Ground Breakers: Lithium contracts, uranium mine builds and some serious green in battery metals
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Allkem (ASX:AKE) delivered a new lease on life to its Mt Cattlin lithium mine on WA’s South Coast recently, with news its mine life had been extended to 2028 with plans to study a longer future as an underground operation.
It’s now issued a major three-year contract to mine the deposit to NRW Holdings (ASX:NWH), with the Allkem board having approved a cutback to extend the life of the Ravensthorpe mine to 2026.
NRW will bank around $332m from the contract, which will include load and haul, drill and blast and material rehandling, using an existing fleet of 200-250t excavators and 150t trucks from August.
It will see around 140 employed through the contract, most from the area, which boomed as BHP built its Ravensthorpe nickel mine in the late 2000s then went through years of hardship as that operation closed and reopened on numerous occasions.
But with the continuation of Mt Cattlin, revival of Ravy under the 70-30 partnership of First Quantum Minerals and POSCO, and the discovery of a number of rare earths deposits in the region, the agricultural heartland is fast becoming a hotspot for critical minerals.
It’s another step into lithium for NRW, showing the pull of the future facing commodity for big mining services players. They want to be in a metal with legs.
The company acquired lithium processing specialist Primero Group in early 2021 in a $100 million cash and share offer that now appears extremely well timed given last year’s enormous boom in EV sales and lithium prices, which is flowing into a drive to develop new mines.
Australia boasts the world’s largest uranium resources but just two active mines, both in South Australia, after the closure in recent years of the Ranger uranium mine in the NT.
That has come against a backdrop of shifting sands in yellowcake mining approvals, a weak and volatile economic outlook for the commodity and anti-nuclear sentiment that continues to impact the Australian market to this day.
But prices have staged a recovery, with spot prices tripling from their cyclical lows of 2016-2018, most of that surge over the past two years as utilities have faced competition from physical uranium funds like Sprott for spot product and have needed to contract to replace their depleting stockpiles.
Boss Energy (ASX:BOE), which wants to reopen the Honeymoon Mine in South Oz, says it remains on track to do so this year, with production from the $105.4m restart job expected in the December quarter.
It remains on time and budget at this point, the company said today, with 77% or $81.5m of the capex committed. Boss has completed its first wellfield, with preparations for flushing of the key infrastructure now underway.
It comes with Boss sitting on a uranium stockpile of US$70 million at current spot prices of US$56/lb, something that has helped back its finance for the development.
“The project development is proceeding to plan and remains on time and on budget as we move towards the restart of Honeymoon,” Boss MD Duncan Craib said.
“Our timing is looking ideal, with the uranium market continuing to tighten and the spot price moving up.”
“Boss remains fully-funded through to production, with cash on hand of A$103m and a strategic uranium stockpile valued at A$105m (US$70m) based on current spot prices. The company has no long-term debt”.
Boss is one of three ASX-listed developers looking to restart mines to capitalise on an expected recovery in the global uranium market, alongside Paladin Energy (ASX:PDN) with its Langer Heinrich mine in Namibia and Peninsula Energy (ASX:PEN), owner of the Lance ISR mine in Wyoming.
News inflation has been slightly tamed was manna from heaven for the Aussie market today.
Materials was no exception, gaining over 0.8% after yesterday’s China stimulus-fuelled afternoon charge.
Battery metals producers were among those enjoying the buoyant mood, with IGO (ASX:IGO), Allkem, Pilbara Minerals (ASX:PLS) and Mineral Resources (ASX:MIN) all green.
Iron ore and coal miners where also supported by the market, with gold an outlier as prices slid under US$1920/oz to US$1916/oz this morning.