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Mining
Copper, zinc and lithium prices have hit severe turbulence in the face of a bearish macroeconomic outlook and China’s less than impressive economic performance.
Yet as prices have hit year lows, Bill Beament’s Develop Global (ASX:DVP), a company with its tentacles in all three commodities, has seen a 17% kick in its share price.
It has some more catalysts on the horizon, with a scheme vote on the scrip acquisition of Pioneer Dome lithium deposit owner Essential Metals (ASX:ESS) coming up next week.
Today, Develop lifted 2.8% by 4pm AEDT after the $630 million mining services and all things energy transition metals stock, announced a 40% increase in resources at its Woodlawn zinc and copper mine in regional New South Wales.
It now contains 10.3Mt at 1.8% copper, 6.1% zinc, 2.2% lead, 47.2g/t silver and 0.5g/t gold — a 4.3% copper equivalent grade.
Notably, Woodlawn now contains over 10 years of mine life with copper metal boosted 43% to 190,000t and zinc tonnes up 50% to 620,000t — a combined 445,000t on a copper equivalent basis.
The mine, where a reserve update and new development plan is due in the March quarter, previously had a life of around 7 years on the basis of its 850,000tpa processing facility.
Beament says while copper, zinc and lithium are in the doldrums right now, evidence is emerging that prices can’t fall much further without putting many producers out of business, fertile ground for a rebound.
“Copper and zinc can’t go much lower, people just don’t make money,” he said.
“You’ve seen zinc mines shut in the last three or four months because of the price, some polymetallic orebodies have shut down as well.
“Lithium I think has really bottomed, you can’t go too much lower or else you send the lepidolite game out of business in China.
“It’s really just linked to the world economy … until the world economy wants to grow again and it’s risk on commodities will just stay stagnant. When that is I don’t know.
“I’m sure no one will be able to time it, but what we’ve been doing at Develop is just getting our asset base right doing all the technical work, wrapping them up into a solid technical bow because the leverage to the commodity price rebound of our asset pool is extraordinary.”
The next big milestone for Develop will likely be next Wednesday’s scheme vote on the Essential deal, deemed not fair but reasonable and in the best interests of shareholders by independent expert BDO.
But Develop has since received support from influential proxy advisor ISS for the takeover.
It would provide yet another business unit for the former Northern Star boss’ green metals initiative. Develop also owns the Sulphur Springs copper-zinc project in WA’s Pilbara and has the underground mining contract on the Bellevue Gold (ASX:BGL) mine.
Beament said he was restricted on what he could reveal on Develop’s plans for Essential’s Pioneer Dome asset, which contains 11.2Mt of ore at 1.16% Li2O.
While it is small on a global scale, it rates as one of less than 15 known spodumene resources in WA, the largest producing jurisdiction globally for the battery metal.
Beament said Develop had been completing metallurgical test work in the background as it has progressed the scheme process and wants to progress approvals to have the project shovel ready by mid-next year.
Rather than an open pit with a high stripping ratio, Beament is looking at the prospect of a smaller starter pit and underground to hit its higher grade core.
Back at Woodlawn, he says more drilling is planned from underground to really tease out the potential of the orebody. He said with the infrastructure in place, there remain opportunities to discover more in previously untested areas to the north and south of the historic lenses.
“With what we’ve put out today and what’s been mined to date out of this project, it’s now over a 23 million tonne orebody,” he said.
“So it’s really getting up there on quite a large geological scale, and this resource is between the surface and 900 vertical metres.
“Golden Grove’s 1.8km down below now and the resource goes down below that. This is going to end up a major orebody, it already is now.
“We found these northern lenses that we announced last drill results, that lines up with a big stonking geophysical anomaly on the surface that (previous owner) Heron discovered years ago but never had the opportunity or money to drill it and we’ve hit it from underground.”
The materials sector meanwhile gained close to a per cent today in a ripping performance that defied lower commodity prices overnight.
While spot uranium prices were little changed the sector caught a bid, led by a more than 6% gain for $1.6 billion capped Boss Energy (ASX:BOE).
There was a bit of yellowcake behind that though, as Boss announced the start of mining at the Honeymoon operation in South Australia.
Just Australia’s third uranium producer, the first well-field at Honeymoon is being pre-conditioned to prepare for in-situ recover and first production in December.
The mine was last in operation in November 2013 when previous owner UraniumOne idled it due to falling uranium prices.
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