Ground Breakers: Who's enjoying a bit of recovery today?

Mining stocks post minor recovery after yesterday’s materials mayhem
Chalice Mining shares pop on hints of Gonneville and Julimar regional drilling
Capricorn goes net cash after record quarter at Karlawinda gold mine

Base metals suffered a vicious pullback, gold continued falling to nine-month lows and iron ore is dithering around the US$110/t mark.

But investors have taken yesterday’s carnage in the mining space as the cue for some classic DIP-BUYING. Whether the dip is really here or we’re merely spelunking blindfolded further into the abyss however, is anyone’s guess.

BHP (ASX:BHP), Fortescue (ASX:FMG) and Rio Tinto (ASX:RIO) are all up between 1 and 2.5% after hitting near eight-month lows yesterday as the mining sector sieved almost 5%.

There’s little of great optimism in the steel market to underpin the move, so we’ll pin it to hope for now.

The China Iron and Steel Association said steel production in China was at its lowest level in three months from June 21-30, with the 2.1Mt/day output of its members down some 7% on the previous 10-day period.

A number of mill owners have decided to undertake maintenance with S&P Global Platts saying factories are making an average loss of US$70/t on crude steel right now.

Materials stocks lifted 1.34% this morning, with energy companies scraping into the green with a 0.15% sector gain.

Chalice hunts Gonneville 2.0

There was more logic behind a rebound in Chalice Mining (ASX:CHN) shares, after the boom explorer locked onto some drill results that could have the making of a Gonneville 2.0 at its Julimar complex near Perth.

Once a journeyman explorer with a history of mild exploration and corporate successes, Chalice became a $3.7 billion company late last year when it posted the mammoth maiden resource for its nickel, copper and PGE monster at Gonneville.

It has spent most of this year plummeting in value though, falling 54% YTD as weaker capital markets and a long delay getting access to targets beneath the Julimar State Forest (amid terse opposition from local enviro groups) hurt sentiment.

It was up 8.5% this morning after initial diamond drilling at the Dampier target 10km north of Gonneville returned promising visual results akin to the early Gonneville core.

Portable XRF confirmed the presence of nickel and copper within intervals bearing plenty of hints of disseminated and matrix sulphides.

One hole intersected a 50m wide interval of weakly disseminated sulphides from 456m containing minor zones of matrix sulphides including 13.2m at 0.71g/t Pd, Pt and Au, 0.1% nickel, 0.06% copper and 0.01% cobalt.

The zone bears a strike of 350m and has more than 250m of dip extent, is open in all directions AND correlates to a 1000m long coincident magnetic high and nickel/chromium in soil anomaly.

Chalice is now in the hands of the assay gods, with 13 of 70 planned sites drilled at the Hartog and Dampier targets though several high priority sites are yet to be tested, and four drill rigs are still on the ground.

Chalice Mining (ASX:CHN) share price today:

Capricorn hits net cash in record quarter at Karlawinda

Gold fell again to US$1738/oz overnight as investors fled from the precious metal to the soaring US dollar as a safe haven.

Stocks are again under water, but that shouldn’t stop us from acknowledging some of the pretty good achievements being rolled out by mid-tier gold miners in their June results.

The latest is Capricorn Metals (ASX:CMM), which has hit a net cash position within 12 months of starting mining at its Karlawinda gold project in the Pilbara.

CMM is down some 5% today, but posted record production of 32,018oz for the June quarter at Karalwinda, helping it make the upper end of its 110,000-120,000oz FY22 guidance.

Its cash pile has increased from $45m on March 31 to $66m on June 30, sending the company into a $1m net cash position from a $20m net debt in March.

That will grow further, with Capricorn making a $15m repayment to Macquarie Bank including an early $5m contribution. It has converted that debt into a new $50m facility with a single bullet repayment in June 2025 and no penalties for early payments with changes to hedges increasing the price of its forward sales.

Capricorn’s celebrated exec chair Mark Clark was understandably chuffed with the outcome.

“The continued strong operational performance and outlook for the Karlawinda Gold Project have put Capricorn in an excellent position to create balance sheet flexibility by converting the project loan facility to a general purpose, medium term corporate loan facility,” he said.

“This provides a great platform to pursue the outstanding growth opportunities at both the Karlawinda and Mt Gibson gold projects and also to continue our active assessment of external growth opportunities.”