Monsters of Rock: Investors pile into MinRes on Wodgina restart news
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Mineral Resources (ASX:MIN) was the standout among the major miners on the news the $8 billion company and US chemicals giant Albemarle plan to restart the Wodgina lithium mine in the Pilbara.
The operation was mothballed just one week after Albemarle tipped around $2 billion into Chris Ellison’s MinRes in 2019, and has sat waiting for a rebound in the lithium market.
MinRes shares rose 9% on the back of the news, with the company aiming to resume production from the first 250,000tpa train at Wodgina (which has a total capacity of 750,000tpa) in the September Quarter of 2022.
The rebound in lithium has come and then some this year, with radical investment in lithium chemical conversion in China and uptake of electric vehicles driving a rush for raw battery materials.
Prices for spodumene and downstream chemicals are at record levels.
China’s shift and investment in green technology is likely to continue to rise as the world’s largest carbon emitter revealed plans to cut fossil fuel consumption to less than 20% of its energy mix by 2060 in a cabinet document on Sunday.
Iron ore miners also drove the market higher, leading the Materials index on the ASX to a 1.09% gain.
Tightly held Tasmanian iron ore miner Grange Resources (ASX:GRR) pulled in squillions in the past two quarters on account of the astonishing premiums paid for the high grade iron ore it produces at the Savage River mine in Tasmania.
It came back to earth somewhat in the September Quarter with prices sliding from an absurd US$287.15/t (A$373.72/t) in the June Quarter to US$153.09/t (A$206.80/t) in the three months to September 30.
Despite seeing operating costs rise from $90.16/t to $95.01/t, the premiums received by Grange kept its margins healthy, with cash and investments rising from $416.4 million to $554.6 million, while trade receivables fell from $83.16m to $21.45m.
St Barbara (ASX:SBM) has not had the happiest couple of years, with costs at its historic Gwalia operations rising steeply on the back of a major expansion at the more than 120-year-old gold mine.
There may be hope from investors another turnaround is on the way at Gwalia, with all in sustaining costs falling to their lowest level in more than a year on the back of improved gold production at the Goldfields mine.
Gwalia produced 51,757oz in the September quarter, a 15% increase, with costs falling 8% to $1492/oz.
St Barbara has identified the Trevor Bore deposit around 25km from Gwalia as a potential open pit addition to its Leonora operations from 2024.
On the other hand, St Barbara’s Simberi operations in Papua New Guinea were a non-starter with maintenance on a tailings pipeline ongoing, while the Atlantic gold operations in Canada saw a 43% drop in production quarter on quarter to just 15,243oz due to the processing of low grade stockpiles.
Gascoyne again told shareholders to ‘take no action’ on Westgold’s new 53c a share all scrip bid, which increased its offer marginally from 1 Westgold share for every 4 Gascoyne shares to 3 for 11.
Gascoyne previously knocked back the Westgold bid in favour of its existing merger agreement with Firefly Resources (ASX:FFR).