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DIGGeRs & DeALeRs ReVIeW

Dealing with Tropicana

&A was the hot topic for discussion at istic view that we could maybe buy the other the known extensions of the mineralisation
MDiggers & Dealers and much chatter 70%; it is a two-way street and at any stage we need for Tropicana and the Havana open
was on the future of Tropicana. along the journey we would have enter- pit, as well as the extensions at depth of the
A two-stage process is under way for tained the opportunity to own more of what Boston Shaker underground. The open pits
AngloGold Ashanti Ltd (70%) and IGO Ltd is a first-class asset. contain a remaining mineral resource of 2.95
(30%) to determine what exactly is fair value “When you look around the gold space moz to be mined over the life of the mine.
for Tropicana, 330km east of Kalgoorlie. in Western Australia, many of them [mines] The underground mineral resource outside
A review of Tropicana, which was one of have been running a long time and they the open pit mineralisation totals 2.85 moz, of
Australia’s few world-class greenfields dis- must be getting ready to run for their pension this Boston Shaker accounts for 732,000oz
covery successes in the 2000s, has been whereas Tropicana is a new discovery, in a gold,” AngloGold general manager at Sun-
prompted by IGO’s intention to realise full new belt; it has only been running since 2013 rise Dam Richard McLeod said at Diggers.
value for its 30% stake in the asset. and the upside opportunity through explora- Commercial production at Boston Shaker
“The first stage is purely technical collabo- tion could be awesome.” was achieved in timely fashion and within
rating with AngloGold and the aim is to draw Tropicana was discovered by Gold Road budget ($105.7 million) during September
the strategic view of Tropicana and agree Resources Ltd managing director Duncan and is poised to run at a rate of 1.1 mtpa @
that and be able to communicate that value Gibb, who declined to comment on any spe- 3.5 g/t gold delivering 100,000 ozpa over
proposition to the market,” IGO managing cific M&A opportunities when contacted by seven years.
director Peter Bradford said. Paydirt. Underground production from Boston
“First prize for us quite frankly would be Shaker is expected to reach full produc-
seeing that reflected in the stock price and tion rate of 100,000 ozpa gold by the end
continuing to hold the asset. But the overall of 2020, with capital payback on the under-
aim is to realise value for shareholders, and ground mine expected to take just over three
we would see any market traction from that years.
compelling story then that second phase With the Boston Shaker orebody continu-
would be to pursue potential divestment or ing at depth, mine infrastructure has been
demerger.” set up to cater for future growth.
At the time of print, the Tropicana data- “Boston Shaker will contribute higher
room remained closed to outsiders, as Brad- grade mill feed to improve the gold produc-
ford explained the reasoning behind IGO’s tion profile and enhance cash flow from
move. 2021-23 when the mine plan includes peri-
“We look across the nickel space, our- ods of higher waste stripping in the Havana
selves and Western Areas [Ltd] and depend- open pit,” McLeod said.
ing on which sell side research you buy you “The next stage of the Havana 1 cutback
have us and Western Areas neck and neck is now under way, Tropicana, Havana, Ha-
about 0.8-0.85 whereas the gold peers are vana South and Boston Shaker open pits
running 1.4 to two times or something stu- have been mined as a series of cutbacks
pid [over value]; we are not seeing that value and sequenced and scheduled to maximise
for Tropicana to give us some headwind value at a mining rate that delivers the best
against Western Areas, which theoretically all round mining unit cost for the scale of the
we should. operation.”
“We think that is the gap and we have to McLeod also reported that development
communicate that gap to the market, get it of the underground drill drive from the Bos-
realised and if we can’t realise that, we’ll ton Shaker decline towards the Tropicana
have to potentially demerge it to realise it.” orebody had advanced about 500m, with
Talk under the big tent at Diggers had Peter Bradford the first diamond drill rig firing up in the week
some analysts estimating IGO’s 30% stake of Diggers.
in Tropicana could be worth anywhere be- “A drill drive is also well positioned and
tween $750 million to $1 billion, however, Meanwhile, AngloGold senior vice presi- provides us production access to the Tropi-
Bradford was mute on that matter. dent, Australia, Mike Erickson said while the cana underground should the drilling be suc-
He did rule out the possibility of making process with IGO was ongoing, there was lit- cessful. We continue to confirm the down-
a pitch for full ownership of Tropicana and tle more he could add to the story. dip extents of the Boston Shaker lodes and
maintained that AngloGold’s greater portion “There is a process currently underway have a study under way to assess open pit
of the mine was not up for sale. and I am actually not in a position to com- and underground trade-off options for the
“AngloGold are not going to sell. If you ment on it. It is early days, it is a great asset development of the Havana Deeps and Ha-
own a good piece of something good, you and extremely well managed if I do say so vana South lodes,” McLeod said.
always want to own a little bit more of some- myself,” Erickson said. “Exploration work continues on under-
thing good,” Bradford said. On a 100% basis, Tropicana is poised standing the complex geology north and
“There has always been formal or informal to deliver 400,000-450,000oz in 2020 and south of Tropicana, looking for the down-dip
interest in the asset since I’ve been a part of 2021 before lifting to 450,000-500,000 ozpa extension on those orebodies.”
IGO. It has not been a one way street, but from 2022 onwards. – Mark Andrews
we have always had a desire and opportun- “Significant potential remains to unlock

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