Ground Breakers: Nickel bounces back, Macquarie reckons many miners improve in a spot price scenario
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Despite the nickel market remaining volatile last week recording double digit drops before rebounding, Macquarie says many miners remain attractive on its forecasts.
The prices touched US$12.74/lb before bouncing back to US$16.9/lb by the end of last week.
Macquarie says that the EV/EBITDA multiples of many miners “remain attractive on our forecasts and improve in a spot price scenario.”
“Panoramic Resources (ASX:PAN) is our preferred development play, which recently mined its first stope at Savannah North.”
Macquarie also flagged Mincor Resources (ASX:MCR) of interest, having recently announced its first development ore intersected at Cassini mine, as part of MCR’s Kambalda Nickel operations.
“The company also discovered a new mineralised zone beyond the previous extent of the resource at Long through its recent underground diamond drilling,” they said.
“We note that current prices are trading 53% above our FY22 estimate while the upside to FY23E and FY24E is 58% and 69% at spot prices.”
Rio Tinto has completed the acquisition of the Rincon lithium project in Argentina for a tidy $825 million, following approval from Australia’s Foreign Investment Review Board (FIRB).
It’s a large undeveloped brine project located in the heart of the lithium triangle in the Salta Province of Argentina, an emerging hub for greenfield projects.
The company says it’s a long life, scaleable resource capable of producing battery grade lithium carbonate and has the potential to have one of the lowest carbon footprints in the industry.
“Rincon strengthens our battery materials business and positions Rio Tinto to meet the double-digit growth in demand for lithium over the next decade, at a time when supply is constrained,” chief executive Jakob Stausholm said.
“We will be working with local communities, the Province of Salta and the Government of Argentina as we develop this project to the highest ESG standards.”
This comes just months after Rio was booted from Serbia amid protests against alleged environmental impacts of its US$2.4 billion Jadar lithium mine.
Let’s hope the company has more luck in Argentina convincing the locals about the ESG benefits of the Direct Lithium Extraction (DLE) technology proposed for the project.
Another player in the DLE space, Lake Resources (ASX:LKE), has teed up a non-binding MoU with Japan-based trading company Hanwa Co to negotiate for up to 25,000tpa offtake of lithium carbonate over 10 years from its Kachi project in Argentina.
Hanwa is also willing to co-ordinate a strategic partnership between companies downstream of the battery supply chain to jointly develop a unique and effective supply chain “for mutual growth and sustainability.”
Plus, the MoU also allows for Hanwa to consider providing financial support mechanisms such as “a meaningful equity investment, a potential prepayment on offtake, and trade finance facilities” to secure a long-term agreement and build up a sustainable partnership with Lake.
The company says the finalisation of a binding long-term agreement with Hanwa will bolster its financial position as it moves towards a Final Investment Decision later in the year.
Gold player Tietto Minerals (ASX:TIE) is zeroing in on the development of its 3.35Moz Abujar gold project in Côte d’Ivoire, bolstered by a $130m placement at $0.50 per share.
The company says it will develop the project with no debt after pivoting to full equity funding to accelerate first production and accelerate development in a flexible structure at significantly lower cost.
Abujar’s development is now fully funded to first gold production in Q4 CY2022, and the plan is to produce 260,000oz in 2023.
“Abujar is an exciting and robust gold project expected to deliver life of mine revenue of more than US$3.2 billion and has expanding exploration upside and strong potential for resource expansion, with an aggressive drilling program underway,” MD Dr Caigen Wang said.
“We have expended US$41M on Abujar development to end February 2022, with the remaining US$155M estimated capex to gold production, firm or tendered.”