Batten down the hatches Highgrade Online By Richard Roberts, 12 November 2007
CLIVE Jones has had mixed fortunes pegging mineral leases under Rio Tinto's nose. The joint managing director of Western Australia iron ore explorer Cazaly Resources may have missed out on Shovelanna - the highly contentious WA property he thought he'd secured. But, with help from university mate Peter Batten, Jones is having a much better time of it in Namibia.
Jones sent well-travelled consulting geologist Batten to southern Africa early in 2005 to peg as much prospective uranium ground as possible in Namibia and Botswana. A year later they got confirmation that they had secured big land packages west and south-west of Rio Tinto's Rossing uranium mine, and around Paladin Resources' emerging Langer Heinrich project. Now a significant new uranium operation at Goanikontes, near Rossing, is being modelled on the established world top-10 yellowcake producer.
Iron ore is clearly the commodity under an international spotlight made brighter by the BHP Billiton/Rio Tinto merger mania. Batten, who Jones asked to be managing director of Bannerman Resources Ltd, is adamant uranium is not far behind. Rio Tinto had its stake in Rossing up for sale when Jones' Turgi Investments was applying for tenements down the road, but the mining giant has a very different view of the asset now. While seeking to offload its US steaming coal business and exit uranium (Kintyre) in WA, it is expanding Rossing and - like BHPB - making uranium a more integral part of its energy focus going forward.
"With 20-20 hindsight now, it's absolutely amazing that the ground [we pegged] was open. The time Clive sent me over was two months ahead of everyone else, so we got in there and had the pick of everything," Batten said.
"Rossing was actually for sale in 2005, and therefore they weren't looking to acquire any more land. They changed their mind in 2006. [Paladin] was going through their BFS but still picking up ground. They wanted ground to the west [of Langer Heinrich] and had an application on it, and we got almost everything else around it [the mine].
"I don't think the gap between supply and demand has got any smaller, even though there is supposed to be all this new production coming on line. But we're just not going to meet demand. The Russians are now talking about renegotiating the price of their secondary uranium - repricing the stuff they're getting from downgrading weapons grade uranium. So whether that comes out of the market or not, we don't know. That represents about 25% of current supply.
"Cigar Lake [in Canada]: we're not sure if that's going to come on line. That?s 10% of the world's new consumption. And no-one else has been able to gear up.
"On the other side you've got China committing to another 12 reactors ... by 2025. There are 443 reactors now and the number planned has risen to 332 not including the new ones China has committed to build. To commence construction of a nuclear reactor you have to be able to identify a source of fuel."
WA born and bred, Batten graduated from Curtin University in 1983 and went to work on Amax Resources' Mt Keith nickel drilling program in the state's north eastern goldfields. He spent the second half of the 90s building one of Australia's biggest geological consulting firms, EMC, which he sold in 2000. "We ended up employing 56 professionals. We got exposed to a lot of areas, particularly iron ore and gold, and I would say nearly every iron ore project out there [in WA] now we had a look at," he said.
Batten worked at difficult gold mines such as Three Mile Hill near Coolgardie, and Randalls and Mt Monger near Kalgoorlie. The rugby-mad 46-year-old is a burrower - a mining geologist who believes in exploration by mining - hence while he sees better exploration prospects outside Goanikontes Anomaly A he'll waste as little time as possible getting the most accessible target into production.
"The great thing about mining geology is that each mine's a PhD in package, and the level of understanding you gain directly relates to your control on the operation," he said. "At Three Mile Hill in the end there was a lot known about it that we were not expecting when we opened it up. The same at Randalls and Mt Monger. When you do open something up, you're not just poking pins into a haystack and trying to guess what's in the middle. You?re actually seeing the geology and the mineralisation and controls on it.
"Goanikontes Anomaly A is not our largest or highest grade prospect, but it is the easiest one to get to and it had more drill holes in it that anything else. We've just headed for the development path and while it's [the project] grown, it's not beyond our capabilities. Certainly even though our cap ex is going to be a large number, it's not overly large, and the payback period is very short."
Batten became a director of Berkeley Resources in 2002 and helped float the company the following year. It was initially focused on gold exploration in China's Shandong province, but has since switched its attention to uranium in Spain. Namibia, Botswana and Spain are just three of the many countries attracting substantial exploration expenditure by Australian and Canadian companies at the expense of parts of Australia, including Batten's home state which allows uranium exploration but not mining. He said extensive travel meant he didn't see as much of his wife, 15-year-old son and 12-year-old daughter as he'd like. But ultimately, Namibia's clear-cut mining laws, political stability and support for uranium mining made it a superior place to operate and Batten doesn't see an increasing sovereign risk threat in neighbouring African states extending to Namibia.
"Namibia and Botswana have both fared very well in recent industry investment risk surveys - better than Australia in fact," he said.
"I think recent moves in the Australian political scene are probably more worrying. WA, for instance, has unwritten policy pertaining to iron ore. At least the government of Namibia has a written policy that they maintain. They don't pull something out of a bottom drawer at the last minute, which is quite refreshing.
"The political argument that is put forward here on uranium doesn't have merit. Namibia has been exporting uranium for 31 years through Rossing, and is already a world player producing 7-8% of world supply, yet they have a law which doesn't allow nuclear material to be brought back into the country. So no-one expects them to accept nuclear waste. To put up the argument here [in WA] that to export means that you must import is ridiculous."
In the meantime, there are plenty of miles still to travel on Goanikontes. Batten believes, though, that the project is shaping up to be the company maker his friend and Bannerman non-executive director Jones saw for Cazaly in Shovelanna (a dream he continues to hold on to).
"[The late Kerry] Packer said you only get one Alan Bond in your life. I keep telling everyone you only get one Goanikontes," Batten said.
"This is the most exciting career episode for me, no doubt."
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