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Mining
The lithium sector is buzzing right now, and Pilbara Minerals (ASX:PLS) is at the centre of the storm.
Its spodumene trading platform, the Battery Materials Exchange, has been the talk of the market in recent months.
Due for another auction this week, the BMX has revealed the previously unforeseen prices lithium converters are willing to get their hands on raw materials.
But Pilbara Minerals has designs on heading downstream as well, and has finalised a deal with South Korean steel, mining and battery giant POSCO to take a 30% stake in a 43,000tpa lithium hydroxide factory in Gwangyang.
The plant will cost US$600-$650 million to build based on pre-feasibility level estimates and produce its first lithium hydroxide monohydrate in September 2023 before ramping up to full scale production over the course of 2024.
Pilbara Minerals will take an initial 18% stake in the JV and has a call option to increase its share to 30% until 18 months after the ramp up of the conversion facility, and has locked in certainty of demand with the deal.
It will sell 315,000tpa of spodumene concentrate to the facility at market pricing for the life of the Pilgangoora project.
The lithium market by the end of the decade is forecast to have a deficit that outstrips the entire size of the market currently.
Pilbara Minerals boss Ken Brinsden said first production from the plant will be perfectly timed to dovetail with rising demand for lithium chemicals from the battery and electric vehicle markets.
“We are delighted to have executed the Shareholders Agreement with POSCO to jointly own and develop a 43ktpa chemical conversion facility in South Korea which will form an important part of POSCO’s overall supply chain for the lithium raw materials market in South Korea and abroad,” he said.
“This agreement further cements our long-standing relationship with a world-class strategic partner, in the rapidly growing South Korean lithium raw materials market. This joint venture will give Pilbara Minerals significant exposure to one of the world’s most dynamic and fastest growing markets for lithium chemicals.”
“Production is expected to commence from the second half of 2023, which should coincide with burgeoning global lithium chemicals demand.”
Closer to home and Core Lithium (ASX:CXO) has started construction of the first lithium mine in the Northern Territory.
Finniss is expected to be the only new lithium mine to enter production in Australia next year, although Mineral Resources (ASX:MIN) and Albemarle did announce the restart of their Wodgina JV in the Pilbara yesterday, which will come back on line in the third quarter of 2022.
Core expects to produce around 175,000t of spodumene per annum over an initial mine life of 8 years from the Finniss mine.
It has been funded through a $150m financing package including a $34 million placement to Ganfeng, China’s largest lithium producer and one of two offtakers along with Tesla supplier Yahua who will take 80% of Finniss’ output under 4 year offtake agreements.
Core MD Stephen Biggins said first production will take place before the end of next year.
“This next phase of the Company will be transformational, and we are excited to see construction milestones met at Finniss over the coming 12 months, ahead of first production before the end of 2022,” he said.
“We also look forward to engaging the local workforce in the NT, with more than 84 per cent of available jobs at Finniss already appointed to locals.”
“We’re excited to see the Northern Territory play an important role in meeting the ever-rising demand of renewable energy sources.”
It was a case of rising tides floating all boats for big lithium stocks this morning.
Pilbara was the undisputed large cap leader, up 6.7% on the POSCO news, while Orocobre (ASX:ORE), Vulcan (ASX:VUL), Lake Resources (ASX:LKE), Sayona Lithium (ASX:SYA), Liontown Resources (ASX:LTR) and AVZ Minerals (ASX:AVZ) all posted large gains.
West African Resources is one of the top performing gold miners on the ASX this year, bucking the downward trend seen across most major goldies.
West African has hit its straps at the new Sanbrado mine in Burkina Faso, hitting record production levels in the September Quarter and announcing it is likely to exceed full year guidance of ~280,000oz in 2021.
The mid-tier is on a great run, up 51.63% over the past month to a market cap of $1.23 billion.
That has given West African the ability to raise $126.4 million in equity at $1.25 in order to buy the nearby Kiaka project from B2Gold and GAMS for a combined US$100m, including US$55m in cash and shares (50-50) on the close and US$45 million in cash or shares on a deferred consideration date.
The purchase will deliver Kiaka’s bulk low grade 6.8Moz resource to West African, which plans to begin major works in mid-2022 and open the new mine by 2025, making it a 400,000ozpa producer.
“Kiaka is one of a few fully permitted gold projects in West Africa with potential be a long life, low strip ratio, open‐pit gold mine amenable to conventional CIL processing,” West African MD Richard Hyde said.
“With the addition of Kiaka to existing operations, WAF aims to a be a +400,000ozpa gold producer by 2025.”
The equity raising and a $10m share purchase plan for existing shareholders will also be used to fully repay the debt facility West African took on to finance Sanbrado’s construction.
From one of the best performing big gold stocks to one of the worst over the past year.
The value of the $1.66bn company has slid ~41% in 2021 to date.
Regis Resources produced 101,989oz at all in sustaining costs of $1521/oz across its Duketon and Tropicana operations in the September Quarter, selling $179m of gold at $2178/oz on the basis of its hedge book.
Tropicana was the stronger performer, with Regis’ 30% stake delivering 28,914oz at $1179/oz, while Duketon produced 73,074oz at $1617/oz.
The WA gold miner will maintain guidance of 460,000-515,000oz at AISC of $1290-1365/oz, with managing director Jim Beyer saying the quarter was difficult but that lower production had already been flagged.
Beyer said Covid impacts on supply chains and labour had an impact as well.
“It is clear there are risks of further COVID impacts in both supply chains and personnel availability,” he said.
“The mandating of vaccination shots is viewed by Regis as a critical element of the path out of this period of uncertainty and we are actively supporting and planning for this initiative.
“We note the mandatory nature of the vaccination requirements in Western Australia may result in further near-term labour availability risks.”
The company said increased turnover and competition for workers meant introducing less experienced operators who required more training time.
On the development, front Regis could make a decision on a second underground mine at its Garden Well orebody at Duketon this quarter, while it continues to wait on approvals from the New South Wales Government for the 2.02Moz McPhillamy’s project in regional NSW.
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