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Mining
2022 was a challenging year for many sectors but ASX stocks with exposure to battery metals such as lithium, cobalt, graphite, nickel, rare earths, and vanadium swam against the tide as global economies upped the ante on renewable energy technologies and EV targets.
According to VP Capital co-founder John So, the rate in adoption by consumers of electric vehicles has accelerated more quickly than what most people would have expected and the truth is, before we know it, we won’t have a choice.
In Australia, newly released data from the Federated Chamber of Automotive Industries shows 2022 was a standout year for EV sales – with EV sales reaching 3.1pc of total new car sales in a market where more than 1.08m vehicles were sold.
While still trailing behind the bigger EV markets such as China and Europe, Australia managed to sell around 33,140 new battery electric vehicles in 2022, with the month of December raking in a record 5,084 sales alone or 5.8pc of the market share.
In other parts of the world, the increased demand for EVs drove momentum in manufacturing, with BestBroker claiming car makers spent about $22.34bn building new construction facilities in the US while another $10.71bn was spent on the construction of auto-assembly plants.
But although lithium dominated the headlines in 2022, and will probably dominate to some extent in 2023, So reckons the new year will bring about the re-emergence of other key battery metals such as copper and nickel.
EVs contain about four times as much copper as conventional cars and Roskill forecasts nickel demand to grow by over 500pc between 2021 and 2030.
“People have tried to look for other complimentary metals along with lithium so they can play on this very exciting trend but the problem with copper and nickel is that they are driven by the Chinese construction sector,” he says.
“This sector was no doubt very weak in 2022 because the country was under very strict covid lock down rules, but that weakness is going to reverse in the medium term as China’s economy opens up.
“Both of these metals will benefit even though they haven’t had the most buoyant 2022.”
Adding further fuel to the fire is news that Xiang “Big Shot’ Guangda’s Tsingshan Holdings Group – the billionaire at the centre of last year’s nickel short squeeze – is in discussions with Chinese copper plants about processing its material into refined nickel.
This could mean a doubling of Chinese nickel production this year from about 180,000t in 2022 – adding about a fifth to global refined output.
Other experts believe both palladium and platinum offer the potential to enhance the performance of lithium-ion batteries by boosting chemical reactions but not participating in them.
For Luke Laretive, CEO of Seneca Financial Solutions, platinum group elements (PGEs) are the best play outside of lithium for battery minerals from a supply-demand perspective.
“In saying that, though, it is overly simplistic to say all battery minerals are in the same supply balance as lithium – the elasticity of supply is not equal across the entire battery minerals complex,” he says.
“But existing supply comes from only two parts of the world and anyone who can find good scale PGE deposits is of strategic value in my view.
“We really like Galileo Mining in WA – we think that is a significantly undervalued business given the prospectivity and results those guys are putting out.”
(Note: All data pulled from IRESS from Stockhead’s list of 265 battery metal stocks, with market caps correct as of January 9).
| CODE | COMPANY | PRICE | 1 YEAR RETURN % | MARKET CAP |
|---|---|---|---|---|
| LIN | Lindian Resources | 0.265 | 755% | $239,551,645 |
| WR1 | Winsome Resources | 1.895 | 405% | $229,666,835 |
| GAL | Galileo Mining Ltd | 0.985 | 369% | $176,874,310 |
| LRS | Latin Resources Ltd | 0.12 | 287% | $239,801,685 |
| PSC | Prospect Res Ltd | 0.115 | 183% | $53,159,838 |
| AS2 | Askarimetalslimited | 0.595 | 177% | $28,123,300 |
| ODE | Odessa Minerals Ltd | 0.013 | 160% | $7,810,444 |
| CY5 | Cygnus Gold Limited | 0.45 | 157% | $75,388,427 |
| ARU | Arafura Rare Earths | 0.55 | 156% | $1,013,194,600 |
| DRE | Dreadnought Resources Ltd | 0.098 | 139% | $307,954,489 |
| ESS | Essential Metals Ltd | 0.48 | 129% | $92,138,009 |
| KFM | Kingfisher Mining | 0.44 | 126% | $22,113,000 |
| PBL | Parabellumresources | 0.405 | 113% | $21,341,775 |
| AGY | Argosy Minerals Ltd | 0.66 | 100% | $877,754,686 |
| ALY | Alchemy Resource Ltd | 0.024 | 100% | $28,273,830 |
| CXO | Core Lithium | 1.2 | 100% | $2,225,495,849 |
| GL1 | Globallith | 2.09 | 94% | $426,346,512 |
| PTR | Petratherm Ltd | 0.079 | 88% | $15,957,331 |
| ARL | Ardea Resources Ltd | 0.835 | 82% | $139,774,759 |
| QXR | Qx Resources Limited | 0.049 | 75% | $43,049,391 |
| RGL | Riversgold | 0.028 | 72% | $27,418,564 |
| SYA | Sayona Mining Ltd | 0.23 | 70% | $1,954,291,952 |
| RNU | Renascor Res Ltd | 0.275 | 67% | $609,072,013 |
| RAS | Ragusa Minerals Ltd | 0.125 | 60% | $17,824,848 |
| LLI | Loyal Lithium Ltd | 0.35 | 59% | $19,421,300 |
| GME | GME Resources Ltd | 0.089 | 59% | $57,183,059 |
| ASN | Anson Resources Ltd | 0.215 | 54% | $253,324,808 |
| GT1 | Greentechnology | 0.9 | 53% | $167,849,786 |
| MIN | Mineral Resources. | 85.89 | 48% | $15,854,246,262 |
| MEK | Meeka Metals Limited | 0.062 | 48% | $65,124,145 |
| GCM | Green Critical Min | 0.021 | 47% | $18,458,094 |
| BNR | Bulletin Res Ltd | 0.11 | 47% | $29,259,110 |
| IMI | Infinitymining | 0.26 | 44% | $19,884,363 |
| BUX | Buxton Resources Ltd | 0.1 | 41% | $15,248,170 |
| WIN | Widgienickellimited | 0.35 | 40% | $95,384,875 |
| MMC | Mitremining | 0.27 | 38% | $7,312,977 |
| ITM | Itech Minerals Ltd | 0.285 | 36% | $31,545,062 |
| COB | Cobalt Blue Ltd | 0.635 | 30% | $231,285,956 |
| CAE | Cannindah Resources | 0.24 | 30% | $123,351,739 |
| BHP | BHP Group Limited | 48 | 26% | $240,677,134,616 |
| PNN | Power Minerals Ltd | 0.565 | 26% | $40,818,325 |
| BRB | Breaker Res NL | 0.35 | 25% | $115,781,298 |
| LNR | Lanthanein Resources | 0.023 | 21% | $21,594,663 |
| LNR | Lanthanein Resources | 0.023 | 21% | $21,594,663 |
| ARR | American Rare Earths | 0.205 | 21% | $91,508,064 |
| TEM | Tempest Minerals | 0.03 | 20% | $13,123,921 |
| MLS | Metals Australia | 0.048 | 20% | $29,744,773 |
| IGO | IGO Limited | 14.17 | 19% | $10,609,322,060 |
| SYR | Syrah Resources | 2.02 | 16% | $1,361,258,541 |
Looking for: rare earths
Lindian rerated heavily after reaching an out-of-court settlement over a protracted 2018 dispute for Kangankunde, one of the world’s largest REE projects outside China.
A big 12,500m drilling program at the Malawi-based project recently kicked off with the first two holes pulling up grades up to 11.8% TREO.
The mineralisation is also very thick.
Rare earths were reported over the entire length of the holes from surface, with both also ending in mineralisation.
The holes will be extended with core drilling to find out how deep the deposit goes, the company says.
Importantly, high value EV/wind turbine ingredient neodymium-praseodymium (NdPr) makes up 21% of the TREO content.
Looking for: lithium
WR1 was one of the hottest exploration stocks on the ASX late last year, gaining 305% – from 37c to $1.50 – between October 27 and December 8.
After a short dip over the Xmas period the explorer is now back at all-time highs, thanks to some impressive maiden assays from the flagship Adina lithium project in Quebec, Canada.
Hole AD-22-055 returned a monstrous 107.6m intercept grading 1.34%, which includes an “exceptionally high-grade” intersection of 2.21% Li2O over 30m.
Hard rock lithium mines usually grade between 0.8% and 1.5%.
More assays are expected to flow through over the coming weeks.
Looking for: nickel
Mark Creasy backed GAL caught a rocket in May after announcing a major nickel-PGE discovery at the ‘Norseman’ project in WA.
(The discovery also includes rhodium, one of the rarest and most valuable precious metals in the world, which currently sells for $US15,500/oz.)
In October, GAL said drilling had hit nickel mineralisation up to 51m thick 400m away from the original discovery hole.
“Our target generation model suggested that the five kilometres north of Calisto are the most prospective and these early drill results strongly support this concept,” the company says.
With no known outcrop, and over five kilometres of prospective strike, we consider that a significant opportunity exists for additional discoveries at shallow depths.”
Looking for: lithium
At the end of 2022, Latin Resources rapidly defined a maiden Indicated and Inferred JORC resource at the Colina deposit, within just 10 months from undertaking a 10,528m diamond drilling program.
The company believes there’s potential for significant growth given the independent exploration target by Toronto-based resource consultants SGS Geological Services – which sits at 13.5Mt to 22Mt at a grade ranging from 1.2% Li2O to 1.5% Li2O.
At a cut-off grade of 0.5% Li2O, Latin Resources (ASX:LRS) geology manager Tony Greenaway says the maiden resource at Colina – part of the wider Salina Project in Brazil – proves it is a significant discovery.
That part of the resource is already calculated in the higher confidence Indicated category speaks volumes about quality of the work that went into exploration at Colina.
Looking for: lithium
PSC sold its 87% interest in the Arcadia Lithium Mine to Zhejiang Huayou Cobalt for US$378m in April 2022, giving back a chunk of that cash to shareholders.
It then entered an earn in agreement with Osino Resources to acquire up to 51% in the Omaruru Lithium Project in Namibia.
Omaruru hosts multiple LCT-style pegmatites at surface confirmed by several walk-up targets where previous drilling has returned outstanding intersections including 3m at 0.76% Li2O from 2m, 10m at 1.06% Li2O from 2m, and 8m at 1.20% Li2O from 145m.
PSC says the project comprises an exclusive exploration licence which hosts numerous lithium, tin, tantalum, rubidium, and caesium targets, including 60 Lithium-Caesium-Tantalum (LCT) pegmatite outcrops visible at surface.
Turns out everybody is keen know more about the ASX graphite, lithium, nickel, and cobalt stocks with established resources and a clear plan to ender production in the next eight years.
In Stockhead’s September article, Minrex Consulting managing director Richard Schodde told Stockhead there is an estimated average delay of 12.4 years between discovery and development – and that lead time is getting worse.
While it is getting progressively harder and slower to turn a discovery into a mine, there are exceptions to that rule – companies like Sandfire (ASX:SFR) which went from discovery hole to first copper production in just over three years at Degrussa.
Another would be Sirius, which took five years to get the Nova nickel discovery into production.
But we took a lunch at a bunch of advanced project developers which are first inline to feed Benchmark’s predicted shortfall.
Some of these included graphite plays like Novonix (ASX:NVX), Talga (ASX:TLG), the next class of lithium producers like Core (ASX:CXO) and Liontown (ASX:LTR) and nickel-cobalt development companies like Ardea Resources (ASX:ARL), Mincor (ASX:MCR) and Sunrise Energy Metals (ASX:SRL).
There are not enough minerals, like lithium, cobalt and nickel, in the currently reported global reserves to build even one generation of batteries for all EVs and stationary power storage, according to a recent report.
Associate Research Professor Simon Michaux from Geological Survey of Finland GTK says those batteries have an estimated life cycle of ~10 years.
“This means even if technology improves by doubling efficiency, then the same quantity of metal has to be sourced from somewhere only 10 to 20 years later,” he says.
The commodities that are vital to electric vehicles (EVs) go beyond the posterchild that is lithium.
Battery metals also include nickel, copper, cobalt, zinc, and graphite – basically anything that can be used in any way for the production of electric vehicles (EVs).
And Europe is hungry for battery metals.
Stockhead writer Emma Davies goes deep on the need for ethically sourced cobalt, the European players with exposure to it, as well as European zinc, nickel cathode and graphite players.
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