A manganese joint venture between a Singapore-based miner and an Australian explorer has increased the chances of a new manganese discovery.
|Bryah Resources and OMH form an alliance to further manganese prospects|
|Aerial view of Bryah’s exploration site|
The unexpected agreement between a subsidiary of Singapore’s OM Holdings (OMH) and Australian Bryah Resources – a junior explorer probing the central Western Australian outback – has opened the door to the potential of new source of manganese supply.
OMH mines smelts and markets manganese ore and produces ferro- manganese alloys from its operations in Australia, Malaysia and Singapore. By contrast, Bryah Resources is a small explorer searching for copper and gold over an area exceeding 1000km2 in central Western Australia.
Neil Marston, Bryah’s Managing Director, an experienced mining executive, launched the company in 2017 with the hope of striking copper-gold.
“Raising funds for exploratory drilling for copper-gold has been a challenge, despite the land being highly prospective,” he said.
“We developed our new strategy of manganese mining after rock-chip sampling over several untested areas returned grades of 40 to 50 per cent manganese.”
The surrounding area is also home to the historic Horseshoe South manganese mine which had produced more than one million tonnes of high-grade manganese ore from the 1940s to 2011. The mineral strengthens steel and is an essential ingredient in steelmaking.
“We realised that manganese mining might provide cashflow to fund our copper-gold drilling programme,” Mr Marston said.
Bryah still remains set, however, on emulating the success of Sandfire’s DeGrussa copper-gold mine which lays just 60 kilometres away.
Bryah – still requiring suitable quantities of ore to support its new manganese-first strategy – secured options on the disused Horseshoe South mine.
When the company announced to investors its manganese prospects, it was approached by OM Holdings whose subsidiary, OM Manganese (OMM), mines manganese at Bootu Creek in the Northern Territory, which are due to be exhausted in 2021.
OM Group’s flagship Samalaju Smelting Complex in Sarawak, Malaysia, consists of 16 furnaces, six of which are dedicated to manganese production which OMH markets and distributes globally. Feedstock for its furnaces is critical, hence OMM’s interest in Bryah’s manganese.
OMM quickly tabled its interest in funding exploratory drilling for manganese on Bryah’s ground excluding the copper-gold prospects.
The two companies had complementary virtues, despite obvious differences in scale.
“Our agreement significantly de-risks our manganese strategy because exploration is now going to be funded by OMM who had expertise in the field,” Mr Marston said.
“In turn, OMM has access to our expertise in this area and, with the expectation of success on proven manganese ground, a good chance of securing suitable ore for their smelters. Moreover, OM Holdings had the mechanism in place to market and distribute our product.”
The latter was a critical point because the mining of any ore did not necessarily guarantee marketing, distribution and sales. OMH’s expertise in this area allayed those concerns.
Bryah was happy with the copper-gold interest remaining 100 per cent under Bryah ownership. In April, a joint venture and farm-in arrangement was signed between the parties. Before the ink was dry, Bryah outlaid AU$340,000 in cash and shares to buy the old Horseshoe South mine.
The agreement with OMM is worth up to AU$7.3 million to Bryah. In turn, OMM has the potential of gaining up to a 70 per cent interest in Bryah’s manganese rights.
Under stage one of the agreement, OMM paid AU$1 million to Bryah, which included AU$500,000 for exploratory drilling, completed in July in return for a 10 per cent interest. Good results persuaded OMM to agree in August to proceed to stage two by funding AU$2 million for more drilling by June 2022.
OMM will have earned a 51 per cent joint venture interest in the manganese once the AU$2 million is spent. Bryah remains the project manager throughout stage two.
Mr Marston said that once OMM have earnt their 51 per cent interest, Bryah will be able to elect to dilute its interest in manganese.
“If OMM funds a further AU$1.8 million on the project, that will give OMM a 60 per cent stake. Bryah can elect to dilute its interest even further if OMM funds another AU$2.5 million, which will give OMM a 70percent stake and raise their total investment to AU$7.3 million. Bryah would then retain 30percent interest in manganese.”
The agreement has transformed Bryah Resources’ fortunes, coinciding with encouraging manganese drilling results on previously undrilled prospects.
The joint venture gave Bryah the confidence to go to market, seeking a AU$2 million placement to fund its copper-gold drilling programmes. With the cash in, Bryah’s drill rig has hit the ground at tempting targets located around Gabanintha, including Tumblegum South.
“This drilling forms a key part of our short-term strategy, which is to define gold mineral resources at Tumblegum South where such resources could potentially be treated through nearby gold processing facilities,” Mr Marston said.
“The joint venture we struck with OMM is allowing us to pursue and explore our manganese and copper-gold interests separately but simultaneously,” he said.
“It is an ideal outcome for everyone, and we are doing our best to maximise the outcome.
“Our ambition is to identify the next copper-gold deposit in the Bryah Basin and develop it. The outlook for manganese remains strong and, in the coming age of battery-powered electric vehicles, we see manganese playing a leading role in new-generation batteries. That can only grow the market for manganese outside of its traditional steelmaking applications.
“And with gold prices at near record highs, there cannot be a better time to be exploring for gold also.”
*Article published in the October-December 2019 issue of The Asia Miner