Monsters of Rock: Miners disappoint but nickel hopeful Centaurus stands out from the crowd
It was a rough day for mining stocks on the ASX, with most of the big boys in negative territory.
The large cap miners were led down by some heavy falls from lithium and battery metals players, with Liontown (ASX:LTR) dropping from all-time highs on Friday by 6.03% to $2.96 per share.
Lynas (ASX:LYC) slipped 1.5% after reporting the impact of labour shortages, which had fed into delays with some parts of its $575 million Kalgoorlie rare earths plant.
Other lithium miners and explorers in the red included IGO (ASX:IGO), Allkem (ASX:AKE), Pilbara Minerals (ASX:PLS), Piedmont (ASX:PLL), Lake (ASX:LKE), Sayona (ASX:SYA), Ioneer (ASX:INR) and Patriot battery Metals (ASX:PMT).
Iron ore players were little better, though gold stocks, led by Evolution Mining (ASX:EVN) provided a bit of hope as the materials sector fell 0.55%.
But if you were looking for a battery metal stock in form today you would find one in Brazilian nickel sulphide developer Centaurus Metals (ASX:CTM).
The company boasts one of a handful of large-scale, highish-grade nickel sulphide deposits on the market in the Jaguar nickel mine in the South American nation of Samba and O Jogo Bonito.
Those are the kinds of deposits best suited to processing into nickel sulphate, a key ingredient in the cathode of NCM lithium ion batteries and the main reason nickel demand is expected to surge as electric vehicles become the future of passenger transport.
Centaurus ran over 13% today after taking up 100% of the offtake rights from Brazilian mining behemoth Vale, giving it full control over the marketing of the product, which it is aiming to sell into the western battery market.
That’s going to open up a whole lot of strategic funding pathways for the 938,000t project, where an FID is due later this year.
In exchange Vale’s operating revenue royalty over Jaguar will increase 1.2% to 1.75% for nickel sulphate and 1.25% to 2% for nickel concentrate.
Centaurus boss Darren Gordon said the deal was mutually beneficial for both parties.
“We anticipate that our low-greenhouse gas emission nickel sulphate product will be highly sought after in the global market, particularly amongst end users, with Centaurus now able to freely explore a range of strategic funding and offtake options to support the Project’s development,” he said.
“The battery materials market is expanding exponentially, and we are increasingly seeing OEMs and other EV battery players moving further upstream as they seek to secure long-term supplies of key raw materials.
“The clean transaction structure allows the Company to retain its cash for ongoing DFS and project development activities at Jaguar and avoids any equity dilution of existing Centaurus shareholders while delivering enhanced funding and partnering flexibility.”