Kristie Batten: Terra attracts big names to unique project

One of Australia’s top mining journalists, Kristie Batten, writes for Stockhead every week in her regular column placing a watchful eye on the movers and shakers of the small cap resources scene.

Explorer Terra Metals (ASX:TM1) has built some real momentum in the past two months as the market catches on to the strategic nature of its Dante polymetallic project in Western Australia.

Last month, the company announced a placement to raise $4 million to advance work at Dante.

What was eye-catching about the placement was the involvement of two big names.

Singapore’s Golden Energy and Resources, which owns stakes in Stanmore Resources and the Ravenswood gold mine in Queensland, and Brisbane-based resources entrepreneur Matthew Latimore, founder of fellow Stanmore shareholder M Resources, participated in the raising.

GEAR and M Resources have invested together in the past, jointly acquiring the Appin and Dendrobium coal mines last year.

They join Terra’s existing major shareholder, Tribeca Investment Partners, on the register.

Terra managing director and CEO Thomas Line told Stockhead its shareholders had done their due diligence and had a good understanding of the Dante project.

“They understand the markets that the products that this resource that we have at Dante go into, and the value of those products, and also the size and scale of the project, so they’ve undertaken a level of analysis that retail investors in Australia would never have been able to get to,” he said.

Line said the polymetallic nature of the Dante orebody was far more challenging to understand than a simple pure-play gold project.

“Our project’s not just normal polymetallic. It’s a mixture of metals that have never been found together before in the same deposit of this size,” he said.

“So sometimes there’s been some challenges with the Australian retail market understanding the asset, and the brokers and analysts knowing how to do the analysis to work out the value, but these groups coming out of Southeast Asia, where a lot of these markets are close to the commodity traders, they understand this.

“They’ve done the analysis, and they’ve arrived at the view that this is extremely prospective and has huge potential value and scale, and therefore they’ve taken the risk to make an investment in a company which is the smallest investment they have ever made.

“They typically only come in on hundreds of millions to billion-dollar deals … so it says a lot about what they see on the project, and it’s huge validation for the project.”

Dante looms

Line said another thing Terra’s new investors liked about the Dante project was its simple geology.

“The mineralisation is like coal seams,” he said.

“They get it because they own coal mines and they understand that we don’t need to have reported the resource or drilled everything to know that it’s there if it sticks out of the ground – it’s easy to target with the drill.”

Exploration to date has identified a laterally extensive, stratiform reef-style system with mineralisation mapped over 10km of strike and extending from surface to 250m depth.

Terra has likened it to the platinum-rich Bushveld Complex of South Africa.

A maiden resource for Dante is due imminently.

Terra also has approval for the next phase of drilling, which will include infill of the resource, as well as some new targets.

The company has identified additional reefs across more than 80km of strike, with recent tenement acquisitions extending the potential to hundreds of kilometres.

“It’s very hard to comprehend the size until you’ve been out there,” Line said, adding that he’d taken the new investors to site last month.

“At 80km an hour, it took us about 60 or 70 minutes to drive from one end of the project to the other on the highway, so it is really, really big.”

Phase one metallurgical test work delivered three high-grade concentrates: a copper-gold-PGM sulphide concentrate, a high-purity titanium-ilmenite concentrate and a high-grade vanadium-magnetite concentrate.

“This is exceptional for a polymetallic deposit to have such good metallurgical recoveries to produce such high-grade concentrates using the simplest and lowest cost processing tools that you can use,” Line said.

“If you look at other vanadium and titanium deposits around the world, you’ll see that the concentrate that we produce is the highest titanium hard rock concentrate, using that magnetic separation method, that we’ve seen globally.

“It’s also one of the highest-grade vanadium concentrates in the world, but on top of that, no other vanadium-titanium deposit is capable of producing a very high-grade copper-gold-platinum concentrate as well, and that’s what this asset can do.

“So it’s a diversified critical metals portfolio in a single resource, and each of those commodities and concentrate products are in totally different commodity cycles, so it provides hedging upside and exposure to different markets and different cycles which should pay dividends over time.”

Notable neighbours

Dante sits in the West Musgrave region and is surrounded by BHP.

BHP’s 390 million tonne Nebo-Babel nickel-copper deposit is 15km to the south of Dante and the 160Mt Succoth copper deposit, 10km to the south.

BHP was more than halfway through building a $1.8 billion mine when it was placed on care and maintenance last year.

“A lot of infrastructure has already gone in, even though they went into care and maintenance based on the nickel price,” Line said.

Rio Tinto and private AI explorer Kobold Mining are also active in the district.

“Jeff Bezos and Bill Gates made a big investment into Kobold, Rio, Tinto, BHP, two of the world’s largest mining companies, and then you’ve got us,” Line said.

“There are synergies and potential pathways for partnerships with larger mining companies down the line that can be seen as a possibility, given where we are and how much land we hold and how big we expect the resources will be.”

Line admitted that Terra had previously marketed off the back of BHP building a large mine next door to Dante.

“So, people had this assumption that we might be in trouble because BHP weren’t continuing the build immediately, and that we are reliant upon them,” he said.

“But now we’ve just had these two big miners invest in us, so no longer is this perception that we’re relying on BHP to progress the asset.”

Line said the company’s new shareholders were strong operators and had deep pockets.

“[GEAR] don’t need another partner to take a project like this further,” he said.

“That being said, they do like to partner and Matt Latimore, who’s also come in on the investment, has co-invested with GEAR on several other opportunities, and they’ve done very, very well, so whilst they have the capacity to build mines on their own, they’re very good at getting involved in partnerships that that work out well for all parties.”