Regency Mines Takes The Kokoda Trail To A Man-Sized Nickel Project
By Alastair Ford
minesite.com
“It’s a real man-sized project”, says Regency Mines chairman Andrew Bell of his company’s Mambare nickel laterite project in Oro province, Papua New Guinea. It’d better be, because it’s located in man-sized country. It was up on the ridges of the Owen Stanley Range, the highest peak of which punches through 4,000 metres, and just a stone’s throw away from Mambare, that the Australian army fought one of its most famous battles of all time, and checked the advancing Japanese at Kokoda. It was a battle famed for the extreme conditions under which it was fought. The days up there are hot, the nights are cold, the rain is torrential, and the potential for disease is almost unlimited. At the battle’s end, one officer of the distinguished 39th Battalion referred to it as the Australian Thermopylae.
The key supply line on the Australian side was the Kokoda Trail, which runs back down from the old mining districts in the hills - opened up in the 1890s - to Port Moresby, the capital. This is also Regency’s key supply line, and although the extremes the company faces are on the mild side compared with those faced by the soldiers who fought Australia’s coming of age battle, it’s not been an easy logistical exercise working up there. Last year a typhoon hit the region, and the road was cut. And not just once, but in thirty places. At one stage Mr Bell had to swim a river in order to continue his journey. He refers to these events, somewhat dryly, as “genuine supply problems”.
However, there may not be a repeat of those supply problems for years to come, because American multinational Cargill has moved into the region in a big way, and is anxious to keep the road open to ensure product supply. This company isn’t in mining, it’s in one of the world’s few other booming sectors, agriculture. The product Cargill wants to ship along the Kokoda Trail is palm oil, which has risen in price dramatically over the past few years. And, with annualised profits of over US$4 billion per year, Cargill certainly has the economic clout to ensure that if the bridges go down, they rapidly go up again.
This is good news for Regency, which ought to benefit directly from improvements in infrastructure, and indirectly from the region’s overall economic growth. The fame of Kokoda is more of a mixed blessing. For a while there was an internal debate inside the company about whether to call Mambare “Kokoda” instead, but it was thought that this might trample somewhat on Australian sensibilities. As it is, another mining company has a license that cuts right across the Kokoda Trail. Nice to have the mineralization, shame the Australian government, which is rather proud of its army’s victory in the hills up there, is lobbying the Papua government against allowing development. And Papuan soldiers died in that campaign too. Luckily for Regency, its tenements sit well to the side of the actual Trail, so perhaps a choice donation to a memorial fund somewhere will be enough to placate any objections.
There are two other major nickel developments in the wider area: Highlands Pacific’s Ramu project, some distance to the north west, and Resource Mining’s Wowo Gap project, situated some 200 kilometres to the east of Port Moresby. According to Andrew Bell, Mambare just might be bigger than both of them. If he’s right, that’s really saying something. But it’s early days yet. Regency knows it’s got good mineralization at Mambare. It also has a fairly good understanding of the geology, so far as it goes. The structure is fairly straightforward, comprising a three to five metre layer of ash, then seven metres of limonite grading around one per cent nickel, 0.1 to 0.2% cobalt, and between 40% and 50% iron. Underneath that there’s a seven to eight metre layer of saprolite grading between 1.25% and 1.6% nickel, and between 12% and 15% iron. The big question is how far the mineralization goes. “It’s potentially one of the biggest nickel projects in the world”, enthuses Andrew Bell, although the market won’t know if he’s on the money with that statement until later in the year, when an inferred resource calculation will be announced. But yes, Regency has finally managed to get drill rigs up those broken roads and on to site.
But it’s intriguing to hear Andrew Bell musing that the numbers he’s likely to present under the Australian JORC reporting code might not be the ones that really matter. They may drive the market in London, but we all know the balance of power is shifting elsewhere. “Several Chinese companies are interested”, he says, “but they’re not a bit concerned with JORC”. What they are interested in, is consistency of grade across the whole plateau that Regency has under license. So all Regency needs to do make sure that drilling takes place right across the plateau, and report the core results to the Chinese. The Chinese will then do their own inferring, without recourse to the Joint Ore Reserves Committee.
Andrew Bell also notes that not a million miles away, across what was known in the old days as the South Seas, Toledo started direct shipping nickel ore from its project in the Philippines before it had proved up a resource. This is mining the old fashioned way, mining before the world was turned upside down by Bre-X, mining when you know the ore is there, and don’t have to prove it to anyone except your buyers. But in these fragile markets the only people with the confidence to approach things that way are at very different ends of the spectrum – the world’s sizeable community of artisanal miners, who mine what they see and worry about tomorrow when it comes, and the Chinese, who have the financial muscle and the overwhelming economic need to buy first and ask questions later. |
