to unravel its secrets and exploit its            books addressing regional geology              the rich mother-lodes in the underlying
riches. Because exploration practices             and use sophisticated mapping                  primeval bedrock. Their efforts in
developed overseas are often of limited           software (GeoVIEW.WA) to view and              developing world-class exploration
use in penetrating Western Australia’s            print a seamless regolith map of any           techniques are significantly enhancing
regolith, methods and technologies                part of the State.                             the prospectivity of Western Australia,
based on locally developed knowledge                  Universities, mining companies and         reinforcing its impressive ranking as one
are required.                                     cooperative research centres (CRCs)            of the world’s great mineral provinces. P




                                                                                                           Prospect June–August 2004       23
R2D3: May the force be with you
I
   t’s not a new generation Star Wars,            technology for the oil and gas industry,          “And who knows what can be achieved
   but still a new frontier for modern            initially covering integrated reservoir           when Australia’s largest publicly listed
   energy technology with R2D3 being              characterisation and management to                oil and gas company joins forces with
launched in Perth.                                optimise recovery rates.                          Australia’s biggest scientific research
                                                                                                    agency and the two leading Western
It has come about through three leading           It will also focus on gas utilisation,            Australian universities?”
research institutions and Australia’s             including gas-to-liquids, small-scale
biggest publicly listed oil and gas               LNG technologies and gas compression              Woodside’s chief operating officer,
company joining forces for the creation of        engineering to improve methods for                Keith Spence, said the joint venture
a world-class energy research centre.             extracting and transporting gas.                  would allow the company to better
                                                                                                    direct its research spending.
The partnership, between CSIRO,                   Under the agreement the partners will
the University of Western Australia, Curtin       share in the administration costs of R2D3,        “It will also result in Western Australia
University of Technology and Woodside             which will be based at the Australian             emerging as a key centre of Australian,
Energy, establishes R2D3 – which stands           Resource Research Facility                        regional and if not world research into
for “Research to Discover, Develop and            at Technology Park in Perth.                      cutting-edge oil and gas technologies,”
Deploy energy solutions for                                                                         he said.
a sustainable future”.                            CSIRO Petroleum chief professor
                                                  Beverley Ronalds said the three research          The agreement marked a significant step
Woodside views the move as a way                  institutions had recognised the need              forward for the State, said Professor
to better direct more than A$25 million           to collaborate as companies such as               Mark Bush, the Dean of UWA’s Faculty
it expects to spend over the next five             Woodside sharpened focus on delivering            of Engineering, Computing and
years on oil and gas research.                    high-value research and development for           Mathematics.
The alliance will focus on research               their business.
and development, training and                                                                       “This agreement builds on the individual
competitive technical intelligence.               “Business today expects a strong                  research strength of each institution
                                                  emphasis by research institutions on              to create the critical mass required to
R2D3 is expected to have a budget this            deploying technology to realise returns on        advance the potential of one of WA’s
year of up to A$5 million. Research and           investment,” Professor Ronalds said.              most vital resource industries,” he said. P
development is to centre on developing


                                                                             WESTONIA MINES LIMITED




                                                                                       210m
                                                                                             Legend
                                                                                                  BFS Base case pit to recover ~ 500,000oz
                                                                               300m               Decline to 264m
                                                                                                  +1m oz resource to 300m
                                                                                      Hole No.   Hole Depth   From (m)   To (m)   Grade (g/t Au)
                                                                                      WDD043        416          370      371        32.0
                                                                                                                 393      396        33.8
                                                                                      WDD054       484.5        410       415        15.6
                                                                 WDD043
                                                                                                                439       440        12.5
                                                                                      WDD055        512        256.8     258.7        8.6
                                                            WDD054
                                                                                                                403       404         8.0

 TARGETING                                              WDD055
                                                                                      WDD083        607
                                                                                                                452
                                                                                                                496
                                                                                                                          481
                                                                                                                         509.5
                                                                                                                                      7.5
                                                                                                                                      7.1


  MID 2005
                                                                                                               520.9     525.9        7.2
                                                                                                                582       587         5.8
                                                   WDD083
                                                                                      WDD096        695        632.7      652         7.6

   GOLD                                                                               WDD097
                                                                                      WDD078
                                                                                                   648.7
                                                                                                   835.5
                                                                                                               608.4
                                                                                                                644
                                                                                                                680
                                                                                                                         614.2
                                                                                                                          645
                                                                                                                          681
                                                                                                                                     20.6
                                                                                                                                     14.8
                                                                                                                                     58.4

   POUR                                  WDD097
                                                  WDD096
                                                                                                                703       705        18.2




                                WDD078
                                           835m
 Image Source: GEOVIZ                                                                                Contact: manager@westoniamines.com.au

24 Prospect June–August 2004
                   Equipment & Services
                    •   Air compressors Zone II & Rigsafe   • Fuel and water tanks
                    •   Steam Generators                    •PLighting
                    •   Generators                          • Access Equipment
IMG0499CH/FP/OFF




                    •   Booster Compressors                 • Safety Gear
                    •   Toolstores                          • General equipment & accessories
                                               • Turkey
     • Oklahoma
     • Texas




                                                           Western
                                                           Australia •

                  AMITY OIL LIMITED


INCREASING REVENUE THROUGH
GLOBAL GROWTH
Amity Oil Limited has a proven track record as a
successful international oil and gas exploration &
production company.

2004 will see Amity pursuing its strategy of growing its
international presence and creating multiple revenue
streams to deliver dynamic growth opportunities and
shareholder value.

Amity’s core focus is to capture new reserves through
exploration and acquisition opportunities in Turkey,
Australia and the United States.




Amity Oil      Focused on Creating
                    Shareholder Wealth
Areas opened for exploration
                                                                                                    Reappraisal
W
            estern Australia’s highly-                The Perth Basin releases, of which
            competitive oil and gas search
            is set to intensify with the latest
availability of exploration areas.
                                                  there are two to the south of the so-called
                                                  Dennison Corridor, are regarded as
                                                  prospective mainly for gas. They are
                                                                                                    of land at
    Six petroleum exploration areas,
ranging from highly-prospective to
                                                  L04-4 and L04-5, made more attractive to
                                                  the exploration industry by the existing
                                                                                                    Oakajee
frontier, have been released.                     and under-utilised Parmelia gas pipeline.

                                                                                                    T
                                                                                                          he Oakajee industrial estate
    In March, the Department of Industry              So far 12 commercial hydrocarbon                    may yet be developed but
and Resources released three blocks               fields and numerous other significant                     the ball has been placed
in the offshore Carnarvon Basin,                  discoveries have been made in the                 squarely in the court of private
two in the onshore Perth Basin and                onshore northern Perth Basin, with by far         enterprise.
one in the underexplored Officer Basin.            the biggest being the Dongara field which
The release, which closes at the end              originally contained 508 bcf of gas and           The Western Australian
of September, is expected to attract wide         104 million barrels of oil.                       Government has rezoned the
interest, especially in the Carnarvon                 The frontier of petroleum exploration         site Industrial Investigation to
Basin region.                                     in Western Australia is represented by the        recognise its potential to back
    The northern Carnarvon Basin                  release of L04-6, in the remote Officer            a deepwater port may one day
acreage centres on Area L04-1,                    Basin, which has been made available at           be realised. Under the scheme
10 km east of the producing Varanus               the request of the industry on the basis of       a private developer would be
Island production area and less than              its potential for oil.                            required to meet all associated
25 km from the Stag oil production                    The basin is considered underexplored         infrastructure costs.
licence. The combined areas L04-2                 because of its age and remoteness, but is
                                                                                                    The move means Oakajee,
and T-04-1 are immediately adjacent               relatively close to major infrastructure,
                                                                                                    25 km north of Geraldton,
to to Airlie Island production facility           including the Goldfields Gas
                                                                                                    is effectively placed in reserve
and immediately to the north of the               Transmission pipeline. Potential markets
                                                                                                    should it one day be required. P
Thevenard complex.                                from an Officer Basin discovery include
    The Department said water depths              mining centres along the pipeline,
are less than 50 metres in the release            Alice Springs in central Australia and
areas, which would prove ideal for the            coastal ports such as Esperance. P
use of jackup drilling rigs. There is good
coverage of 2D seismic and partial
coverage of 3D seismic in the areas.




When small is beautiful
S
       mall miners are the unsung                 So where do those owners,
       heroes of the Western Australian           and potential owners, have access
       resources scene.                           to the knowledge-at-a-glance which
                                                  could mean the difference between
Trying their luck in a hostile, unforgiving       bankruptcy and bonanza? Until now,            and plats,
environment, dependent on vagaries                nowhere. But there is a new publication       the drives, the stopes and
of luck and orebodies and without                 which addresses the issue in such             developing the orebody. There’s even
the resources of laboratories and                 a practical way it should become as           a mention on what bushtucker is best,
engineering workshops, the myriad                 essential to small operators as their         though personally I draw the line
of small shows in WA is legion…                   pick and shovel.                              at galah.
and legend.
                                                  Frank Bojesan has been an                     The book also has a praiseworthy
Legend because many of those small                underground miner for more than               eye to safe development, based on
operations have gone on to become                 30 years in his own and others’ shows         common sense. It is not aimed at
some of the nation’s biggest producers            in Western Australia and overseas and         part-time prospectors or weekend
over more than a century, taken on by             from the tone of his book Small Scale         gougers, but rather at small
some of the world’s biggest miners on             Underground Mining there is little he         syndicates with a base amount of
a scale which would have left many of             hasn’t experienced.                           knowledge wanting to get serious
the original owners stunned.                                                                    about successfully developing a
                                                  It is a step-by-step guide to                 prospective orebody.
But at the other end of that scale there          successfully developing a small
were many which just constituted                  underground show: How to set up the           This entertaining publication is
a nice little earner for their owners,            camp (including the dunny, both above         available through Hesperian Press.
maybe developed over a level or two,              and below ground), establish the shaft        (www.hesperianpress.com) P
a stope or three.
                                                                                                         Prospect June–August 2004       27
   the big picture 8
     Global recovery continues                                                Japan sees a long-awaited broadening of growth
     Over recent months the world economy has continued to                    The outlook for the Japanese economy now looks brighter than it
     recover at a rapid pace and, in aggregate, is now expected               has for a long time. GDP growth lifted to 1.6% in the December
     by the International Monetary Fund (IMF) to grow at 4.6% in              quarter of 2003 for an annual growth rate of 3.6%.
     2004. This represents a robust growth rate when compared with            Business investment has been a key driving force behind Japan’s
     average growth over the past 30 years. Importantly, while a year         recovery and has occurred in a climate of strong profitability.
     or so ago there were some significant downside risks causing              Exports growth has been the other factor lifting overall economic
     major concern (such as the persistent weakness of global                 growth. As with many economies in the region, including
     equity markets, and the potential for deflation) these risks have         Australia, it is Chinese demand that has driven exports growth
     subsided. Replacing these fears is a concern that world growth           in Japan, though the recovering US economy has been another
     may surprise on the upside, provoking inflationary fears and              important source of export growth.
     consequently, higher interest rates.
                                                                              Indicators of business conditions suggest that growth should
     A major factor driving the more positive outlook is that, with the       continue, with the Tankan business survey and the Shoko Chukin
     exception of a relatively weak recovery in the euro area (driven         survey of small business suggesting that conditions in the
     largely by softness in Germany), the recovery is becoming more           manufacturing sector are as good as any time during the past
     synchronised across the global economy, reducing the risk that           15 years.
     over-reliance on US recovery might stall global growth.
                                                                              While industrial production and exports growth have leveled out
     Global and Regional Growth Prospects – Annual GDP Growth                 in the first months of 2004 they remain at high levels. Critically,
                                                                              there has been a lift in activity in the services sector indicating
                           2002         2003           2004         2005      a broadening of the recovery. An extension of activity into
                                                 IMF forecasts (April 2004)   the services sector has been a missing link in past, tentative,
     United States         2.2            3.1             4.6          3.9    Japanese recoveries.
     Euro-area             0.9            0.4             1.7          2.3    Another missing link in past recoveries has been household
     Japan                -0.3            2.7             3.4          1.9    spending. Consumers now appear to be responding to
     China                 8.0            9.1             8.5          8.0    improvements in the labour market with signs of improved
     Other East Asia       4.6            3.7             5.4          5.1    consumer sentiment and higher spending. The improvement
     World                 3.0            3.9             4.6          4.4    in the labour market has seen employment rise over the past
                                                                              year and job vacancy indicators suggest further improvement
     Source: Reserve Bank and IMF
                                                                              over the short-term. As a result of better employment growth,
                                                                              unemployment has fallen from its recent peak of 5.5% in
     The US recovery lifting its labour market
                                                                              January 2003 to 4.7% in March 2004.
     While the US economy has been recovering since mid-2003
     under the stimulus of accommodative monetary and fiscal policy,           Two key factors holding back recovery in Japan appear to
     the sluggishness of the labour market has been the weak link in          be relenting.
     the recovery.                                                            •   Deflation, which promises lower prices in the future thus
     GDP in the March quarter of 2004 grew strongly by 1% to give                 deterring consumers from buying now, is easing and
     annual growth of 4.9%. Importantly for the sustainability of                 household consumption appears to be strengthening.
     the recovery, activity in the March quarter was broadly based.               Consumer prices fell only marginally in the year to March
     Household consumption rose strongly, supported by low interest               – compared with falls of 1% a year earlier. Indicators of
     rates, rising household wealth as house and share prices lifted,             wholesale and producer prices have also stabilised in recent
     and tax cuts. Business investment rose by 1.7% in the March                  months in part due to a lift in global commodity prices which
     quarter to be 9.4% higher than a year earlier with information               feed into Japanese production through imported input prices.
     technology investment continuing to grow strongly as the                 •   Japan’s banking sector, which has laboured under the burden
     software replacement cycle gains pace. Low interest rates and                of non-performing loans and low levels of loan demand,
     solid consumer demand are providing an attractive climate for                seems to be recovering. Non-performing loans now account
     further growth in investment. Strong profitability, with the profit            for around 7.5% of bank lending, substantially lower than
     share of GDP at well above its long-term average, has also                   their early 2002 peak of 9.5% and small business demand for
     boosted business confidence significantly.                                     loans has picked up significantly.
     Strong productivity growth and modest wage growth have meant             Non-Japan Asia continues its strong expansion
     that inflation remains at relatively low levels, allowing the Federal     Since the SARS-induced slowdown experienced in the first half
     Reserve to maintain a stimulatory monetary policy, notwithstanding       of 2003, East Asia has grown strongly. This strength reflects
     some mild suggestions by Federal Reserve Chairman Greenspan              expansionary monetary and fiscal policy and the impact of the
     that eventually interest rates will begin to rise.                       recovery in US demand for the region’s exports, notably in the
     Softness in the labour market has been unexpected given the lift         electronics sector. A number of regional economies have their
     in growth that the US economy has experienced since mid-2003.            exchange rates linked to the US$, and the depreciation of the
     Non-farm payroll increases appear to have picked up recently             latter has given a significant boost to the competitiveness of
     however, with growth of around 300 000 and revisions to earlier          regional exports.
     months lifting average jobs growth to around 100 000 a month.
                                                                              Domestic demand has recovered rapidly from the SARS period
     Forward indicators are looking positive with the Institute of
                                                                              and there have been some concerns that growth rates are back
     Supply Management’s employment index at 20-year highs.
                                                                              at pre-1997-98 Asian crisis levels.
     Stronger employment growth should assist in sustaining
     consumption growth adding further impetus to the US economy.




28 Prospect June–August 2004
                                                                                                                                                             Economic trends
                                                                                                                                      C o m p i l e d b y D o I R ’s E c o n o m i c s A n a l y s i s B r a n c h



                                                                                                                                     In China for example, growth of 9.7% in the year to the March quarter
                                                                                                                                     follows rates at a similar level in the previous year. Exports have eased
                                                                                                                                     back from the 43% rates experienced over 2003 but remain at high
Chart 1: Real GDP growth                                                                                                             levels. Such rates of external growth have contributed to industrial
per cent
                                                                                                                                     production growth of around 20% in the year to December quarter 2003.
 6.0                                                                                                                         6.0
                                                                                                                                     Household consumption spending continues at a rapid rate.
 5.0                                                                                                                         5.0
                                                                                                                                     In response to concerns of overheating and to assist in sustaining
 4.0                                                                                                                         4.0
                                                                                                                                     Chinese economic growth, the Chinese government has indicated
 3.0                                                                                                                         3.0
                                                                                                                                     that it will act to restrain credit growth and encourage a shift in
 2.0                                                                                                                         2.0     spending away from areas of investment in which there is the potential
 1.0                                                                                                                         1.0     for excess capacity expansion, notably the steel industry, towards
 0.0                                                                                                                         0.0     household spending.
 -1.0                                                                                                                        -1.0    The effects of exchange rate depreciation in tandem with the US$,
 -2.0                                                                                                                        -2.0    a stronger global economy and demand from China, which has boosted
 -3.0                                                                                                                        -3.0
                                                                                                                                     intra-regional trade, have lifted industrial output and exports across
                        US         Euro-zone         Japan
                                                                                                                                     the region. Stronger stockmarkets and falling unemployment have also
 -4.0                                                                                                                        -4.0
      Dec-96             Dec-97            Dec-98            Dec-99       Dec-00          Dec-01            Dec-02       Dec-03      stimulated retail sales and business investment. Helping to sustain
        Source: RBA                                                                                                                  strong activity, inflation has remained reasonably low to date, though
                                                                                                                                     there are signs of price pressures building in economies such as China
                                                                                                                                     and Singapore.
                                                                                                                                     Europe remains the laggard
                                                                                                                                     Europe’s economy remains moribund with only tentative signs of
                                                                                                                                     recovery, particularly in the case of Germany. Exports have provided
                                                                                                                                     most of the stimulus to activity over the past year, though the
                                                                                                                                     strong appreciation of the euro against the US$ is showing signs of
 Chart 2: Global sharemarkets                                                                                                        constraining even this source of growth.
 Index: June 1999=100
                                                                                                                                     Domestic demand remains sluggish, with consumption spending very
120                                   US       Japan          Euro-zone     Australia
                                                                                                                                     weak and business confidence plateauing in the early months of 2004.
110                                                                                                                                  As a consequence European industrial production has fallen a little over
100                                                                                                                                  the past quarter.
 90                                                                                                                                  On the brighter side, business investment recorded its fastest rise in
 80                                                                                                                                  three years in the December quarter 2003, though it is hard to see how
                                                                                                                                     this can be sustained given weak consumption growth. Part of the
 70
                                                                                                                                     explanation for constrained consumption growth has been the weak
 60                                                                                                                                  labour market though there have been some signs of stabilisation of
 50                                                                                                                                  unemployment at 8.8% in recent months.
 40                                                                                                                                  In contrast to mainland Europe, the United Kingdom has seen
  Mar-01 Jun-01 Sep-01 Dec-01 Mar-02 Jun-02 Sep-02 Dec-02 Mar-03 Jun-03 Sep-03 Dec-03 Mar-04
                                                                                                                                     strong economic growth, lifted by rising wealth generated by
         Source: RBA
                                                                                                                                     rising house prices and a buoyant labour market. In terms of the
                                                                                                                                     latter, unemployment is at its lowest in nearly 30 years. Household
                                                                                                                                     consumption is the current mainstay of growth. There are currently
                                                                                                                                     concerns about the sustainability of growth given surging housing
                                                                                                                                     prices and an associated rise in household indebtedness. It was partly
                                                                                                                                     in response to these concerns that the Bank of England raised interest
                                                                                                                                     rates by 25 basis points in early May.
                                                                                                                                     The A$ gives back some of its strong gains
      Chart 3: Exhange rates against A$                                                                                              The strong rises in the Australian dollar’s value against the US$ over
  TWI, Yen                                                                                                             US$, Euro     2002-03 to the peak in February 2004, reflected a relatively strong
 90                          TWI        Yen         US$       Euro                                                            0.90   Australian economic growth rate vis-à-vis that of the US and the
 85                                                                                                                           0.85   associated positive interest rate differential. Since February 2004,
 80                                                                                                                           0.80   when the A$ peaked at around US$ 80 cents, perceptions of these
 75
                                                                                                                              0.75   factors has changed.
 70                                                                                                                                  It is now expected that the US economy will be stronger than earlier
                                                                                                                              0.70
 65                                                                                                                                  expected, and expectations for a rise in US interest rates have recently
                                                                                                                              0.65
 60                                                                                                                                  been brought forward. At the same time it is likely that the Australian
                                                                                                                              0.60
 55                                                                                                                                  economy will slow modestly and there is an increasing expectation that
 50                                                                                                                           0.55   domestic interest rates may have peaked following two 25 basis point
 45                                                                                                                           0.50   rises in late 2003.
 40                                                                                                                         0.45     In consequence, by early May 2004 the A$ has fallen by around 12%
 May-99         Nov-99 May-00              Nov-00 May-01         Nov-01   May-02        Nov-02     May-03     Nov-03   May-04
          Source: RBA                                                                                                                against the US$ and, to a lesser extent, by 5% against the euro, by 7%
                                                                                                                                     against the yen and across currencies by around 9% against the
                                                                                                                                     trade-weighted index.

                                                                                                                                                                          Prospect June–August 2004           29
   the big picture 8
High pressure on oil prices
The price of crude oil surged US56c on 5 May 2004 to reach a 13–year high of
US$39.93/barrel, a rise of 12% from the 30 March 2004 price of US$35.78.
High prices have been attributed to tight supplies in the US and the terrorist
                                                                                           Oil price pressure
attack on Westerners working for an oil contractor in Saudi Arabia. Oil analysts        US$/bbl(WTI)
                                                                                           45
are concerned that terrorist attacks may increase during the year on the world’s
largest supplier of crude oil, thus causing further volatility to the price of crude.
                                                                                           40
Other important macro reasons for the price rise include global political and
economic uncertainty, periodic disruptions to Iraq’s oil supply, spare capacity,
diminishing stocks and volatile weather patterns. Furthermore, robust energy               35
demand from the Chinese mainland and the expanding economies of Asia is also
boosting oil prices.                                                                       30
The decision by OPEC to cut one million barrels per day (mbd) from
1 April 2004, coupled with low inventories has also had a significant impact on             25
prices. Australian Mineral Economics (AME) reports that OPEC is seeking higher
prices to negate the impact of a weaker US dollar and the attendant revenue                20
losses and could adjust its price of crude oil upwards in the next few months.
There is a consensus among analysts that the price of oil will in the short-term           15
trade above US$30/bbl. However, oil prices are forecast to fall over the medium




                                                                                                                                                               02/09/02




                                                                                                                                                                                                                                                                             02/09/03
                                                                                                               02/03/02

                                                                                                                             02/05/02




                                                                                                                                                                                                                                 02/03/03

                                                                                                                                                                                                                                                  02/05/03




                                                                                                                                                                                                                                                                                                                02/03/04

                                                                                                                                                                                                                                                                                                                              02/05/04
                                                                                                                                             02/07/02




                                                                                                                                                                                                                                                                 02/07/03
                                                                                                02/01/02




                                                                                                                                                                                                           02/01/03




                                                                                                                                                                                                                                                                                                    02/01/04
                                                                                                                                                                                     02/11/02




                                                                                                                                                                                                                                                                                         02/11/03
term due mainly to an increase in world production.
                                                                                             Source: EIA (Official Energy Statistics from the US Government)
On 10 May 2004, the Saudi Minister for oil stated that his Government felt that
the price of oil had increased enough, and that in view of this he would be asking
OPEC to increase production.
The Saudi Arabian Minister said that the principal reason for this initiative was
that high oil prices would inhibit global economic growth, which in turn had the         Nickel – coming off a high?
potential to reduce the demand for oil.                                                  US$/t
                                                                                        19,000
Gold price slips, but remains high…
Gold has again dropped below the US$400/oz level, trading at US$388.50/oz               17,000
as at 30 April 2004. The fall in the price of gold is a reflection of the weakness of
the US dollar mainly against the euro, which had a significant impact during the         15,000
course of 2003.
Exchange rate adjustments had a major impact on gold production and producer            13,000
cost rankings. This was clearly demonstrated in 2003 when the South African rand
appreciated by 39% against the US$ increasing cash costs by around 40-50%.              11,000

To offset some of the negative effects of exchange rate realignments, a new
                                                                                        9,000
agreement, which will replace the Central Bank Gold Agreement, has been agreed
to by the principal participants, which includes the European Central Bank and
twelve other Eurozone banks. The new agreement will cap central bank gold               7,000

sales at 500 tonnes a year, 25% higher than the previous agreement and will be
reviewed in 2009.                                                                       5,000
                                                                                                                                  25/06/02




                                                                                                                                                                                                                                                             25/06/03




                                                                                                                                                                                                                                                                                                                                  02/04/04
                                                                                                                                                    25/08/02




                                                                                                                                                                                                                                                                            25/08/03
                                                                                                    25/02/02

                                                                                                                  25/04/02




                                                                                                                                                                                                                      25/02/03

                                                                                                                                                                                                                                            25/04/03




                                                                                                                                                                                                                                                                                                                   25/02/04
                                                                                                                                                                          25/10/02




                                                                                                                                                                                                                                                                                        25/10/03
                                                                                                                                                                                                25/12/02




                                                                                                                                                                                                                                                                                                     25/12/03

According to AME, for the remainder of calendar 2004, the impact of an assumed
weaker dollar is expected to be negated by the effect on gold prices of
a reduction in investor concern over uncertainty about world economic recovery.                    Source:Metalprices

In view of this reduced uncertainty, a price of around US$410/oz for the average
price of gold has been forecast by analysts for the remainder of 2004.
Global economic and political issues, the relationship between the euro/US dollar
and market deregulation will be the key determinants to the future price of gold.          Gold prices bouyant
                                                                                            US
Copper prices have improved, but are vulnerable                                           450
The price of copper as at 30 April 2004 was US$2752/tonne, down 10% from the              430
US$3060/t price at the beginning of March 2004. The major reason was concern
that US interest rates will rise, strengthening the dollar and making metals more         410
expensive in other currencies.                                                            390
However, there is general agreement that as US economic growth gathers
                                                                                          370
momentum and the Japanese economy gradually improves for the first time in
many years, the outlook for copper and other base metals demand looks positive.           350

Furthermore, with a substantial deficit forecast in copper over the next couple of         330
years, the price of copper is expected to improve.                                        310
It is estimated that world refined copper consumption grew at around 4% in 2003            290
and growth is forecast to improve to about 6% in 2004. Westpac has forecast an
average copper price of US$2750/tonne for calendar 2004. However, the bank                270
states that the projected prices may prove conservative given the possibility of a        250
supply shortfall, which could disrupt the demand/supply equation.
                                                                                                    30/09/99
                                                                                                    30/06/98
                                                                                                    30/09/94



                                                                                                    30/05/96




                                                                                                    30/04/99
                                                                                                    30/04/99




                                                                                                    30/06/03
                                                                                                    30/08/02
                                                                                                    30/04/94




                                                                                                    30/07/00



                                                                                                    30/03/02




                                                                                                    30/04/04
                                                                                                    28/02/95




                                                                                                    30/08/97
                                                                                                    30/07/95


                                                                                                    30/10/96
                                                                                                    30/03/97

                                                                                                    30/01/98




                                                                                                    30/12/00
                                                                                                    30/05/01



                                                                                                    30/01/03
                                                                                                    30/12/95




                                                                                                    30/10/01
                                                                                                    30/11/98
                                                                                                    30/11/93




                                                                                                    30/11/03




30 Prospect June–August 2004                                                                          London PM Fix
                                                                                                                                                                             Commodity trends
                                                                                                                                                           C o m p i l e d b y D o I R ’s E c o n o m i c s A n a l y s i s B r a n c h


                                                                                                                                            Lead and zinc
                                                                                                                                            After stagnating for a period of 18 months, world zinc prices have increased
                                                                                                                                            by around 29% since June 2003. However, zinc was selling at US$1028.50
  Copper – shaky at the top                                                                                                                 tonne at the end of April 2004, down 7.7% from the 1 January 2004 price of
  US$/t                                                                                                                                     US$1115/tonne. The major reasons for the fall in the price of zinc are attributed to
 3,750                                                                                                                                      speculative selling, as the demand for zinc has not been strong enough to reduce
                                                                                                                                            zinc stocks.

 3,250
                                                                                                                                            Galvanising is the principal end use of zinc, accounting for almost half of total zinc
                                                                                                                                            consumption. Expected growth rates in the construction and automotive sectors,
                                                                                                                                            both significant users of galvanised steel, are key indicators of zinc consumption.
 2,750
                                                                                                                                            In this regard, a sustained recovery in US industrial production appears to be
                                                                                                                                            underway and has also boosted production and exports in Japan and other Asian
2,250                                                                                                                                       eonomies. Chinese consumption was a major factor in raising global consumption
                                                                                                                                            by over 2% in 2003 and is again expected to underpin global growth of around
                                                                                                                                            3% in 2004.
 1,750
                                                                                                                                            The underlying supply and demand fundamentals of the global zinc market are
                                                                                                                                            forecast to be supportive of higher prices in the short term. On the supply side,
 1,250                                                                                                                                      closures of both mine and smelting capacity in the past two years, specifically in
                                                                                                                                            2003 and with only small amounts of greenfield capacity planned for the future,
                        30/04/02




                                                                      30/04/03




                                                                                                                              30/04/04
                                   30/07/02




                                                                                 30/07/03
         30/01/02




                                                30/10/02


                                                           30/01/03




                                                                                                30/10/03


                                                                                                               30/01/04




                                                                                                                                            indicate that supply will increase only slowly in the short term.
         Source:LME Cash Official                                                                                                           The price of lead as at 30 April 2004 was US$735/tonne indicating price increases
                                                                                                                                            of around 64% since June 2003. However, the price of lead has fallen 11.4% from
                                                                                                                                            early January 2004 to the end of April 2004.
                                                                                                                                            The global resources sector has been increasingly driven by China’s voracious
  Lead and Zinc Prices                                                                                                                      demand for minerals, including lead. This is mainly due to the demand for lead in
US$/t (Zinc)                                                                                                              US$/t (Lead)      China by the burgeoning automobile sector, coupled with the idling of some world
1200                                                                                                                                 1200
                         Zinc            Lead                                                                                               mining, smelting and refining capacity.
1100
                                                                                                                                     1000   Nickel
                                                                                                                                            Nickel prices are expected to be relatively high in 2004 as demand for the metal
1000
                                                                                                                                            continues to remain strong.
                                                                                                                                    800
900                                                                                                                                         The LME cash price for nickel was US$7900/tonne at the end of April 2003,
                                                                                                                                            compared to US$11 155/tonne in April 2004.
800                                                                                                                                 600
                                                                                                                                            During 2004, improved economic conditions in the OECD are expected to lead
700                                                                                                                                         to increased growth in nickel consumption. Higher world economic growth
                                                                                                                                     400    is expected to boost activity in the nickel intensive consumer sectors such as
600                                                                                                                                         catering, automobile and construction industries.
                                                                                                                                     200    China is again expected to account for an increasing share of growth in nickel
500
                                                                                                                                            consumption, because of the new stainless steel capacity coming on stream in the
                                                                                                                                     0
                                                                                                                                            next few years. The country continues to look for nickel supplies since domestic
400
  30/01/02 30/04/02 30/07/02 30/10/02 30/01/03 30/04/03 30/07/03 30/10/03 30/01/04 30/04/04                                                 production accounts for only around a half of domestic consumption.
                                                                                                                                            Indicative Chinese consumption growth of 35% which was achieved in 2003,
         Source:LME Cash Official                                                                                                           continues to drive the market, however, a lower growth rate of around 15% is
                                                                                                                                            forecast for the remainder of 2004.
                                                                                                                                            Global nickel production increased by a marginal 1.5% in 2003 and is expected to
                                                                                                                                            be up by about 5% in 2004. However, this will only meet demand which, in turn,
                                                                                                                                            will be constrained by higher prices and limited stocks. Although nickel prices fell
  Aluminium                                                                                                                                 during April 2004, they are expected to improve over the remainder of the year.
  US$/t
1,800                                                                                                                                       Aluminium
                                                                                                                                            The monthly price of aluminium on the LME averaged US$1433/tonne in 2003.
                                                                                                                                            The average for the first four months of 2004 was US$1669/tonne.
1,600                                                                                                                                       The price increases indicate an incremental build up in aluminium stocks.
                                                                                                                                            With unreported stock also understood to be large, these prices could reflect
                                                                                                                                            expectations of stronger demand growth and an easing in aluminium production
                                                                                                                                            globally in the short term.
1,400
                                                                                                                                            Higher energy prices during the first part of 2004 continue to be of concern to
                                                                                                                                            aluminium producers worldwide. Current spot alumina is at around 20% of the
                                                                                                                                            aluminium contract price compared to normal levels of 13-14%.
1,200




1,000
         Jan-99



         Oct-99

         Apr-00

                                                Oct-00
          Jul-99

         Jan-00




                                                Apr-02

                                                Oct-02


                                                                                                           Apr-03

                                                                                                           Oct-03

                                                                                                                          Apr-04
                                                                                                            Jul-03
                                                Jan-02




                                                                                            Jan-03
         Apr-99




                                                Apr-01

                                                Oct-01
                                                 Jul-01




                                                                                                                          Jan-04
                                                Jan-01




                                                 Jul-02
         Jul-00




         Source: Metalprices
                                                                                                                                                                                               Prospect June–August 2004         31
Commissioned Projects
(for financial year 2003/2004)

                      IRON ORE                           obtained conditional environmental approval in April      port was announced on 23 February 2004. Current
                                                         2003 and is proceeding with mine and infrastructure       production of 1.6 Mt/a will be increased to 2.2 Mt/a
 East of Paraburdoo - Paraburdoo Eastern                 development. Mining of the new deposits                   by Q2 2005. The company intends to commission a
 Ranges - Iron Ore                                       commenced in Q1 2004.                                     second hematite mine at Mt Gibson, about 300 km
 HAMERSLEY IRON PTY LIMITED                              Expenditure: $20m.                                        southeast of Geraldton, by mid-2005.
 Hamersley Iron has joined with the Shanghai Baosteel    Employment: Construction: 120; Operation: 35              Expenditure: $50m.
 Group Corporation to develop the Eastern Range                                                                    Employment: Construction: 80; Operation: 30
 mine, which was officially opened on 19 April 2004.      Mining Area C - Iron Ore Mine
 This joint venture partnership, known as the Bao-HI     BHP BILLITON IRON ORE PTY LTD                                                     NICKEL
 Ranges Joint Venture, will mine and export around       BHP Billiton and the State approved the development       Cosmos - Nickel Mine (sulphide ore)
 200 Mt of high-grade iron ore to China over a 20-year   of Mining Area C on 3 April 2002. Mining operations       JUBILEE MINES NL
 period.                                                 at deposit C commenced in Q3 2003. The product and        A feasibility study based on the Cosmos Deeps
 Expenditure: $64m.                                      capacity expansion (PACE) project at Finucane Island      ore reserve of 520 000 tonnes at 7.2% nickel was
 Employment: Construction: 100; Operation: 100           was approved on 19 July 2002.                             completed in April 2001. The company completed
                                                         Expenditure: $1b.                                         open pit mining in July 2003. After an 18-month
 Koolyanobbing - Northern Expansion - Iron               Employment: Construction: 500; Operation: 200
 Ore Mine                                                                                                          development program, underground mining at
                                                         Tallering Peak - Iron Ore Mine                            Cosmos Deeps commenced in Q3 2003. Based on
 PORTMAN LIMITED                                         MT GIBSON IRON LTD
 Portman intends to increase iron ore production at                                                                current ore reserves, production will continue to 2010.
                                                         Mid West Region - Iron Ore Mine                           Expenditure: $30m.
 its Koolyanobbing operations to 5-6 Mt/a through the    Mount Gibson Iron Ltd commenced mining at
 development of deposits located at Mt Jackson and                                                                 Employment: Construction: 35; Operation: 30
                                                         Tallering Peak, 130 km northeast of Geraldton in
 Windarling, north of Koolyanobbing. The company         Q3 2003. The first shipment of ore from Geraldton

Committed Projects
(as at 2/6/2004)
                BAUXITE/ALUMINA                          This work includes a new car dumper, new rail and         through the upgraded port of Wyndham. The project
                                                         construction of two new berths with a new ship            is expected to have a mine life of 5.5 years on current
Pinjarra/Huntly - Alumina Refinery Efficiency              loader as well as expansion of the stockpile facilities   resource estimates. The project is estimated to
Upgrade                                                  — expected completion end 2005.                           produce 9000 t/a of contained nickel.
ALCOA                                                    Expenditure: $700m.                                       Expenditure: $50m.
Alcoa commenced construction in April 2004 on an         Employment: Construction: 800; Operation: 195             Employment: Construction: 150; Operation: 120
efficiency upgrade of its Pinjarra alumina refinery.
Refinery capacity will increase by 0.6 Mt/a to a total                 IRON ORE PROCESSING                                     OIL & GAS DEVELOPMENTS
4.2 Mt/a (+17%). The additional capacity is expected     Kwinana - HIsmelt Commercial Iron Making                  North West Shelf - Project Expansion - 4th
to come on-stream at the end of 2005.                    Plant                                                     LNG Train, Second Trunkline
Expenditure: $440m.                                      HISMELT CORPORATION LIMITED                               WOODSIDE ENERGY LTD
Employment: Construction: 1000                           HIsmelt Corporation, in a joint venture with Nucor        Proposals by the NWS partners for additional LNG
Worsley/Boddington - Alumina Refinery                     (25%), Mitsubishi (10%) and Shougang (5%),                Trains 4 and 5, and a second trunkline and expansion of
Expansion                                                announced plans to develop a commercial-scale             the Domgas plant, received environmental approval in
WORSLEY ALUMINA PTY LTD                                  HIsmelt process plant at Kwinana, near Perth. The         1998 and 1999. The LNG expansion is based on growing
BHP/Billiton’s Worsley Alumina Refinery is expanding      first stage of the plant will produce 800 000 t/a of pig   Asian energy markets. In April 2001 the joint venturers
its capacity from 3.1 Mt/a to 3.5 Mt/a at cost of $192   iron from iron ore fines, coal and fluxes. Construction     committed to develop a fourth LNG processing train
million. The “creep” program will expand the refinery     commenced in January 2003 with commissioning              costing A$1.6 billion. Construction commenced in Q3
capacity to the maximum provided for by Worsley’s        scheduled to commence in late 2004.                       2001. In December 2001 the joint venturers approved
current environmental approval.                          Expenditure: $800m.                                       expenditure for a A$800 million second subsea trunkline
Expenditure: $192m.                                      Employment: Construction: 320; Operation: 65              linking the offshore production facilities to the onshore
Employment: Construction: 400                                                                                      gas plant on the Burrup Peninsula. Construction
                                                                                 NICKEL                            commenced in 2002. First gas began flowing through
                        GOLD                             Lake Johnston (Emily Ann/Maggie Hays)                     the trunkline in February 2004. Train 4 is scheduled for
Telfer - Gold Mine (Expansion)                           - Nickel Mine/s (sulphide ore)                            completion in Q3 2004.
NEWCREST MINING LIMITED                                  LIONORE AUSTRALIA (NICKEL) LTD                            Expenditure: $2.4b.
Feasibility studies for the Telfer expansion have        LionOre Mining is developing the Maggie Hays              Employment: Construction: 2000; Operation: 70
identified a large low-grade resource in excess of 500    deposit as an integrated development with its nearby
                                                         Emily Ann mine near Lake Johnston. Construction                   PETROCHEMICALS/CHEMICALS
Mt and containing more than 26 Moz gold. Newcrest
commenced construction of the mine extension             at Maggie Hays is progressing with the main decline       Burrup Peninsula - Ammonia Plant
in late 2002, with commissioning scheduled in Q3         nearing completion. Mining at Maggie Hays is              BURRUP FERTILISERS PTY LTD
2004 and full capacity to be reached by 2005. When       planned to commence in Q4 2004 and will double            Burrup Fertilisers is developing an ammonia plant
production commences it is estimated to average          production from the region to about 10 000 to 12 000      at the King Bay/Hearson Cove industrial area on
800 000 oz/a of gold and 30 000 t/a of copper over a     t/a of nickel. The concentrate will be shipped to Inco    the Burrup Peninsula, near Karratha. Around 760
24-year period. Newcrest Mining is building a new        Ltd of Canada under a life-of-mine offtake agreement      000 t/a of liquid ammonia will be produced and
17 Mt/a processing plant as part of the project . A      negotiated for the Emily Ann mine.                        exported to India and other world markets for the
major component of the project will be a 440 km gas      Expenditure: $28m.                                        manufacture of fertilisers. SNC-Lavalin Australia Pty
pipeline from Port Hedland to the minesite.              Employment: Construction: 25; Operation: 167              Ltd, is the EPC contractor and Sinclair Knight Merz
Expenditure: $1.2b.                                      Ravensthorpe - Nickel Mine                                the environmental management consultant for the
Employment: Construction: 1222; Operation: 620           BHP BILLITON - RAVENSTHORPE NICKEL                        project. The Harriet Joint Venture has an agreement
                                                         OPERATIONS PTY LTD                                        to supply 82 TJ/d of natural gas to the project.
                      IRON ORE                                                                                     Construction commenced on 30 April 2003 and
                                                         On 23 March 2004, BHP Billiton approved the
Pilbara - BHP Billiton’s Rapid Growth Project            development of the Ravensthorpe Nickel Project that       production is planned to start in Q3 2005.
BHP BILLITON                                             will produce up to 220 000 t/a of mixed nickel/cobalt     Expenditure: $630m.
In February 2004, BHP Billiton announced that it         hydroxide to be processed at QNI’s Yabulu refinery in      Employment: Construction: 700; Operation: 60
would be spending A$145 million in expanding its         Queensland. Plant construction is expected to take                               TIMBER
Pilbara iron ore business from 85 Mt/a in 2003 to        30 months and the first shipment of product from
110 Mt/a by the end of 2004. The move will include a                                                               Neerabup - Laminated Veneer Lumber Plant
                                                         Esperance to Yabulu is to commence in early 2007.
50% increase in capacity of the Mining Area C (MAC)                                                                WESBEAM PTY LTD
                                                         Expenditure: $1.4b.
operation, BHP Billiton’s newest mine. The company                                                                 The Wood Processing (Wesbeam) Agreement was
                                                         Employment: Construction: 1000; Operation: 300
is currently undertaking studies for further long-term                                                             ratified by Parliament on 4 October 2002. The Agreement
expansions of its WA iron ore business. It has flagged
                                                         Sally Malay - Nickel Project                              will facilitate the development of an A$80 million
                                                         SALLY MALAY MINING LIMITED                                laminated veneer lumber (LVL) plant at Flynn Drive,
an increase in excess of 145 Mt/a to feed China’s
                                                         Open pit mining commenced during Q1 2004. Plant           Neerabup. Construction of the plant has commenced
strong demand for iron ore.
                                                         construction is progressing with commissioning on         with first production due in the second half of 2004.
Expenditure: $145m.
                                                         schedule to be completed in August 2004. The first         Timber feedstocks will be pine trees harvested from State
Employment: n/a
                                                         shipment of concentrate to the Jinchuan Group in          Government-owned plantations at Gnangara and other
Yandicoogina - Iron Ore Mine                             China is planned for Q3 2004. Sally Malay plans to        areas. The project will sell LVL and other timber products
HAMERSLEY IRON PTY LIMITED                               employ both open-cut and underground mining               to Australian and overseas markets.
Hamersley Iron is currently expanding the capacity       methods to extract ore, which will be processed           Expenditure: $80m.
of its port facilities at Parker Point (near Dampier)    via a 750 000 t/a mill. A bulk nickel/copper/cobalt       Employment: Construction: 200; Operation: 140
from 74 Mt/a to 95 Mt/a at a cost of A$685 million.      concentrate will be shipped by road and exported
   32 Prospect June–August 2004
 Projects under consideration
 (as at 2/06/2004)


                     AGRICULTURE                                                         GOLD                                Koolanooka, Western Australia - Iron Ore Mine
Mantinea Flats - Ord River Irrigation Scheme                   Boddington - Gold Mine (Wandoo Expansion)                     - Mid West Region
                                                                                                                             MIDWEST CORPORATION LIMITED
(Stage 2 Development) - Mantinea Flats                         BGM MANAGEMENT COMPANY PTY LTD
                                                                                                                             Midwest Corporation proposes to develop a number of
HENRY WALKER ELTIN LTD.                                        Boddington Gold Mine is managed by BGM
                                                                                                                             iron and steel feedstock materials projects, including
The project consists of developing and servicing               Management Company Pty Ltd on behalf of Newmont,
                                                                                                                             direct shipping iron ore from Koolanooka, Blue Hills,
approximately 80 farms (about 4200 ha total) at                AngloGold and Newcrest. BGM has environmental
                                                                                                                             and Weld Range tenements; and an iron ore pellet
Mantinea Flats for irrigated intensive horticulture which      approval for the expanded Wandoo project, based on
                                                                                                                             production project based on the magnetite resource
will then be offered for sale. Following an Expression         mining the extensive bedrock that underlies the mined-
                                                                                                                             at its Koolanooka tenements. Shipping of ore from
of Interest process in late 1998, a consortium headed          out oxide resource. The project includes a dedicated 100
                                                                                                                             Koolanooka is expected to commence in Q4 2004 at an
by Henry Walker Eltin Limited was mandated to carry            MW gas-fired power station. Project go-ahead will be
                                                                                                                             initial rate of 1 Mt/a.
out the development, subject to a successful feasibility       subject to commercial factors.
                                                                                                                             Expenditure: $540m.
study and associated approvals. The studies have been          Expenditure: $500m.
                                                                                                                             Employment: Construction: n/a; Permanent: 295
deferred pending resolution of land access issues.             Employment: Construction: 500; Operation: 350
Expenditure: $108m.                                                                                                          Pilbara - Iron Ore Mine Rail and Port
                                                               Sunrise Dam - Gold Mine - Underground                         Development
Ord River - Ord River Irrigation Scheme                        Development                                                   FORTESCUE METALS GROUP (FMG)
ORD STAGE 2 M2 AREA                                            ANGLOGOLD AUSTRALIA LTD
                                                                                                                             FMG is conducting a pre feasibility study into a new
The potential exists for a 30 500 ha irrigated agricultural    AngloGold Australia Ltd began a three-year underground
                                                                                                                             iron ore development in the Pilbara (based on the Mt
development immediately to the northeast of the                development in Q4 2003 at the Sunrise Dam gold mine
                                                                                                                             Nicholas, Tongololo Creek, Mt Lewin and Mindy Mindy
existing Ord Stage 1 development. The WA and NT                to test the feasibility of later committing to a full-
                                                                                                                             prospects), to be serviced by a multi-user railway and
Governments are committed to investigating the                 scale underground operation. The study involves the
                                                                                                                             port infrastructure at Port Hedland. The company is
project feasibility and propose to consult with the local      development of two declines totalling 9 km in the vicinity
                                                                                                                             undertaking a PER into the first phase of the proposed
community before progressing the re-tendering of the           of previously defined reserves. The company expects
                                                                                                                             project, namely the north-south railway and port
Ord Stage 2 M2 area. Environmental approval has been           to make a decision on whether to proceed to full-scale
                                                                                                                             facilities. The second phase of the project - the east-west
given for an irrigated agricultural project in the M2          underground mining in early 2007. A positive decision
                                                                                                                             railway and the mine developments - has also been set
area. Possible crops include sugar, cotton, leucaena or        is expected to increase the life of the project to at least
                                                                                                                             a PER level of environmental assessment. A detailed
horticultural crops.                                           2012.
                                                                                                                             feasibility study is expected to commence in June 2004.
Expenditure: $600m.                                            Expenditure: $87m.
                                                                                                                             Construction on the rail and port facilities is planned
Employment: Construction: 650; Operation: 550                                                                                to start early in 2005 to supply the Chinese market from
                                                                             HEAVY MINERAL SANDS
West Kimberley - Water & Land Resources                                                                                      late 2006.
                                                               Jangardup South - Mineral Sands Mine
Development Project                                                                                                          Expenditure: $1.8b.
                                                               CABLE SANDS (WA) PTY LTD                                      Employment: Construction: 1000; Operation: 300
WESTERN AGRICULTURAL INDUSTRIES PTY LTD
                                                               Cable Sands has outlined a major titanium minerals
Western Agricultural Industries Pty Limited (WAI) was
appointed in August 1997 to carry out feasibility studies
                                                               orebody adjacent to D’Entrecasteaux National Park.                          IRON ORE PROCESSING
                                                               Feasibility and environmental studies are well advanced.      Fortescue (Cape Preston) - Mine and Pellet
into establishing an irrigated agricultural industry
                                                               An environmental impact statement for the project is          Plant
based on the ground and surface water resources of the
                                                               expected to be released for public review in early 2005.      MINERALOGY PTY LTD
Canning Basin and Fitzroy River system. Results to date
                                                               Expenditure: $40m.                                            The first project based on the Fortescue magnetite
indicate that there is sufficient potential to establish a
                                                               Employment: Construction: 100; Operation: 50                  deposit is expected to be a 7 Mt/a pellet plant. The
20 000 ha groundwater-based irrigated cotton industry
in an area situated about 200 km south of Broome.              Kemerton - Titanium Dioxide Pigment Plant                     project involves mining, concentrating through magnetic
Feasibility studies have been deferred pending resolution      Expansion                                                     separation, pelletising and export through new port
of land access issues. WAI’s MoU with the State, which         MILLENNIUM INORGANIC CHEMICALS LTD                            facilities at Cape Preston.
allows WAI to undertake its feasibility studies, has been      Millennium has approval for a major expansion of its          Environmental approval has been granted. Other
extended to 30 June 2004.                                      Kemerton titanium dioxide pigment plant near Bunbury          projects based on the Fortescue deposits could include
Expenditure: $1.9b.                                            to 190 000 t/a. Environmental approval for the proposal       an export DRI plant.
Employment: Construction: 500; Operation: 800                  was given in April 1999. A decision to proceed to this        Expenditure: $1.4b.
                                                               capacity is dependent on market factors.                      Employment: Construction: 2000; Operation: 400
                 BAUXITE/ALUMINA                               Expenditure: $470m.
Wagerup/Willowdale - Alumina Refinery Train 3                   Employment: Construction: 500; Operation: 200                                          KAOLIN
Expansion                                                      Kwinana - Titanium Dioxide Pigment Plant                      Thangoo (100 km SSE of Broome) - Kaolin Mine
ALCOA WORLD ALUMINA AUSTRALIA                                  Expansion                                                     MANSFIELD MINING NL
Environmental approval was granted in August 1995              TIWEST JOINT VENTURE                                          Mansfield Mining NL plans to mine the Eaglehawk
to increase the mining rate and expand the Wagerup             Environmental approval for the staged expansion of a          Kaolin deposit, situated on Thangoo pastoral station
refinery to 3.3 Mt/a by construction of a third production      pigment plant capacity to 180 000 t/a has been given.         about 100 km south-southeast of Broome in the West
train and round-out of total facilities. The round-out         A decision to proceed with further stages within this         Kimberley region of Western Australia. Proven reserves
was completed in 1999, but the third train was deferred.       expansion is dependent on market conditions.                  total about 410 Mt. Once operating, the A$90 million
Alcoa is now considering seeking approval to expand to         Employment: Construction: 108; Operation: 98                  project could produce and export 700 000 t/a of kaolin
more than 4 Mt/a. Commitment to build the third train is                                                                     and by-product minerals such as silica sand, ilmenite
dependent on a range of factors.                                                      IRON ORE                               and leucoxene.
Expenditure: $1.5b.                                            Hope Downs - Iron Ore Mine                                    Expenditure: $90m.
Employment: Construction: 1000; Operation: 150                                                                               Employment: Construction: 50; Operation: 130
                                                               HOPE DOWNS LIMITED
                        GALLIUM                                Hancock and Kumba have completed a feasibility                                          LEAD
                                                               study of the Hope Downs project. The alliance is now
Pinjarra - Gallium Extraction Plant                            progressing project finance, joint venture and market
                                                                                                                             Wiluna (Magellan) - Lead Mine
GEO SPECIALTY CHEMICALS INC.                                                                                                 MAGELLAN METALS PTY LTD
                                                               agreements.
In March 2001, GEO Speciality Chemicals Inc of the USA                                                                       The project is based on a lead carbonate (cerussite)
                                                               Expenditure: $1.5b.
announced plans to construct a major new gallium metal                                                                       deposit 30 km west of Wiluna. Following completion
                                                               Employment: Construction: 1000; Operation: 300
extraction facility at Pinjarra, south of Perth, on the site                                                                 of a feasibility study and an independent review,
                                                               Koolan Island, Western Australia - Iron Ore                   construction is planned to commence in Q1 2005 to
of the former Rhodia gallium chloride plant. The facility
is planned to have an ultimate capacity of 100 t/a of          AZTEC RESOURCES LIMITED                                       produce concentrate for export through the port of
‘4N’ gallium metal. The gallium will be extracted from         Aztec Resources proposes to develop a mining operation        Geraldton. Proven and probable reserves total 12.1 Mt at
the Bayer liquor stream generated in Alcoa’s adjacent          based on the ex-BHP Koolan Island iron ore deposits in        a grade of 6.8% lead. Annual throughput is planned at 1.2
alumina refinery. Timing is dependent on favourable             the Yampi Sound, 130 km northwest of Derby in Western         Mt/a of ore to produce over 100 000 t/a of concentrate. A
market conditions and statutory approvals.                     Australia. Aztec aims to become a producer of premium         second stage will involve the production of lead metal.
Expenditure: $75m.                                             grade iron ore at a production rate of 3-4 Mt/a. The          Expenditure: $48m.
Employment: Construction: 150; Operation: 50                   company plans to complete a feasibility study during          Employment: Construction: 100; Operation: 80
                                                               2004 with mining due to commence in 2005.
                                                               Expenditure: $50m.




                                                                                                                                        Prospect June–August 2004             33
Projects under consideration
(as at 2/06/2004)


                   MANGANESE                             North West Shelf - Project Expansion - 5th                as a fertiliser, while ammonia is used in fertilisers,
                                                         LNG Train                                                 explosives and as a chemical feedstock.
Kalgoorlie Region - Manganese Dioxide                                                                              Expenditure: $900m.
                                                         WOODSIDE ENERGY LTD
Project - Stage 1                                                                                                  Employment: Construction: 1000; Operation: 130
                                                         Proposals by the NWS partners, for LNG Train 5 and
HITEC ENERGY LIMITED
                                                         a second trunkline, and expansion of the Domgas           Burrup Peninsula - Dimethyl Ether Project
HiTec Energy Ltd proposes to produce electrolytic
                                                         plant, received environmental approval in 1998 and        JAPAN DME LTD.
manganese dioxide (EMD) for alkaline batteries.
                                                         1999. The LNG expansion is based on growing Asian         Japan DME Ltd, a joint venture of Japanese
The hydrometallurgical plant will be a brownfield
                                                         energy markets. In April 2001 the partners committed      companies comprising Mitsubishi Gas Chemical
development at Cawse, 55 km northwest of Kalgoorlie,
                                                         to development of the A$1.6 billion LNG Train 4.          Company, Itochu Corporation, Mitsubishi Heavy
built around an existing electro-winning cell house
                                                         Train 5 development is contingent on future market        Industries and JGC Corporation, plans to develop
and SX plant, acquired by HiTec in October 2003 . The
                                                         conditions.                                               a world-scale dimethyl-ether (DME) plant on the
initial production of 14 000 t/a, planned for Q2 2005,
                                                         Expenditure: $1.6b.                                       Burrup Peninsula near Karratha. DME is used
can be expanded to 23 000 t/a without significant
changes to the existing plant. Manganese ore will be     Scarborough (Carnarvon Offshore Basin)                    as an aerosol propellant and is a likely future
sourced from Consolidated Minerals’ Woodie Woodie        - Gas Field                                               environmentally clean fuel for the power generation
mine in the Pilbara, as well as manganese waste from     EXXON MOBIL                                               and transportation industries. The proposed plant
OMG’s Cawse nickel plant.                                The field is located in 900 metres of water, 300 km        will produce methanol for conversion into 1.7 Mt/a
Expenditure: $136m.                                      offshore in the Carnarvon Basin with probable             of DME from around 220 TJ/d natural gas. Detailed
Employment: Operation: 30                                reserves of approximately 8 Tcf of gas. Evaluation        feasibility studies are underway. The project was
                                                         work is being undertaken to assess options including      granted Major Project Facilitation status by the
                    METHANOL                             standalone LNG development and supply to the NWS          Federal Government. Environmental consultant,
Burrup Peninsula - Methanol Plant                        project as part of potential NWS expansion.               Parsons Brinckerhoff (Aust) Pty Ltd, has commenced
GTL RESOURCES PLC                                                                                                  work on obtaining environmental approval for the
                                                         Scott Reef/Brecknock (Browse Basin) - Gas
GTL Resources proposes to build a plant to produce 1                                                               project. A commitment to proceed is expected by the
                                                         Fields
Mt/a of methanol by 2006. The plant will be situated                                                               end of 2004. Current planning is for the plant to be
                                                         WOODSIDE ENERGY LTD
at Withnell East on the Burrup Peninsula. On 17                                                                    operating by end of 2007.
                                                         In February 2001, recoverable reserves for the Scott
October 2001, GTL Resources signed a Memorandum                                                                    Expenditure: $1b.
                                                         Reef/Brecknock project were upgraded to 20.49
of Understanding with Apache Corporation, Globex                                                                   Employment: Construction: 1000; Operation: 150
                                                         Tcf of gas and 311 million barrels of condensate
Energy Inc and Santos Ltd for the purchase of 108        after multi-disciplinary studies incorporating the                   PLATINUM GROUP METALS
TJ/d of natural gas to supply the plant. Products        results of drilling at Brecknock South. The fields are
will be sold to Swiss company Vitol for trading on                                                                 Munni Munni - Platinum Deposit
                                                         considered commercially viable in the future, but
international markets.                                                                                             HELIX RESOURCES NL
                                                         firm development plans are dependent on significant
Expenditure: $770m.                                                                                                Helix Resources NL has established an indicated
                                                         growth in domestic gas and LNG markets.
Employment: Construction: 600; Operation: 85                                                                       resource of 9.2 Mt at 2.9 g/t combined platinum,
                                                         Tern/Petrel (Bonaparte Offshore Basin) - Gas              palladium, rhodium, and gold, 0.2% nickel, and 0.3%
                      NICKEL                             Field                                                     copper at its project site near Karratha. Preliminary
                                                         SANTOS LIMITED                                            mining studies suggested a mining rate of combined
Mt Keith - Nickel Mine
                                                         The offshore Petrel gas field, discovered in 1969, is      open cut and underground production of 1.5 Mt/a.
WMC RESOURCES LTD
                                                         located about 250 km west of Darwin on the WA/NT          Further activity was postponed in early 2003, as a
A feasibility study for an expansion of the Mount
                                                         seabed border in the Bonaparte Basin. The offshore        result of poor exploration results and a decreased
Keith operation from 11 Mt/a to 14.2 Mt/a throughput
                                                         Tern gas field, discovered in 1971, is located about       palladium price. The project is under review.
has been conducted. Options for implementation,
                                                         300 km west of Darwin in WA waters in the Bonaparte
including an incremental expansion, are under                                                                                         RARE EARTHS
                                                         Basin. Field development options include installation
consideration in light of other nickel sulphide
                                                         of unmanned offshore production platforms with a          Mt Weld - Rare Earths Operations
opportunities in the area.
                                                         pipeline to a gas treatment plant south of Darwin.        LYNAS CORPORATION LTD
Debottlenecking of the Kwinana nickel refinery will
                                                         The development possibilities for these fields have        Lynas is planning to mine up to 200 000 t/a ore,
see production capacity increased from 67 000 t/a to
                                                         been enhanced by recent significant discoveries            producing 20 000 t/a of rare earths concentrate. In
70 000 t/a by the end of 2004.
                                                         by other parties nearby, which may provide tie-in         phase 1, the concentrate will be exported to China
Expenditure: $150m.
                                                         potential for Petrel and Tern to service domestic         for toll processing into approximately 10 000 t/a rare
          OIL & GAS DEVELOPMENTS                         gas customers. A conceptual plan involves initial         earth oxides. Lynas will market all products from the
                                                         development of Petrel with a pipeline to an onshore       downstream processing under the Rare Earths Direct
Gorgon (Carnarvon Offshore Basin) - Gas
                                                         gas plant and a subsequent phase that completes           “RED” Brand. Lynas is also evaluating the feasibility
and Condensate Field
                                                         Petrel and develops Tern.                                 of secondary processing rare earths carbonate in
CHEVRON AUSTRALIA PTY. LTD.
                                                         Expenditure: $1b.                                         Australia.
The Gorgon Joint Venture is considering an LNG
(up to 10 Mt/a) and domestic gas development             Whicher Range (Perth Onshore Basin) - Gas                 Expenditure: $40m.
at Barrow Island, based on gas from the Gorgon           Field                                                     Employment: Construction: 100; Operation: 35
field. The restricted industrial use of Barrow Island     AMITY OIL NL
                                                                                                                                       ZINC/COPPER
has been approved, in principle, by the Western          The Whicher Range gas field, located 21 km south of
Australian Cabinet after evaluation of environmental,    Busselton, was discovered in 1968. Four previously        Teutonic Bore - Jaguar - Base Metal Deposit
social, economic and strategic aspects. Gas reserves     drilled wells confirmed a significant-sized gas field,       PILBARA MINES LIMITED
have been enhanced by positive results from an           but gas flow rates have been sub-commercial.               Ongoing prefeasibility studies of Pilbara Mines Ltd’s
exploration program in the West Gorgon area.             Subsequent work, including high-pressure injection        Jaguar base metal prospect, 54 km north of Leonora,
Development decisions by the Gorgon Joint Venturers      of carbon dioxide, to increase gas flow rates from the     have indicated a resource of 1.87 million tonnes
will be subject to market commitments. The joint         extremely tight sands, has indicated the possibility of   of zinc/copper. It is planned to develop a A$30-40
venture has applied for environmental approvals so it    commercial development. The latest well (Whicher          million underground mine, expected to have a 5-6
is in a position to start construction in late 2005.     Range-5), completed January 2004, was suspended           year life, with a possible start-up date of July 2005.
Expenditure: $11b.                                       as a potential gas producer. Geo-mechanical studies       Expenditure: $35m.
Employment: Construction: 3000; Operation: 600           have been undertaken to prepare and design a high-        Employment: Permanent: 100
                                                         pressure diesel fracture stimulation program. This
Macedon/Pyrenees (Carnarvon Offshore
                                                         work is planned for July/August 2004.
Basin) - Oil/Gas Fields
BHP BILLITON PETROLEUM PTY LTD                                   PETROCHEMICALS/CHEMICALS
These are two adjacent, but separate offshore            Burrup Peninsula - Ammonia Urea Plant
hydrocarbon fields within the West Muiron structure,      DAMPIER NITROGEN
about 50 km north of Exmouth. The Macedon gas            The Joint Venture between Agrium Inc of Canada,
field was discovered in 1992 by the West Muiron-3         Plenty River Corporation Ltd, Thiess Pty Ltd has been
well with a follow-up appraisal campaign in 1994. The    terminated. Plenty River and Thiess have signed a
Pyrenees oil and gas field was discovered in 1993 by      Cooperation Agreement to develop the A$900 million
the West Muiron-5 well. Development of the Pyrenees      ammonia and urea plant and have been given access
heavy oil accumulation would likely only proceed         to the site on the Burrup Peninsula set aside for an
as part of a larger heavy oil project undertaking.       ammonia/urea project. The plant would be world-
Macedon is under consideration for domestic market       scale and produce around 1.2 Mt/a of granular urea
opportunities.                                           and 100 000 t/a of ammonia. Urea is widely used
Employment: Construction: 35; Operation: 5



   34 Prospect June–August 2004
Significant resource projects underway or
planned in Western Australia
                                              Project value
                                               (estimated A$)
                                                                    Employment
                                                                Construction   Permanent
                                                                                           Get online and visit us
Iron and steel                                                                             Prospect magazine is produced quarterly by the Department
Rio Tinto/Robe mine, rail and port expansion       1250             500           200      of Industry and Resources as an internationally-circulated
BHP Billiton’s rapid growth project                  145            n/a           n/a      publication that showcases Western Australia’s mineral and
Hope Downs iron ore mine                           1050             500           300      petroleum industries.
Mineralogy (Cape Preston) mine & pellet plant      1400           2000            400      And we are online. Figures show that Prospect attracts
Fortescue Metals mine, rail & port                 1800           1000            300      about 18 000 website hits an issue, which significantly
Kwinana HIsmelt pig iron and steel plant             800            320            65      adds to the more than 10 000 hard copies of the magazine
Koolanooka mine and potential DRI plant              540            n/a           295
                                                                                           already distributed.
Koolyanobbing iron ore mine expansion                  20           120            35      Prospect is squarely aimed at industry executives,
Koolan Island iron ore mine                            50           n/a           n/a
                                                                                           financiers, suppliers and other people involved in the world’s
                                                                                           most exciting industry.
Sub total                                          7055           4440          1595
Nickel/cobalt                                                                              Prospect can be downloaded from the internet by visiting
                                                                                           the Department’s website at: www.doir.wa.gov.au
Mt Keith mine expansion                              150            n/a           n/a
Ravensthorpe mine                                  1400           1000            300
Lake Johnson — Emily Ann/Maggie Hays                   28            25           167
Sally Malay                                            50           150           120
Sub total                                          1628           1175            587
Petrochemicals
Burrup Fertilisers ammonia plant                     630            500            60
Japan DME — di-methyl ether plant                  1000           1000            150
GTL Resources methanol plant                         770            600            85
Dampier Nitrogen ammonia–urea plant                  900          1000            130
Sub total                                          3300           3100            425
Gas
Gorgon project                                   11 000           3000            600
LNG Train-4 and trunkline                          2400           2000             70
LNG Train-5 project                                1600           2000             70
Sub total                                        15 000           7000            740
Other
Alcoa Pinjarra alumina refinery optimisation          440          1000            n/a
Alcoa Wagerup refinery Train 3 expansion            1500           1000            150
Worsley refinery expansion                            192            400           n/a
Boddington Wandoo gold mine expansion                500            500           350
Kemerton titanium dioxide pigment plant expansion 470               500           200
Collie pulp mill                                     400            300            72
Telfer gold mine expansion                         1200           1222            620
Kalgoorlie manganese dioxide plant                   136            n/a            41
Sunrise Dam underground gold project                   87           n/a           n/a
Mt Weld rare earths project                            40           100            35
Jaguar base metals                                     35           n/a           100
Various port upgrades                                220            n/a           n/a
Ord irrigation (Mantinea Flats)                      108            n/a           n/a
Ord irrigation (stage 2) project                     600            200           825
Nifty Copper Underground expansion                   148            160            90
Magellan Lead                                          48           100            80
West Kimberley irrigation project                  1900             500         3000
Sundry projects — at least another                 3000           1500            300
Sub total                                        11 024           7982          5863
TOTAL                                A$38 007 million           23 697         9210
* not available or not applicable




                                                                                                                            Prospect June–August 2004      35
                                      COMMON USER FACILITY


                      USINESS
     FOR             B
OPEN




World Class fabrication, assembly and loadout facilities
· Protected and dredged harbour                     · Australia's largest portal crane with a
· A 15,000 tonne service and heavy lift wharf         150-tonne capacity, and a range of 20 tonne
                                                      and 50 tonne auxiliary overhead cranes
· A 3,000 tonne loadout wharf
                                                    · 40 hectares of laydown / assembly area
· A large sophisticated mobile fabrication hall
                                                    · Workers amenities and project offices

      License only the facilities you need, for the period you want.
                 Terms to suit large or small projects




                                                                              For more information contact:
                                                                        Mr Michael Bailey, General Manager
                                                                                     JBFM Babcock Pty Ltd
                                                  JBFM babcock     tel +618 9437 0500 - fax +618 9437 0555
                                                                          mike.bailey@jbfmbabcock.com.au
                                                                     www.australianmarinecomplex.com.au
Artwork to come from Ray Burns and be stripped in

				
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