Monsters of Rock: Greatland eyes ASX citizenship as IGO boss warns of lithium price volatility

Greatland Gold plans to make ASX debut within next six months on back of Telfer and Havieron purchases
IGO up as it lays down its plans to navigate tumultuous lithium market
Critical minerals heavyweights Pilbara Minerals, MinRes and Nickel Industries make gains

The ink has barely dried on the passport after expanding into WA’s gold-rich Paterson Province, yet London-based Greatland Gold is already making moves to list itself on the ASX in order to increase local market exposure.

Greatland is now the proud owner of the historical 32Moz, ~400,000ozpa Telfer gold mine and 100% owner of the nearby 7Moz Havieron deposit, which it had previously had a 30% stake in.

Far be it that there are any intrinsic issues with the projects, Newmont just had to decide how to pay for its costly US$16.8bn takeover of Newcrest Mining last year and considered the assets dead wood out of necessity.

They’re anything but that, as shown by Andrew Forrest-backed Greatland’s efforts and subsequent successful purchase of Telfer and Havieron for US$475m this week.

Twiggy, through his Wyloo Metals investment arm, has subscribed for up to an extra ~US$100m as part of Greatland’s $500m raise to maintain its stake in the not-so-junior gold miner.

On the back of the deal, Greatland says it’s now eyeing to list on the ASX to become a truly rubber-stamped Aussie gold producer.

As if it wasn’t before, the Paterson Province is now abuzz with rumours that mid-tier or major miners such as Rio Tinto (ASX:RIO) – which holds the Winu project in the area and its Citadel JV (Rio: 68%, Antipa Minerals (ASX:AZY) 32%) – could further shake up the mining region.

The latter has JV’s with IGO (ASX:IGO) at Paterson and with Newmont with Wilki, as well as its own 1.8Moz Minyari Dome gold asset – alongside others in the vicinity with prospective projects such as Cyprium Metals (ASX:CYM) and Venus Metals (ASX:VMC) – which could all capitalise on a flurry of further potential M&A activity.

Lithium price volatility to remain on journey to imminent supply deficits

In a company strategy update pow-wow earlier today IGO boss Ian Vella says price assumptions on the lithium spot price are just a small part of the problem in the fledgling commodity sector and assets are very much beholden to downstream business decisions.

Lithium is IGO’s core focus – is underpinned by world’s largest hard rock mine at Greenbushes and refinery in Kwinana, south of Perth, both of which it shares with Chinese partner Tianqi in a joint venture.

“There’s a lot going on and the takeaway from us is twofold,” Vella says.

“One, we just don’t think that subsidies, incentives and tariffs are going to make a big difference in the space we’re talking about playing in.”

Vella says it’s more focused on leveraging upstream mining margins and optimising downstream processing through partnerships.

This included a focus on the competitive landscape in China, the need for cost competitiveness in lithium processing, and the importance of refinery efficiency, Vella says.

“So if you look at the drivers there, there’s no structural advantage that we see. It’s not like aluminum, where you’re talking about energy source being a major differentiator.

“This comes down to having a very well run asset, very well maintained, running at capacity, with a steady feed, very thoughtful management of their waste products, which is an issue, and the logistics around the refinery.

“Upstream in lithium and copper mining is going to drive substantive shifts in the economics that shouldn’t affect our strategy or our business case.”

China’s lepidolite mine shutdown

That sentiment comes on the back of UBS China analyst Sky Han saying yesterday that integrated Chinese battery manufacturer and lithium miner CATL had decided to suspend production from its Jioangxi lepidolite mine, which makes up about 5 per cent of global primary supply and a quarter of China’s.

Han reckons price support is sitting at US$8600/t, with CATL’s cash cost sitting at an estimated US$10,968/t excluding taxes or US$12,500/t including VAT.

“We previously believe that CATL would be more tolerant on its loss in lithium business as its focus is likely on its overall battery margin,” the UBS analyst said.

“But after making a loss for two months in lithium business and continuous downside risk on lithium price, we finally see normal supply response from marginal-cost producer.”

Making Gains

MinRes (ASX:MIN) (multi-commodity) +7.06%

Pilbara Minerals (ASX:PLS) (lithium) +4.49%

IGO (ASX:IGO) (multi-commodity) +4.29%

Nickel Industries (ASX:NIC) (nickel) +7.79%

Eating Losses

BHP (ASX:BHP) (multi-commodity) -1.88%

Newmont (ASX:NEM) (gold) -1.73%

Emerald Resources (ASX:EMR) (gold) -0.78%

Bluescope Steel (ASX:BSL) (steel) -0.56%

At Stockhead we tell it like it is. This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.