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Mining
Facing more swings and roundabouts than a poorly planned children’s playground subject to serial complaints in your local newspaper, the iron ore market has been a rough ride in 2022.
More than half of the companies on our watchlist are down in 2022, not withstanding a recent run inspired by China’s potential reopening that has sent prices more than 30% higher over the past month back over US$100/t.
In October the outlook was very bleak indeed for junior iron ore stocks, as the threat of continued economic pain in the world’s steelmaking heartland sent prices below US$80/t, having peaked at more than US$160/t following the Russian invasion of Ukraine.
Indeed, many of the companies on the ASX with iron ore in their back pockets pulled the rabbit out of the hat, diverting your gaze while they reemerged from behind the curtain as lithium or rare earths stocks.
But November’s terrific turnaround has seen a handful of companies emerge from the wreckage as likely winners in 2022 … if you held your nerve long enough.
The big boys in Rio Tinto (ASX:RIO), BHP (ASX:BHP) and Fortescue Metals Group (ASX:FMG) (just) all look like they’ll end 2022 better off than they started.
But you’ve heard us talk about them plenty in our Monsters of Rock and Ground Breakers columns (wink, wink, nudge, nudge).
Ignoring companies receiving their kudos for boom EV metals like lithium, rare earths and copper (here’s looking at you Mineral Resources (ASX:MIN), Dreadnought Resources (ASX:DRE) and Havilah Resources (ASX:HAV)) , here at Bulk Buys we’ve combed the ASX for a group of juniors who have matched the majors in 2022.
Mark Creasy has been in the headlines for his investment in Galileo Mining (ASX:GAL), a cobalt and PGE stock whose Callisto palladium find ranks as one of the few interesting discoveries of the year.
It hasn’t matched GAL’s Bradmanesque 334% rise this year, but at 112.5% WA’s super-prospector has had another feather in his cap with CZR Resources.
Creasy owns a controlling stake of roughly 55% in CZR, which owns the ‘Robe Mesa’ DSO deposit immediately north of Rio Tinto’s Mesa F deposit in the Pilbara.
Rio are said to be drilling literally 50m the other side of CZR’s tenement boundary, opening the door for a potential takeover by the iron ore giant, which produces around 30Mt from its Robe Valley operations each year.
A definitive feasibility study is ongoing into a standalone 3Mtpa DSO operation at Robe Mesa, with CZR announcing plans to share infrastructure with fellow junior Red Hill Iron earlier this year.
Robe Mesa hosts 37.5Mt at 56% Fe (62.6% Fe calcined, 55% Fe cut-off grade) but an updated mineral resource is expected to be delivered in mid-December, with a maiden ore reserve and mine plan due in January.
Hawthorn Resources has contented itself with small-scale gold mining in recent years, but it is the news Gina Rinehart’s Hancock Prospecting has taken an interest in its Mt Bevan iron ore JV that has investors humming.
It’s backed by Chris Corrigan, of Waterfront Dispute fame, and Chinese group Feng Hua, Hawthorn and its majority JV partner Legacy Iron Ore (ASX:LCY) brought Hancock in last year to lead a PFS into the development of a new magnetite operation at Mt Bevan in the Goldfields last year.
Hancock’s Atlas Iron is leading the study, taking a 30% in the JV, with Legacy (42%) and Hawthorn (28%) still on board.
Rinehart’s business has, among other things, set its sights on becoming a 100Mtpa iron ore player, maintaining its status as Australia’s fourth largest producer against friendly opposition from MinRes, expanding beyond the ~70Mtpa produced currently from its 70% owned Roy Hill mine and Atlas.
They include other magnetite developments such as the long-dormant Hardey project. Magnetite orebodies like Mt Bevan are lower in grade than hematite and require energy intensive processing to create a saleable product.
But that concentrate is typically super-high in grade, meaning it captures a significant premium over the 62% Fe benchmark and is suited to low emissions steelmaking.
Hancock can earn up to 51% of the JV by completing the PFS, which would leave Hawthorn with 19.6% but a deep pocketed partner leading the way.
Champion Iron has completed the phase 2 expansion of its Bloom Lake mine in Canada’s icy Labrador region, picked up for peanuts during the downturn in 2015.
Now a $3.6 billion company, Champion plans to expand from ~7.5Mtpa to 15Mtpa with the increased capacity from Bloom Lake’s second phase, selling a magnetite concentrate with a grade in excess of 66.2% Fe at a cash cost of C$46.6/dmt.
CIA, which was looking at a year in the red a couple months ago amid falling iron ore prices and premiums as Chinese mill owners put pragmatism over emissions reductions, says its product reduces emissions in the blast furnace by 10%.
It is also working on converting its resources into a 69% Fe concentrate which could work in electric arc furnaces, 50% lower in emissions than conventional blast furnace steelmaking.
Formerly Red Hill Iron, the under the radar junior has paid out three dividends, including an initial $1.20 per share payout since selling its 40% interest in the Red Hill Iron Ore JV to MinRes last year for an initial $200 million.
MinRes is now developing the RHIOJV as part of its 35Mtpa Onslow Iron project in the Pilbara. Another $200 million CASH is due for RHI once the first commercial shipment from the tenements departs from WA’s coast.
MinRes intends to enter production at the $3 billion development by the end of next year.
RHI will also have a 0.75% royalty over all future production from the RHIOJV tenements, the first 10 years from the APIJV owned Upper Red Hill Creek and all production from MinRes’ Bungaroo South tenement associated with the RHIOJV production.
Josh Pitt-backed RHI still owns the low grade Panawonica iron ore project, as well as gold and base metals interests in the West Pilbara, along the boundary between the rich Hamersley and Ashburton basins.
Mount Gibson Iron is yet to return to the 2022 highs of ~75c it hit in May this year, but is still an overall winner for 2022.
A ~20% run over the past month has steadied the ship for its Koolan Island mine, one of the few hematite mines outside Brazil to ship high quality 65% Fe hematite DSO.
The co-location of its port facilities on the Kimberley Island means MGX does not face the issues its peers have with long haulage routes and infrastructure requirements.
A processing plant fire halted proceedings in August, but the mine operated with decent cash operating costs of $67/wmt FOB and has maintained cost guidance of $70-75/wmt, leaving a margin still at premium 65% Fe prices.
MGX plans to sell 3.2-3.7Mt from Koolan Island in FY23, weighted to the second half of the year.
Iron ore prices have been fed a healthy diet of Chinese property support and a softening of its Covid stance in recent days, raising hopes steel demand will improve in 2023.
The Singapore iron ore contract was fetching US$108.30/t yesterday afternoon.
According to Goldman Sachs, Chinese steel production — the main factor in iron ore demand — is on track to decline 2% in 2022, its second straight drop.
Markets are tightly balanced, with an 8Mt surplus projected in 2022 by the investment bank, rising to 46Mt next year.
However, that will largely be driven by a 41Mt lift in supply out of Brazil.
Despite expectations Vale would lift production substantially by the end of 2022, Brazilian seaborne iron ore supplies are projected to fall from 367Mt last year to 346Mt by the end of December.
In July Vale cut its guidance from 320-335Mt to 310-320Mt, cementing the No 2 exporter status it has held since slipping behind Rio Tinto following the Brumadinho dam disaster in January 2019.
| CODE | COMPANY | PRICE | 1 WEEK RETURN % | 1 MONTH RETURN % | 6 MONTH RETURN % | 1 YEAR RETURN % | MARKET CAP |
|---|---|---|---|---|---|---|---|
| MIN | Mineral Resources. | 89.4 | 9% | 22% | 48% | 100% | $ 17,201,686,392.00 |
| DRE | Dreadnought Resources Ltd | 0.092 | -4% | -16% | 124% | 96% | $ 298,150,020.45 |
| CZRDA | CZR Resources Ltd | 0.25 | -5% | 13% | -6% | 88% | $ 56,077,256.25 |
| HAV | Havilah Resources | 0.31 | -3% | -2% | 15% | 88% | $ 94,991,763.00 |
| GRR | Grange Resources. | 0.875 | 15% | 29% | -48% | 76% | $ 972,164,506.32 |
| CIA | Champion Iron Ltd | 6.91 | 15% | 43% | -12% | 57% | $ 3,568,632,569.40 |
| GEN | Genmin | 0.24 | 14% | -14% | 30% | 55% | $ 70,821,962.50 |
| MGX | Mount Gibson Iron | 0.51 | 21% | 24% | -28% | 40% | $ 649,714,343.16 |
| BHP | BHP Group Limited | 46.56 | 6% | 21% | 0% | 30% | $ 237,131,060,226.36 |
| HAW | Hawthorn Resources | 0.12 | 4% | 41% | 4% | 22% | $ 41,689,451.63 |
| RIO | Rio Tinto Limited | 116.06 | 11% | 25% | 0% | 22% | $ 43,109,338,931.82 |
| FMG | Fortescue Metals Grp | 20.7 | 9% | 30% | -4% | 21% | $ 64,750,632,225.54 |
| RHI | Red Hill Minerals | 3.85 | -10% | 8% | 20% | 19% | $ 242,546,966.20 |
| MDX | Mindax Limited | 0.059 | 0% | 0% | 0% | 18% | $ 115,533,663.12 |
| FEX | Fenix Resources Ltd | 0.24 | 2% | 14% | -25% | 9% | $ 145,928,480.00 |
| SRN | Surefire Rescs NL | 0.0125 | -4% | -4% | -62% | 4% | $ 20,557,725.20 |
| MAG | Magmatic Resrce Ltd | 0.095 | 0% | -14% | 34% | 2% | $ 28,386,508.61 |
| SRK | Strike Resources | 0.095 | -3% | 0% | -41% | 1% | $ 26,460,000.00 |
| CTN | Catalina Resources | 0.009 | -5% | 29% | -5% | 0% | $ 11,146,382.03 |
| HIO | Hawsons Iron Ltd | 0.098 | 9% | -7% | -83% | -11% | $ 77,810,559.75 |
| TLM | Talisman Mining | 0.13 | -4% | 0% | -28% | -16% | $ 25,344,832.10 |
| TI1 | Tombador Iron | 0.025 | 9% | 25% | -24% | -17% | $ 51,287,576.95 |
| MGT | Magnetite Mines | 0.017 | 6% | 6% | -37% | -19% | $ 64,460,252.55 |
| LCY | Legacy Iron Ore | 0.019 | -5% | 19% | -16% | -24% | $ 121,729,697.78 |
| FMS | Flinders Mines Ltd | 0.44 | -12% | -6% | 5% | -24% | $ 77,670,345.42 |
| AKO | Akora Resources | 0.17 | -11% | -8% | -28% | -26% | $ 10,794,480.48 |
| JNO | Juno | 0.091 | -2% | -5% | -17% | -27% | $ 12,480,536.09 |
| AMD | Arrow Minerals | 0.0045 | 0% | -10% | 50% | -31% | $ 9,151,942.92 |
| EQN | Equinoxresources | 0.13 | 0% | 8% | -24% | -34% | $ 5,850,000.13 |
| GWR | GWR Group Ltd | 0.061 | 0% | 0% | -47% | -39% | $ 19,594,215.96 |
| IRD | Iron Road Ltd | 0.13 | 4% | 4% | -28% | -40% | $ 103,981,969.52 |
| VMS | Venture Minerals | 0.024 | -8% | 14% | -40% | -41% | $ 42,298,982.21 |
| PFE | Panteraminerals | 0.12 | 0% | -17% | -8% | -43% | $ 6,180,134.40 |
| EFE | Eastern Resources | 0.034 | -17% | -8% | 17% | -45% | $ 37,531,644.05 |
| ADY | Admiralty Resources. | 0.008 | 0% | 14% | -38% | -47% | $ 9,125,054.07 |
| BCK | Brockman Mining Ltd | 0.023 | 0% | 0% | -41% | -50% | $ 213,445,339.01 |
| CUF | Cufe Ltd | 0.014 | 0% | 8% | -53% | -52% | $ 14,491,685.48 |
| ACS | Accent Resources NL | 0.025 | 0% | 0% | -58% | -55% | $ 11,650,682.08 |
| MIO | Macarthur Minerals | 0.15 | 11% | 7% | -47% | -65% | $ 28,161,092.96 |
| PLG | Pearlgullironlimited | 0.028 | 40% | 17% | 4% | -65% | $ 1,427,460.01 |
| RLC | Reedy Lagoon Corp. | 0.011 | -8% | 10% | -52% | -68% | $ 6,131,696.03 |
| MGU | Magnum Mining & Exp | 0.02 | -13% | -29% | -62% | -77% | $ 15,287,326.32 |
A return to prices for Newcastle thermal coal above the US$400/t mark was enough to send producers of the fossil fuel back into go mode yesterday.
Yancoal (ASX:YAL) lifted 5.14% to $5.625, with Whitehaven Coal (ASX:WHC) up nearly 3% at 3.30pm AEDT.
Coronado (ASX:CRN), New Hope (ASX:NHC) and Stanmore (ASX:SMR) were all in the green as investors eyed higher prices.
It comes despite growing chatter about plans from the Albanese Government to place a cap on domestic coal prices, which are facing push back from coal-rich states New South Wales and Queensland.
Coking coal miners, meanwhile, are enjoying some of the tailwinds of China’s reopening, with premium hard coking coal futures up 1.6% to US$264.3 on Monday.
Despite Australian coal remaining locked out of China due to diplomatic tensions dating back to 2020, Chinese steel demand still has an impact on Aussie met coal pricing.
| CODE | COMPANY | PRICE | 1 WEEK RETURN % | 1 MONTH RETURN % | 6 MONTH RETURN % | 1 YEAR RETURN % | MARKET CAP |
|---|---|---|---|---|---|---|---|
| NAE | New Age Exploration | 0.009 | 13% | 20% | -10% | -10% | $ 12,923,090.19 |
| CKA | Cokal Ltd | 0.2 | 21% | -2% | 43% | 29% | $ 188,289,796.00 |
| NCZ | New Century Resource | 1.04 | -5% | 6% | -53% | -49% | $ 139,069,416.02 |
| BCB | Bowen Coal Limited | 0.275 | 4% | -8% | -26% | 112% | $ 494,331,348.42 |
| SVG | Savannah Goldfields | 0.18 | 6% | -18% | 13% | -6% | $ 32,793,703.22 |
| GRX | Greenx Metals Ltd | 0.575 | 46% | 109% | 229% | 174% | $ 144,563,664.48 |
| AKM | Aspire Mining Ltd | 0.078 | -1% | -7% | -10% | 0% | $ 39,595,684.83 |
| AVM | Advance Metals Ltd | 0.012 | -8% | 9% | 9% | -25% | $ 5,784,528.83 |
| AHQ | Allegiance Coal Ltd | 0.047 | -6% | -15% | -89% | -88% | $ 48,235,004.59 |
| YAL | Yancoal Aust Ltd | 5.64 | 3% | 5% | 3% | 126% | $ 7,064,350,987.95 |
| NHC | New Hope Corporation | 5.77 | 2% | -11% | 48% | 180% | $ 4,983,508,824.00 |
| TIG | Tigers Realm Coal | 0.015 | 25% | 0% | -35% | -25% | $ 196,000,535.52 |
| SMR | Stanmore Resources | 2.6 | 2% | -16% | -1% | 184% | $ 2,307,537,146.88 |
| WHC | Whitehaven Coal | 9.81 | 4% | -2% | 81% | 302% | $ 8,614,073,842.55 |
| BRL | Bathurst Res Ltd. | 0.895 | 17% | 3% | -42% | 39% | $ 172,223,802.00 |
| CRN | Coronado Global Res | 2 | 1% | -2% | 4% | 114% | $ 3,269,084,773.50 |
| JAL | Jameson Resources | 0.125 | 4% | 92% | 67% | 56% | $ 48,938,887.50 |
| TER | Terracom Ltd | 0.85 | 9% | -7% | -1% | 400% | $ 695,580,893.16 |
| ATU | Atrum Coal Ltd | 0.0065 | 0% | 8% | -22% | -74% | $ 9,046,044.62 |
| MCM | Mc Mining Ltd | 0.245 | 9% | 11% | 114% | 288% | $ 95,443,581.36 |
| DBI | Dalrymple Bay | 2.45 | -2% | -1% | 20% | 21% | $ 1,249,319,400.84 |
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