Monsters of Rock: A F’ Yeah! day for big miners as they lead ASX200 higher
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Aussie larrikin and swimming superstar Kaylee McKeown didn’t just win gold in the 100m backstroke.
The 20-year-old from the Sunshine Coast also pulled off this all time live TV gaffe to ensure her place in the Twitter history books.
⚠️ Viewer discretion advised ⚠️
— 7Olympics (@7olympics) July 27, 2021
Miners were in good spirits today as well and were happy to splash the cash with a couple of interesting acquisitions.
First thing this morning IGO firmed up its grip on the Fraser Range by paying $45 million for Mark Creasy’s Silver Knight discovery and a JV on the ground Creasy Group privately holds around it.
Cobalt Pac-Man Jervois Mining also announced its latest in a string of globe-trotting purchases by paying US$160 million for Freeport McMoran’s Finnish cobalt business to go along with its assets in Australia, Idaho and Brazil.
BHP (ASX:BHP) hit a new record again, but at this point maybe we should tell you when that stops happening.
Materials was up 1.58% at the close, helping the ASX200 to a 0.5% gain.
The second big day in a row for the SA (South Australian and South American) copper and gold miner, this time with June Quarterly to share.
Strong gold production of 57,875 ounces for the June Quarter drove an increase in guidance for 2021 from 190,000-215,000oz to 205,000-228,000oz, while copper output rose 22% QoQ from 26,842t to 32,681t.
Record copper prices helped drive revenues to $986 million in the first half, giving OZ around $134 million cash on hand with no debt.
While Covid issues had a serious impact on its Brazilian operations, Prominent Hill was a winner with OZ increasing copper and gold guidance and significantly reducing all in sustaining cost guidance at the flagship mine by around US30c/lb after producing 16,945t of copper and 35,845oz of gold in the June Quarter.
Carrapateena guidance remained unchanged after generating 14,183t of copper (up from 9799t in the March period) and 20,775oz of gold, although costs are expected to be around US15c/lb higher.
Jervois Mining was a directionless tiddler this time four years ago.
Now it has a serious growth mindset, using a string of acquisitions to become a major player in the cobalt sector.
Jervois is around 1000% up since a change of management in 2017 set it on its new path and 159% over the past year, having expanded via the acquisitions of the proposed Idaho cobalt mine and San Miguel Paulista nickel and cobalt refinery in Brazil.
It has now taken out mining giant Freeport McMoran’s cobalt division in a US$160 million purchase, securing a long-term stake in Umicore’s world class cobalt refinery in Kokkola, Finland.
Jervois will raise $313 million Aussie to fund both the acquisition and the development of the Idaho mine, with major investors AustralianSuper ($50m + $33m sub underwriting), Mercuria (US$40m), Freeport McMoran and Lundin Mining ($66m raising and sub underwriting) all coming on board as part of the deal.
The purchase price implies a 7.6x EV/EBITDA ratio on EBITDA of US$21m in 2020. That came about due to depressed cobalt prices.
That increases to US$38m taken at 2018-2021 averages, including an US$83m contribution from 2018 when cobalt prices were as high as US$90,000/t.
IGO has spent a lot of money in the past five years looking for the next Nova nickel mine.
The closest anyone has come however, has been prospector and Nova backer Mark Creasy, whose privately-owned Creasy Group confirmed the Silver Knight discovery in 2018.
IGO has finally sewn up a deal for the deposit, 35km north-east of Nova, in a $45 million cash deal that will see IGO take full ownership of Silver Knight and form a 65-35 JV over Creasy’s ground around it.
Pre-mining activity at Silver Knight is expected to start in 2023.
“The acquisition is strategic, in our view, as it can prolong the life of Nova beyond the RBCe life of 2027 (reserves),” RBC mining analyst Kaan Peker wrote in note today.
“However, we do note that the 2018 (Silver Knight) Resource estimate is lower than current throughput grades at Nova, and, as such, expect significant infill drilling to occur before the deposit is added into the current processing plan.
“We also note that IGO’s Ecliptic target is approximately 1km from the Silver Knight deposit.”