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Mining
John Borshoff has shown his pull with uranium investors again, with his developer Deep Yellow (ASX:DYL) announcing a $220 million placement and additional $30 million share purchase plan to stock up the coffers ahead of an investment decision on the Tumas uranium project.
As much as $220m of the $250m raised at $1.225 per share will be put towards the development of the Namibian uranium project, located around 30km as the crow flies from Borshoff’s old haunt, Paladin Energy’s (ASX:PDN) soon to be restarted Langer Heinrich mine.
Another $5m will be put to exploration with $5m to be spent progressing the Mulga Rock project in WA, picked up in its merger with Vimy Resources back in 2022, with another $20m to go towards working capital and placement fees.
Deep Yellow, which is hoping to pump 3.6Mlbs of yellowcake a year out of Tumas from 2026 on, is one of nine ASX listed uranium stocks with close to concrete timelines on bringing up to 60Mlbs of new uranium producing capacity online in the coming years.
READ: Which ASX uranium stocks are in the development pipeline?
Tumas carries a most recent capex estimate of US$360 million ($550m), with all in sustaining costs of US$38.63/lb once vanadium credits are taken into account. Almost doubling last year, uranium spot prices climbed as high as US$107/lb in January — a 16-year high — before reverting to still strong levels of US$92.50/lb as of yesterday.
John Borshoff said on a conference call that term prices, which are based on longer term sales and more reflective of market activity than spot, are now at incentive pricing levels of around US$75/lb.
$942m capped Deep Yellow is up almost 9% YTD and over 100% in the past 12 months, falling today by a level close to the (relatively narrow) 3.9% discount in the Aitken Mount and Bell Potter led placement.
It sets the stage for an investment decision on Tumas to be made by the third quarter of this year, poised to be the first greenfields uranium development to hit the ASX in years after restart plays Boss Energy (ASX:BOE), Paladin and Peninsula Energy (ASX:PEN) return to production this year.
Borshoff told investors today it is aiming to bring the project to market within the next three years.
“This is the result of a consistently applied, focused 7-year strategy based on the foresight that the uranium supply squeeze currently being experienced was inevitable,” he said.
“This strategy has been supported by a proven, highly credentialed and experienced uranium team that has successfully assembled a relevant pipeline of geographically diverse projects through both organic and inorganic growth endeavours.”
“The Tumas Project represents a long-life high-quality asset timed to deliver into what is a supply constrained market.
“The Mulga Rock Project is next in the development schedule and provides a great opportunity to develop our second uranium mine, that will also benefit from integrating the value-adding critical minerals and magnetic rare earth elements associated with these deposits.”
Borshoff also flagged DYL were not shut off to further M&A in a bit to bolster its project pipeline. While Mulga Rock is expected to deliver 3.5Mlbpa from 2028, with a DFS expected to start next quarter.
It’s the only one of four projects sanctioned under the pro-uranium Barnett Liberal-National Government before 2017 to meet a five-year substantial commencement clause on its environmental approval. But the anti-uranium Labor Government continues to hold court in WA and the project has long been subject to protests from some traditional owners and the Conservation Council.
Despite gold hitting fresh highs on Friday miners were poleaxed, with heavy losses for the big iron ore miners tanking the ASX materials sector.
BHP, Rio and FMG were all down in excess of 2.4% as year-high iron ore port stockpiles in China weighed on prices.
It came as analysts warned the lack of new stimulus measures in China’s Two Sessions rhetoric would hurt bulk sentiment.
“China’s National People’s Congress meeting revealed an unchanged growth target of 5%. Hopes of further stimulus measures were dashed as Beijing increased its focus on ‘new productive forces’ to drive the economy in 2024,” ANZ’s Daniel Hynes and Soni Kumari said in a note.
“These forces include the electric vehicle supply chain, renewable energy and advanced technology.
“This will have important implications for commodity markets. There is likely to be little support for demand of commodities such as oil, steel and iron ore.
“Instead, metals & critical minerals and cleaner burning fuels such as gas will be highly sought after.”
Capricorn Metals (ASX:CMM) shares fell as Mark Clark’s gold miner revealed rainfall events totalling 283mm in January and in recent days had resulted in eight lost mining days at its Karlawinda gold mine in the Pilbara.
CMM expects to produce 26,000oz in the March quarter, but says it still expects to hit the lower end of guidance of 115,000-125,000oz at the upper end of its all in sustaining costs range of $1270-1370/oz.
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