Monsters of Rock: A new niobium monster creeps up on us and a gold takeover target battens down the hatches
It’s witching season and weird and wonderful things are happening on the ASX as the market downs tools.
And some interesting trading has given birth to a new monster – our designation for mining stocks upwards of $500 million.
But a sudden bump in niobium rocket WA1 Resources (ASX:WA1) has lit up the ASX today and sent the explorer up 25% to an all time high of $12.15, and a market cap of over $516 million.
That comes a day after a release on some fairly positive drill hits around 30km west of the Luni discovery at the West Arunta project, which generated a far tamer reaction from the market.
But then the release of a pretty bullish recommendation from research analysts at critical minerals specialists Canaccord Genuity, who have placed a massive $17.50 per share price target, up from $11.50.
44% upside still after today’s rally, with analysts Tim Hoff and Michael D’Adamo lifting their modelled high grade resource at Luni 28% from 32Mt at 2.25% Nb2O5 to 41Mt at 2.33% Nb2O5, inside a broader resource model of 154Mt at 1.19% Nb2O5.
It should be noted that is not a compliant JORC resource or exploration target. WA1 says that is not coming until the second quarter of next year. It will certainly whet the appetite of investors hoping they’re not too late for the ride.
Companhia Brasileira de Metalurgia e Mineracao is the world’s primary supplier of niobium products from a single mine in Brazil’s Araxa State, with around 460Mt of ore at grades mined from open pits at between 2.5-3% Nb2O5 according to the Tantalum-Niobium International Study Center.
But other market participants are tiny, boasting resources at far lower grades and inventories in the range of 2-20Mt. WA1 has become a market darling on hopes it could break the virtual monopoly for the material, largely used in iron and steel production.
Tietto Minerals (ASX:TIE) has put up its defence in a war of words to keep the wolves at bay, as 7-odd per cent shareholder Zhaojin Capital continues its efforts to secure support from shareholders for a ~$650 million takeover.
The Cote d’Ivoire gold miner has fired back against claims made in Zhaojin’s latest bidder’s statement earlier this week.
Its board continues to hold a whip hand because neither of its other big shareholders, including fellow Chinese gold stock Chifeng Jilong, want to sell into the 58c per share bid, forming an 18.74% block against Zhaojin’s proposal.
Zhaojin leapt on production downgrades announced by Tietto since its bid went live as evidence investors were at risk if the cash deal didn’t go ahead. But Tietto has continued to promote an independent expert’s report, which found the Zhaojin offer was neither fair nor reasonable.
Its shares had traded as high as 86c earlier this year as it moved into production at the Abujar mine in Cote d’Ivoire, but fell as low as 30c as ramp up issues emerged.
Having previously stated it would produce 105,000-120,000ozpa in this half of the year it now expects to deliver only 65,000-75,000oz.
However, today it rebutted ‘observations’ from Zhaojin that the independent expert had used inappropriate comparisons in coming to a valuation 39-59% above its offer price and defended gold price forecasts used in the assessment saying they were below currently strong spot price levels and prices used in other M&A transactions like BHP’s takeover of OZ Minerals.
“The Directors remain of the view that Zhaojin’s Offer was opportunistically timed to take advantage of a period of short term weakness in the Tietto share price caused by temporary operational challenges during the ramp-up of Abujar and the market’s initial adverse reaction to announcing the need to update the Ore Reserve,” Tietto said in its statement.
“Absent the Offer, the Directors believe that Tietto’s share price would have continued to increase above pre-bid levels as operational performance stabilises in line with the updated LOMP.”
Tietto shares are in a halt to remove “an ASX release that was lodged in error” after the company initially repeated its second supplementary target’s statement in two forms.