Pic: Phillip Thurston/E+ via Getty Images
Ground Breakers: Rio goes on a Trek, Penny drops for Ramelius and Newcrest grants Newmont extension
Mining
share
- Rio Tinto gives junior a boost with $5m farm-in deal
- Ramelius looking more likely for strong fourth quarter
- Newcrest gives Newmont extra week to make up its mind on gold mega-bid
It’s not the absolute splash we had yesterday with Allkem (ASX:AKE) and Livent’s near $16 billion lithium merger, but some small M & A action is moving at least one dial on a rough Friday for miners.
Trek Metals (ASX:TKM) is up a tasty little 15% after Rio Tinto (ASX:RIO) moved to farm-in to its Jimblebar nickel and copper project in WA’s North West.
Located deep in iron ore and lithium territory in the State’s famous Pilbara district, where Rio already extracts well over 300Mt of iron ore per year, the world’s second biggest mining house will sole fund $5 million to earn an 80% interest in the Jimblebar project and then free carry Trek until the earlier of the delivery of an order of magnitude study or $40m in cumulative expenditure.
Rio will need to spend at least $100,000 at Jimblebar over its initial $50,000 six month option period, which can be extended to 12 months with a $25,000 payment, but if it elects to farm-in it has to undertake at least 2000m of RC and/or diamond drilling over a six-year period, with a $150,000 minimum commitment to opt out of the farm-in.
It is the sort of deal we have seen in the past and will likely see more of. Juniors are typically more adventurous explorers and stakers of ground, and play an important role in identifying projects for majors to latch onto.
Rio is keen on battery metals, with major new investments in nickel, lithium and copper among its highest priorities when it comes to project generation and M & A, with the big miners all latching onto the electrification and net zero thematic.
Rio Tinto (ASX:RIO) and Trek Metals (ASX:TKM) share prices today:
Penny drops for Ramelius
Ramelius Resources (ASX:RMS) has given itself a shot of making its ambitious fourth quarter production guidance, after securing approvals just about on plan to haul ore from its high grade Penny gold mine to the Mt Magnet mill.
The mid-tier gold miner considers Penny the key to reinvigorating its business, with its ultra-high grade ore expected to significantly reduce all in sustaining costs per ounce at its Mt Magnet gold project in WA’s Mid West.
Its receipt of haulage approvals on Thursday to move from 50t double road trains to 100t quad road trains come one day back from the target of May 10 given at its quarter results update last month. It should see a site stockpile cleared by the end of the quarter.
RMS produced 54,244oz at an all in sustaining cost of $1873/oz in the March quarter, but thinks that will rise to between 67,500-77,500oz at $1700-1800/oz in June.
RBC’s Alex Barkley says RMS is forecast to deliver 244,000oz in FY23, around the mid-point of its revised 240,000-250,000oz guidance range.
“While a minor update from RMS, we think the approval of large capacity ore haulage from Penny is a positive outcome and a Q4 de-risking event which should help Ramelius hit FY23 guidance considering that the lack of high grade Penny ore was one of the key drivers to the Q3FY23 production miss,” he said.
“With the approvals in place RMS should be able to see significant QoQ production uplift. We expect a 22% QoQ gold increase in Q4. We stay sector perform, Price target A$1.20/sh, but expect RMS to trade higher today with some FY23 operational risks removed.”
Ramelius meanwhile has moved to over 80% ownership of its takeover target Breaker Resources (ASX:BRB) and unfurled a string of drill results demonstrating the high grade potential of its Bartus East target at Mt Magnet and outside the Penny resource, including 60m at 7.8g/t at Bartus.
Visible gold meanwhile has been seen in core from outside the Penny North mine plan’s southern boundary.
“It is pleasing to have finally obtained the full ore haulage approvals for our high grade Penny mine, which should see us clear the site stockpiles and mine production, in what promises to be our best Quarter for the financial year,” RMS MD Mark Zeptner said.
“The likelihood of adding significantly to our cash and gold balance by June 30 is something that we very much look forward to following a period of re-investment.
“In addition, our exploration and resource development teams continue to hit high grade material at Bartus East, which confirms similar wide, high-grade intercepts
to those received late last year.
“Our Mt Finnerty JV with Westar Resources is also looking more and more interesting with additional high grade hits and the geologists beginning to understand the controls to the mineralisation.”
Ramelius Resources (ASX:RMS) share price today:
Newmont takes its time over Newcrest
Back in M & A land and Newmont has been granted an additional week to do due diligence on gold target Newcrest (ASX:NCM).
The deadline was due to strike just before midnight yesterday, but the US gold behemoth now has until May 18 to decide whether it will lob a binding offer for the 2Mozpa plus Aussie gold miner.
The latest non-binding indicative proposal from the Denver monster would see Newcrest shareholders receive 0.400 Newmont shares for every NCM share they hold, while NCM would also issue a franked special dividend of US$1.10 per share to its investors on the way out.
At an implied price of $32.87 per share, the deal would come in at an equity value of $29.4b and enterprise value of $32b, implying a 46.4% premium to NCM’s price on February 3 before Newmont’s approaches were publicly revealed.
Newcrest fell alongside most gold stocks as prices fell 0.6% overnight to US$2015/oz on a stonger US dollar.
Other commodities were towelled up as well, with iron ore down around 6% to US$98.70/t, copper falling to its lowest level in seven months at US$8475/t and nickel down 8.2% to US$22,531/t.
The materials sector sunk 1.33% with only the lithium players, still basking in the afterglow of the Allkem-Livent merger, really in the green.
