Ground Breakers: Goyder splurges $24m on cheap Chalice; Woodlawn delivers copper-zinc goods for Beament
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WA billionaire Tim Goyder has turned from buyer to seller at Chalice Mining (ASX:CHN), pouncing on a 40% collapse in its share price since August 30 in a ~$25 million splurge that has taken his holding back above 10% of the Julimar nickel-copper-PGE finder.
Chalice was one of a stable of companies that turned Goyder from an obscure investor and executive in small cap resources stocks to a household name and low-key resources rockstar whose grateful retail investors gift him with bottles of Grange.
The bulk of that wealth is now tied up in Liontown Resources (ASX:LTR), the lithium developer where Goyder is chairman and boasts a 15% stake which will convert to ~$986 million in cold hard cash if Albemarle is successful in getting a $6.6 billion, $3 per share scheme takeover across the line.
(Though mining uber rich-lister Gina Rinehart could throw a spanner in the works after Hancock Prospecting revealed itself as a 7.72% holder of the Kathleen Valley owner yesterday.)
As Liontown’s shares have been soaring, Chalice’s have been careening downwards waiting for the slack from the bungee to tighten.
The reason? Mainly a scoping study for the Gonneville discovery 70km northeast of Perth which sellers accused of using over-optimistic price assumptions, including a palladium price of US$2000/oz that came in at almost double spot rates.
But Goyder has come out swinging to claim the reaction was overblown and put his money where his mouth is.
His recent on-market purchases included a $12.2 million splurge last Thursday and $10.5m payment on Friday for ~7.4 million shares, with another $1.5 million spent on Monday to claim almost 500,000 additional units of Chalice stock.
The Gonneville study predicted it would cost between $1.6-2.3 billion to build the mine on Chalice owned farmland in an environmentally sensitive area near the Julimar State Forest, at a project which had previously propelled Chalice to a market cap in excess of $3 billion and led a rush of IPOs and land grabs to open up what looked like a new mineral district on the western edge of the Yilgarn Craton.
Goyder told Stockhead he believed the sell-off was “overdone” as he upped his stake in Chalice from 8.8% to 10.43%, worth $116.5m after its shares fell 3.37% to $2.87 this morning.
“It’s got a massive orebody there, albeit low grade but it’ll have its day in the sun,” he said.
Chalice is currently looking for a deep-pocketed strategic partner to push Gonneville forward as it heads into a PFS.
A number of analysts have suggested the company needs to strip back its approach to the development, rebasing from the large tonnage 15-30Mtpa scenarios envisaged in the scoping study to instead start up at a lower rate targeting high grade pockets of the resource like a more traditional palladium/platinum development.
That resource was declared in late 2021 to be the largest nickel sulphide discovery in Australia in two decades and first globally significant PGM find.
Goyder, who no longer sits on the Chalice board, said he remained confident in the company’s board and executive to “navigate their way through in terms of optimisation of the project”.
“The market really treated it like it was a PFS, and didn’t take into account that it’s early days in terms of study work at Chalice,” Goyder said.
“It’s a large, low grade deposit.
“In terms of other similar deposits, you’ve got Boddington, Mt Keith, Cadia, all those projects took some time for the owners to get their head around the economics.
“I think the market is really ready to pull the trigger on anything they don’t understand and that’s what’s happened.”
On the price assumptions used in the study, projected for a project not expected to be in operation until 2029, Goyder said few projects would be developed if only consensus pricing was followed.
“If you use consensus on any project, most of them wouldn’t go other than various gold projects.”
Up a radical 7.6% today is Bill Beament’s Develop Global (ASX:DVP), which is shooting up on a mine plan that shows it can get the Woodlawn copper and zinc mine into production for just $32m with a six-month runway from the start of the redevelopment to production.
Over a seven-year mine life the operation in regional New South Wales, bought from the administrators of Heron Resources, would deliver 10,000t of copper, 35,000t of zinc and $90m of pre-tax cashflow a year, with a pre-tax NPV of $481m and IRR of 367%.
It sets up Woodlawn as the first major development for the mining services/energy metals firm, which also owns the Sulphur Springs copper-zinc project in WA, the mining contract at the Bellevue gold mine and is attempting to acquire Pioneer Dome lithium project owner Essential Metals (ASX:ESS) with the support of major shareholder Mineral Resources (ASX:MIN).
Develop has spent $44m on pre-production capital already, including 3.2km of underground development to enable drilling from underground, with the first 18 months of production at the Kate Lens already exposed.
A resource update is due in the December quarter ahead of a further resource and reserve update in the March quarter ahead of a mine plan update and FID.
“This mine plan shows Woodlawn is set to create significant value for
Develop,” DVP MD Beament said.
“The exceptional financial results stem from two key factors. First, the extremely favourable price we paid for the asset, which included extensive near-new infrastructure, vast underground development and an existing high-grade mineral inventory.
“Second, our operational team over the past year has completed further capital activities including extensive underground development, extending primary ventilation/escapeway systems, significant metallurgical testwork and process flowsheet optimisation, which greatly de-risks a production restart.
“The 40,000m of underground diamond drilling completed since late 2022, which consistently hit extensive mineralisation, is not included in this mine plan update and hence we are extremely excited about the Resource update next quarter and the next mine plan update in the March quarter 2024, both of which will include the latest results.
“Woodlawn now boasts extremely strong technical and financial foundations. These ensure the project can maximise its leveraged exposure to an upturn in commodity prices, especially copper and zinc, while continuing to grow the inventory, mine life and production rates.”