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Diggers and Dealers: Some of the news, all of the jokes as miners get ready for primetime
Mining
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- All the, very unserious, news and muses from the sidelines of Australia’s biggest mining forum
- Gold Fields fields (our) questions on De Grey’s Hemi mine
- Liontown boss Turning Japanese in lithium bombast
The first day of Diggers and Dealers in Kalgoorlie has come and gone.
We were going to bring you all the talking points from the annual mining talkfest, but one of our reporters has been shunned and ridiculed for, allegedly, wearing attire marking him as a Communist sympathiser.
A Western Bulldogs beanie was the offending item. We thought of tossing our recorder into the Super Pit in protest.
But we were talked down and convinced to return for another day. Scraping through the wreckage of a night admiring the paving on Hannan Street, let us regale you with tales you won’t get on the live stream.
Everybody Loves De Grey-mond
Our favourite game at Diggers and Dealers is asking every gold miner and explorer when they are buying De Grey Mining (ASX:DEG) and its Hemi gold mine.
The 9.5Moz gold deposit, part of the 11.6Moz Mallina gold project near Port Hedland, is the largest in the development pipeline this century in Australia. A DFS is due this quarter, but the numbers on the previous PFS are already something else — 540,000ozpa for a decade spitting out around $4.2 billion of free cash after the taxman has his take.
We’ve asked a few penny stocks with little more than some dusty gold nuggets to their name, whose board of directors may or may not include people no longer alive, about their bid plans, just to see who we can make squirm.
There are a handful of more serious propositions floating around Kalgoorlie ahead of DEG boss Glenn Jardine’s presentation tomorrow.
Gold Road (ASX:GOR) managing director Duncan Gibbs, whose company currently holds a strategic stake of almost 20% of the more than $2 billion explorer, escaped without a serious grilling.
But there are feelings bigger dogs could be in the yard. Newmont is acquiring Newcrest (ASX:NCM), signalling a pivot back to Australia for the world’s biggest gold miner. Agnico Eagle and Barrick have also been kicking around WA.
Then there’s Gold Fields, the South African giant which missed out on big fish Canadian target Yamana Gold last year to Agnico and Pan American Silver and is keen to bolster its Australian portfolio, which currently includes the St Ives, Granny Smith, Agnew and half of the Gruyere gold mine.
Its last M & A move was a decision to take a 50% stake in Osisko Mining’s Windfall mine in Canada.
“It’s expensive at the moment, I think it’s expensive to do a deal. But for the right asset a deal is worth doing no matter what the price,” Gold Fields’ Australian boss Stuart Mathews said.
“We would still consider M & A in Australia. Absolutely. We wouldn’t like to stop.”
What about a cheeky question on Hemi itself?
“Well the thing is it’s got a long way to go … they’re still looking at where’s the reserves and look it’s a great project … looks like they’re looking for a deal but I don’t know.”
We’ll file that under the no comment category.
Where Gold Fields is keen to grow is through exploration — it’s spending around $80m a year in WA — and through boosting the renewable capacity at its mines, while its Granny Smith project near Laverton remains under-fed, its mill is operating around 20 days a month.
“We managed to get a commitment from executive and the board to spend $100 million for five years on our four mines. We have made massive discoveries out of that,” Mathews said.
“So in that time, we have discovered something like around six or seven million ounces. At around $80 per ounce discovery, to buy those sorts of reserves, I would have to pay $500, $600, maybe $700 (an ounce).”
Cosmo Kramer’s Kalgoorlie adventure
Liontown Resources (ASX:LTR) boss Tony Ottaviano has a style best described as bombastic.
Tony is no doubt a serious man who has created incredible value in his time as managing director at LTR, a one-time microcap that rejected a $5.5 billion bid from America’s Albemarle for its Kathleen Valley mine in March.
But his towering frame, lifted hair, staccato rhythm and hyperactive hand movements do lend to some amusing comparisons with Seinfeld’s iconoclastic Kramer.
After announcing a deal to study downstream lithium processing options with Japan’s Sumitomo he delivered a spiel to journos that, while clearly of Tony’s energetic creation, could well have been scripted by Larry David.
“That’s a very good question,” he said (NB: The jury is out on whether an interview subject who compliments a question has actually been asked a good question.)
“I’ve got a history with Sumo and also the other Japanese trading houses. They’re a tremendous partner.
“I love the way they come and tackle a problem. When you say to the Japanese and Sumitomo are very much in this world, Australia’s got high capital costs.
“They say ‘Yes, Tony San. But in Australia, we don’t agree with you, we can sue you. We can rely on a very transparent and reliable judiciary. We can rely on stable government policy … Tony San.
“‘And once you sink that capital, Tony San, then it’s forgotten. It’s all around delivery and efficiency.’
“Don’t you love their long term thinking?”
Liontown’s $895 million Kathleen Valley lithium mine will be opened in mid-2024, with LTR looking into the prospect of developing a downstream hydroxide plant or mid-stream facility that can feed the EV supply chain.
So could Liontown be Turning Japanese? We really think so. Of all the lithium miners on the card, Ottaviano is the most outspoken about supplying the market outside of China, saying where product goes will be at the whim of the spodumene producer.
Others aren’t as dogmatic.
Core Lithium’s (ASX:CXO) boss Gareth Manderson, says product from his smaller Finniss mine in the NT, which recently entered production with a ramp up profile far slower than initially envisaged in studies, will for now go into the existing Chinese market.
Core, which walked away from a Tesla deal earlier this year, counts China’s Ganfeng and Yahua as its two key offtakers.
While it is, like other lithium producers, facing a slower and more difficult teething stage than initially thought processing ore from its Grants pit, Manderson said speed to market was important with spodumene prices still remarkably attractive.
Fastmarkets reported 6% Li2O lithium concentrate at US$3450/t today.
“I think the speed to market in a reasonable pricing environment is a reasonable offset for working through some of these issues,” Manderson said.
“And I think it’ll actually start to pave the way for the business moving forward as well. So, you know, that really does set us up well for (underground deposit) BP33, the second mine.”
Liontown Resources (ASX:LTR) and Core Lithium (ASX:CXO) share prices today:
Anyone for iron ore?
Coal’s never been a big seller in gold-mad Kalgoorlie, but iron ore has always been a feature.
Until this year, where Fortescue (ASX:FMG) and Champion Iron (ASX:CIA) have dropped off the bill.
Plenty of reasons why that may be the case. Iron ore prices remain pretty strong at around US$100/t, but there is little doubt investors’ enthusiasm for the red dirt pales in comparison to their embrace of lithium and rare earths this year.
One iron ore executive reputedly poked their head into the media room at a particularly busy time, as the media cohort went collectively catatonic trying to digest the math-bending metrics of Chalice Mining’s (ASX:CHN) Julimar deposit, which we genuinely think may contain Frinkonium.
They received a truly millennial experience, a silent and painful ghosting. Come back when iron ore’s back above US$200/t thanks.
At Stockhead, we tell it like it is. While De Grey Mining is a Stockhead advertiser, it did not sponsor this article.
