Pic: John W Banagan / Stone via Getty Images
Mining’s man of the moment Tim Goyder reflects on a transformational week at his companies Chalice and Liontown
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It has been a long week for Tim Goyder, but a prosperous one.
The mining investor spent years largely flying under the radar, well known by those in the industry for his corporate acumen and longevity but largely anonymous in the mainstream.
But after around 40 years in the resources industry he is starting to receive widespread acclaim.
The down to earth Perth mining magnate is a little unusual in that he has made his fortune by backing and leading a portfolio of junior mining stocks, two of which appear poised – after more than a decade and many cast-off projects – to be headed for the big time.
The first is Chalice Mining (ASX:CHN), where he has been chairman since its listing in the mid-2000s with the Chalice gold mine near Norseman in WA, now part of the Higginsville gold operations.
It has since cycled through a gold and other projects in Eritrea – earning US$115 million for Chalice to fund its exploration activities – Canada and Victoria before striking it lucky with the Julimar nickel-copper-PGE discovery just 70km north of Perth on the underexplored western fringe of WA’s Yilgarn Craton.
That project’s maiden resource was announced last week, shooting the explorer to all time highs and a market cap of more than $3.5 billion after revealing it as the biggest platinum group elements discovery in Australian history and largest nickel sulphide find globally in 20+ years.
Liontown Resources (ASX:LTR) similarly had a number of guises before becoming Goyder’s host for his move into the modern lithium industry with the Kathleen Valley project in the northern Goldfields.
A bolder long term dream to add a refinery with a capacity of up to 86,000tpa of lithium hydroxide could make Liontown one of the world’s largest lithium chemical producers by the end of the decade.
At current levels of $9.9 a share, Goyder’s 10.8% stake in Chalice alone is worth $380 million. Its value has risen almost 40% in five trading days since the resource announcement.
Liontown copped a sell down on Thursday’s DFS release, but remains a 519% gain over the past 12 months.
Add to that his shares in DevEx Resources (ASX:DEV), Perth basin oil and gas explorer Strike Energy (ASX:STX), Liontown spinoff Minerals 260 (ASX:MI6) and soon to be Chalice demerger Falcon Minerals, and his Midas touch is clear to see.
Stockhead caught up with Goyder at the end of a whirlwind week for mining’s man of the moment.
So obviously it was a pretty big week for the companies that you’re involved in between the Chalice announcement of the Gonneville resource and the Liontown Definitive Feasibility Study. Which of the two was the most exciting for you personally?
“I can’t separate them, they’re both fantastic milestones. Clearly for Chalice to come out with a resource as it has within 18 months of discovery is a huge achievement.
“And in respect to Liontown, you know, we’ve come out now with a very, very good study, a definitive feasibility study on the concentrate production plant and we’ve also updated our downstream scoping study.
“So, they’re real projects, speaking in respect to Liontown, a long life mine and that’s gonna pump out a lot of cash.
“Chalice has got a lot more upside in terms of the exploration, and we will be now commencing a scoping study or we have commenced a scoping study which should be out next year.”
Goyder companies share prices today:
So Chalice and Liontown have both been fairly long term investments for you. They’ve had a number of other projects that have gone through them and Liontown was in base metals at one point, Chalice had a lot of gold exploration projects over time. Was there a point where you made the decision with the companies to specifically focus on the new energy metals, particularly the shift into lithium with Liontown?
“Well, this is back about five years ago, we were exploring for gold in Tanzania. And at that time, I guess the politics changed within Tanzania and we felt that it was getting too hard.
“So we basically then started looking at lithium. And this is when lifting was on the up back in 2015. So we started that search for lithium in Tanzania.
“And then we looked at projects within Africa, greater Africa and also Canada. However, we decided that the best opportunities were here in Australia. And that’s when we started to pick up Kathleen Valley project and the Buldania project.”
And it seems pretty incredible to me, and you’ve got these two projects here. But Gonneville was just an incredible story in terms of how nobody had identified this resource before.
“Yeah, well, nature does a pretty good job of hiding them, hiding these deposits. That’s part of the power of the exploration phase. You’ve got to do the groundwork, do the good technical work and then drill holes.”
In terms of your sort of decision to invest in these companies or invest in people or projects or anything like that, is there a particular thing that you look at in terms of an investment in mining and exploration?
“It really comes down to having a good board, having a good team and then turning these projects over until you find the one which you can focus on. You’vr really got to have a lot of opportunities, because a lot fail.
“Fortunately, in Chalice’s case, we got onto the greater Julimar prospect there. We got early encouragement through soil sampling and then of course the first drill hole we drilled there in March last year and everything happened pretty quickly after that.
“In terms of Liontown, Kathlyn Valley pegmatites were known but no one had really drilled them. So we commenced an initial program there, got some quite good numbers and then we persisted. And, of course, what followed is that we found 156 million tonnes there at a grade of 1.4%. So you know when you get onto something good.”
So, obviously, the Liontown definitive feasibility study coming out, you’re looking at about $473 million dollars capex. It’s a long life operation you’d be looking at, potentially a refinery beyond that. Do you see that refinery as definitely being something that you think will happen? And do you see the prospect that you’ll be able to go in and build that project yourself, or you’re going to need to go sell out or get a JV partner?
“Certainly we can build the concentrate plant and the mine. That’s certainly within our ability to fund through banks or offtake agreements.”
“The downstream processing plant, we actually feel that we could probably fund a large proportion of that out of cash flow, the way we’ve structured it, in terms of building each individual train over time.
“So we’ll kick off the first train, producing about 30,000 tons of hydroxide and then move to the second and the third. Essentially our initial work shows that we can fund that out of cash flow substantially.”
I just feel like you must have suitors knocking down the door of both of Chalice and Liontown.
“Well look, they’re pretty appealing assets, absolutely, but you know, we want to build these things.
“They’re very, very good assets, and we’ve got the technical skill set to find them. We’re now employing the technical skill set to build them.”
Do you think these valuations are accurate in terms of where the market’s at at the moment? Is the market overheated and the valuations are a reflection of that or are they a reflection of the underlying value of the resource?
“I think the real investors can see the value in both companies. Chalice has got a very large orebody, or ore resource, rather. It’s got excellent, fantastic upside.
“We’ve only drilled 7% of that intrusion and we’re waiting approval to then move into the State forest there. So this has got huge upside.
“So I think it’s an investor interest because of that, because number one, what we’ve got, but also number two, the exploration potential.”
In terms of the lithium market, obviously, you’ve got plans to construct Kathlyn Valley with the investment decisions being made in the middle of next year. We’re at all time highs in terms of lithium prices. Does that hold out to 2024 when the mine’s been built?
“Really the market forecasts and the broking industry … six months ago and some of them were still holding the predictions that the market won’t really improve until 2024 when there’s going to be a tremendous deficit commencing.
“There’s a shortage right now, hence the price on the spot market being obtained. So look there’s so many gigafactories being built around the world, and they’re going to need product.
“And I think in Europe alone, I was told by an industry participant, there will be 20 gigafactories being built in Europe over the next few years.
“Just in Europe alone, let alone China, Korea and Japan, and the US. The mines aren’t out there.
“We would need probably, on Roskill’s forecasts, another six more Kathleen Valleys just to fulfill that market void.
“It’s not a quote but you can go look at the recent Rio Tinto announcement where they said the world needed 60 more Jadars to fill the demand.
“It’s not just us saying it. The amount of interest we’re getting is just fantastic right through the spectrum, from hydroxide producers, from OEMs, the chemical industry. It’s really a strong interest.”
I was listening to Ken Brinsden a while back, and he was talking about the idea of building refineries. They’ve gone the Korean route. He said that the benefits that get offered by the Korean government and Korean companies are much better than what you get here. Do you see Liontown basing the refinery here in WA and if so, is Kalgoorlie the likely location? Would it be trucking to Perth?
“Well, our initial scoping study is structured that we would build the downstream processing plant near the mine.
“The benefit about that is a large saving in transport, not having to transport the spodumene concentrate, say, to Geraldton.
“I guess Kalgoorlie is a possibility and this PFS we’re doing now, we’ll look into that. Alternatively, we may look to build it offshore, but that’s what we’re going to study for.”
And so you’ve you’ve been pretty tremendously successful over the last couple of years off your investments, particularly your stakes and your chairmanship in Chalice and Liontown and then Devex Resources as well. What is it that you look for in an investment or company that you seek to get involved in or float?
“Well I guess I roll my sleeves up and participate. We were exploration companies now into development in terms of Chalice and Liontown, but always our priority is to have a really good technical team.
“The right geologists, the right board, and also being able to fund that work we do and drill.
“We won’t be left wondering. When we tie-up ground, we quickly do our initial work to see if it’s any good. And then if it does show signs that we’ve got some good targets, we’ll then get into drilling them pretty quickly.”
In terms of the scale and the quality of Julimar and what you’ve seen since the resource came out in terms of the market reaction, how does this discovery compare to other mineral discoveries you’ve seen in your history in the industry in WA?
“Well, I guess there’s Mt Keith, there’s Boddington, which is gold of course and some copper, but yeah it’s large, and it will have long term benefits for the State.”
Do you remember this sort of level of excitement around many discoveries in WA, in your time in the industry?
“Not for a long time. There’s been some great discoveries even in the last five years in Western Australia.
“There’s been Havieron, Winu, De Grey’s discovery at Hemi. I’ve probably missed some out, but there’s been great discoveries and it just shows there’s still great opportunities in Western Australia.”
And I guess that’s one of the features of your companies, you have looked overseas in recent years, but you’ve come back to Western Australia. Have you found that this is still the best place to go out and look for a gold mine or otherwise? What makes WA such a great place to explore?
“The backbones of legislation. You’ve got certainty here, although you’ve got a lot of hurdles to jump through in terms of the approval process, all things being equal, you know you’ll get through and in some countries now it’s problematic.”
We’re seeing a lot of concerns in terms of labor shortages, skill shortages here in Western Australia. Do you see that impacting Liontown at all? Is it something that you’ve been in conversation with anyone in the government and mines department about how that can be alleviated, or how they can assist new mines?
“Hopefully, in the new year, the borders will open up.
“Labour shortages are being experienced in many types of industries in Western Australia at the moment. Historically a lot of people come over from over east and overseas to Australia to work.
“So hopefully that’s going to alleviate the current situation. The border needs to be opened up and hopefully we can see that in February.”
