Ground Breakers: Vulcan inks lithium offtake with Volkswagen, Newcrest aims to slash gold production costs by 50pc

Lithium darling Vulcan inks third offtake deal in two months
Newcrest wants to be lowest cost gold miner by 2030
OZ offloads copper projects to junior JV partner Minotaur

The top large cap mining news in morning trade, Thursday December 9.

Lithium darling Vulcan inks third offtake deal in two months

Yesterday evening lithium project developer Vulcan Energy (ASX:VUL) announced a binding lithium offtake deal with behemoth Volkswagen Group — the world’s largest automaker by revenue and the largest company in Germany.

The deal is for between 34,000t and 42,000t of battery grade lithium hydroxide for an initial five years. The start of commercial delivery is set for 2026.

Volkswagen and VUL have also agreed to a first right of refusal to invest in additional capacity in VUL’s ‘Zero Carbon’ lithium project.

Conditions precedent – and they are bigguns — include successful start of commercial operation and full product qualification.

It follows two binding deals last month with fellow carmakers Stellantis and Renault.

VUL will supply Stellantis between 81,000t and 99,000t tonnes of hydroxide over an initial five years. The Renault deal covers 26,000t to 32,000t over six years.

$1.4bn market cap VUL is up marginally over the past month, and 300% year-to-date.

Newcrest wants to be lowest cost gold miner by 2030

Newcrest says its development projects could slash group AISC by more than 50% by FY30, to levels well below today’s lowest cost gold major producers.

At the 8.1Moz gold, 2.2 million tonnes copper Red Chris Block Cave development in British Columbia, AISC – a measure of the cost to produce one ounce of gold – would be just $US144/oz.

Compare that with current gold price of $US1,780/oz and you’ll see why it could take Newcrest just three years to pay off the whopping ~$US2.1bn construction cost.

A feasibility study expected to be completed in the second half of FY23. Right now, NCM is drilling up to eight rigs to grow the resource, which remains open all over the joint.

Like Red Chris, 3.4Moz Havieron (70% NCM) in WA is big, deep, and potentially very lucrative.

The Paterson province ore body electrified the junior end of the market when it was found back in 2018. Centred on a deep magnetic anomaly 45km east of the aging Telfer operations, the deposit is underneath more than 420m of unmineralised cover.

Talk about a blind discovery.

Attention has now moved to testing targets outside of the known Havieron system at Havieron North (2km away), and Zipa (1km away).

Scout diamond drilling of the ‘Tyama’ prospect – part of the JV with neighbouring explorer Antipa Minerals (ASX:AZY) — was recently completed.

Assay results from all targets are pending, NCM says.

“At Havieron, our exploration is now totally focused on growth which has continued to demonstrate potential for resource additions outside of the existing Inferred Mineral Resource limits,” Newcrest boss Sandeep Biswas says.

“We have eight operating rigs exploring the high-grade targets in and around the main Havieron deposit including the high-grade depth extents of the South East Crescent.”

The gold miner expects to produce 1.8-2Moz of gold and 125-130,000t of copper this financial year, having delivered 2,093,322oz of gold and 125-130,000t of copper in FY21.

NCM, AZY share price charts

OZ offloads copper projects to junior JV partner Minotaur

OZ Minerals (ASX:OZL) will sell its ‘Jericho’ (80%) and ‘Eloise’ (70%) project interests to Minotaur (ASX:MEP) after they failed to meet its Tier 1 criteria.

A maiden resource estimate at the Jericho copper-gold system of 9.1Mt @ 1.4% copper and 0.3g/t gold was announced in July 2020.

“Whilst a discovery, the resource at Jericho did not meet our requirements to continue so we have agreed for our partner’s subsidiary, Demetallica, to gain 100% ownership of the project,” OZ boss Andrew Cole says.

“Our exploration strategy is to partner with junior explorers who bring new ideas and regional expertise in a way that allows us to test theories and quickly determine the attractiveness of a project.

“This is a good example of how our partnering approach allows us to continually turnover our portfolio of exploration projects as we search for our next material discovery.”