Monsters of Rock: Rio Tinto plucks Aussie scandium project in $21 million deal
Rio Tinto (ASX:RIO) has tossed pocket change into the hands of Aussie explorer Platina Resources (ASX:PGM), offering up to US$14 million ($21m) to acquire a project which will double its scandium production.
Acquired for round about a single shipment of its Pilbara iron ore (it’s cigarette packet maths but don’t get angry at us please), Rio says the Platina Scandium Project near Condobolin in New South Wales could produce up to 40t a year of the rare, high value commodity for about 30 years once scaled up.
Rio currently accounts for around 20% of the world’s scandium oxide from titanium dioxide waste at the Sorel-Tracy project in Quebec, Canada.
Listed as a critical mineral everywhere from the US to Canada and Australia, it is effective in strengthening aluminium for light, strong and heat resistant high performance alloys used in aerospace, cars, heat exchangers, sports, 3D printing and energy transmission.
It can also improve the performance of fuel cells, which provide green power in buildings, medical facilities, data processing centres, lasers and lighting.
“This acquisition supports our commitment to critical minerals and finding better ways to provide materials the world needs,” Rio mineral CEO Sinead Kaufman, who is also overseeing the mining giant’s push into lithium, said.
“It will enable us to further develop and grow with the global scandium market, complementing our existing scandium production in Quebec, where we have the expertise, technology and capacity to produce pure, highly reliable scandium through sustainable methods.”
Often lumped in with rare earths, scandium oxide is produced in such small quantities it trades for more than 10 times the price of NdPr, currently fetching US$913.49/kg on the spot market according to Shanghai Metals Market.
Up 7.7% today, Platina says the sale will allow its shareholders to enjoy an injection of new funding to advance its gold exploration portfolio.
A DFS in 2018 put a $67.8m price tag on its stage one development with a post tax NPV of $234m and 5.3 year payback, though it was at a then higher scandium oxide price of US$1550/kg.
“The transaction with Rio Tinto is congruent with Platina’s strategy of advancing projects along the value chain and monetising when a new combination of technical, market or financial capability is required. This enables projects to achieve optimal scale, minimises Platina’s capital outlay and accelerates returns to investors,” MD Corey Nolan said.
“Platina discovered the scandium resource in 2011 as part of an exploration program for platinum and nickel/cobalt. Platina has advanced the project over the last 12 years through geological, metallurgical and engineering studies to the point where its value has been recognised by one of the world’s largest and leading natural resource companies.”
The high grade Sugar Zone mine in Canada seemed like a tasty little pick up a year or so ago for Silver Lake Resources (ASX:SLR).
But it is probably giving the gold miner’s investors a bout of hypertension right about now, as quarterly gold production in March came in at 10,290oz with sales of 9066oz at all in sustaining costs of $3132/oz.
That’s more than even record gold prices, with better performance at SLR’s mainstay Deflector and Mount Monger mines putting a shinier gloss on the ASX listed goldie’s performance.
All up SLR produced 63,153oz of gold and 340t of copper at an average sale price of $2785/oz and AISC of $2014/oz, including a non-cash inventory charge on the treatment of Mt Monger stockpiles.
Deflector was the standout, delivering 27,161oz gold and 340t copper at a tidy AISC of $1548/oz, for year to date sales of 81,248oz and 720t at $1645/oz.
Mt Monger produced 25,702oz with sales of 26,474oz at $2113/oz. YTD Mt Monger has returned 66,712oz with sales of 66,467oz at $2337/oz, including $409/oz from the stockpile treatment.
SLR expects sale to be at the bottom end of its guidance of 260-275,000oz at AISC of $1950-2050/oz.
Year to date it’s tracking at 179,988oz of gold and 841t of copper produced and sales of 176,831oz and 720t at a sale pice of $2614/oz and AISC of $2104/oz.
RBC’s Alex Barkley said the result was weak, with sales guidance shifted to the lower end of its original 260-290,000oz range and AISC guidance in the upper half of its original $1850-2050/oz range.
“A weak Q3 result, with potential negative read-through for future periods,” Barkley told clients.
“Q3 gold of 63koz was 7% below RBCe and 9% below consensus. AISC of A$2014/oz was 5% above us and consensus.
“Mt Monger performed well, with issues at Deflector and Sugar Zone. Deflector mill grade only rose to 4.9g/t (RBCe 5.63g/t) leaving the site 22% short of our gold forecast.
“SLR had expected grades to rise through the year. Mining has entered the higher grade South West Deflector area as planned, however, grades have fallen short of what was required for site FY23 guidance (130-135koz, RBCe 126koz).
“There is potential that lower-than-expected grades persist into Q4 (RBCe 6.1g/t) and FY23 (RBCe 5.9g/t).”
Silver Lake is planning to replace Sugar Zone’s ageing fleet over the next six months in the hope of improving its performance.
Aeris Resources (ASX:AIS) is the latest victim of a rainy summer in northern Queensland, reducing copper equivalent guidance to 53,000-63,000t on the impact of heavy rainfall at its Mt Colin mine in the normally termed Sunshine State, branding ASX-listed copper miners must take as some sort of water cooler joke by now.
Copper production will drop for FY23 from 32,000-40,000t to 28,000-32,000t, with delays bringing the Budgerygar deposit online at its Tritton project in New South Wales also impacting guidance.
Zinc, gold and silver production of 24-29,000t, 60-78,000oz and 1.1-1.3Moz respectively remain unchanged, with the Jaguar and Cracow mines running to plan.
AIS produced 6,000t Cu, 4200t Zn, 15,400oz Au and 200,000oz Ag in the March quarter at AISC of $5.87/lb on a copper equivalent basis.
Year to date AIS has produced 19,500t copper, 19,600t zinc, 43,100oz gold and 800,000oz silver at $5.30/lb copper equivalent, for 38,400t of copper equivalent production.