Pic: John M. Lund Photography/DigitalVision via Getty Images
Mining
There are few superlatives left to describe the extraordinary prices Pilbara Minerals (ASX:PLS) is raking in for its BMX spodumene auctions, with the latest achieving another record.
At a 5.5% Li2O sale price of US$7805/dmt for a 5000t cargo, the benchmark 6% equivalent is a tidy US$8575/t, well above any spot price reported in the market previously.
That’s around $58 million of cargo on one ship, more than double what BHP (ASX:BHP) and Rio (ASX:RIO) would be taking in on a shipment of iron ore right now.
Wowzers. That’s our new superlative for the day.
While it comes in well above the actual average sale price PLS has been getting for its spodumene, the sale sends a strong signal that the market for lithium raw materials remains very tight.
That is despite concerns from some analysts that cutbacks from battery makers in China could send prices lower, which stirred a collapse in lithium stocks on Tuesday.
Something probably had to give at St Barbara (ASX:SBM), down 57.45% year to date and hovering just a little bit above five-year lows after a catalogue of missteps at its Gwalia, Simberi and Atlantic gold operations. That included a disastrous September quarter report which revealed all in sustaining costs had risen to $2490/oz, burning $34 million of cash.
SBM owns the best asset in the Leonora gold district, the Gwalia gold mine, still a major producer 125 years after it was discovered and opened, initially with future US President Herbert Hoover at the helm in his early days as a globetrotting mining engineer.
But the collapse in its share price – partly ascribed to issues at its overseas operation in Papua New Guinea and Canada, the former of which is up for sale – has seen opportunists move in.
Every man and his dog wants a slice of the Leonora consolidation, most notably Genesis Minerals (ASX:GMD) and its high profiled boss Raleigh Finlayson, whose explorer is ironically more valuable by market cap than SBM despite the fact it will only be a gold producer in its own right once it completes its scrip takeover of Dacian Gold (ASX:DCN) (currently at 76% acceptance).
But now SBM has secured the services of a new MD who may have the clout to manage the consolidation play.
Former Western Areas boss Dan Lougher, who carried the high grade nickel miner into a more than $1.3 billion cash takeover by IGO (ASX:IGO) this year, will start as CEO and MD on November 28.
Lougher will collect an annual salary of $750,000 inclusive of super and salary sacrifice benefits plus incentive bonuses and 800,000 escrowed shares in two tranches as part of the assignment.
SBM non-executive chair Tim Netscher described him as an executive with “industry leading credentials”. Lougher’s experienced in deep underground mining operations in Australia and South Africa could come in handy given Gwalia ranks as Australia’s deepest trucking gold mine.
“He has successfully built multiple mines, managed all facets of project development from resource definition, feasibility studies, project financing, mine construction and the negotiation of off-take contracts,” Netscher said.
“An initial important priority for Dan will be to ensure that the agreed FY23 Gwalia business plan and budget are delivered and that the significant value associated with the Leonora Province Plan is unlocked, including potential value accretive corporate activity.”
Gold prices have been timid this year, but have rebounded by over US$100/oz since lower US CPI data suggested a pullback in rate rises may be on the cards from the US Fed. Bullion is currently trading at US$1773/oz.
Shares in $730 million capped coal miner TerraCom (ASX:TER) surged this morning, rising 8.33% after the coal boom backed yet another dividend, just months after paying out 10c a share with its full year results.
The Blair Athol coal mine owner will pay out another 10c, consisting of a 7.5c ordinary dividend and 2.5c special payout, representing 75% of NPAT from the September quarter.
Is there any end to the coal boom? TerraCom thinks Newcastle grade pricing will continue to average US$275/t through 2023, based on the Wednesday’s closing GlobalCoal futures despite prices moderating from insane levels of more than US$400/t in recent weeks to trade at still pretty loco rate of US$341/t yesterday.
“Following payment of this dividend in December 2022, the company will have returned 20 cents per share to shareholders since July 2022. This is an excellent return for shareholders and represents a dividend yield in excess of 25% for the half year, based on the current share price,” TER chairman Graeme Campbell said.
“The board is committed to responsible capital management and maintaining investor confidence via the continued payment of quarterly dividends, in accordance with the company’s dividend policy.
“The company’s outlook on the coal market remains positive and we look forward to continuing to achieve production targets to meet already agreed sale commitments to our customers.”
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