Monsters of Rock: Spotlight shines on WA's gold, iron ore and lithium

Paterson Province heats up on Greatland Gold’s $475m purchase of Telfer and Havieron stake from Newmont
MinRes pockets over $1 billion from iron ore haul road sale and cuts expenses
Lithium stocks froth up the charts as China closes major lepidolite mine and UBS calls bottom

Ructions in the Paterson

Greatland Gold has pounced on snapping up the historical Telfer gold mine and the remaining 70% stake in the nearby Havieron project in WA’s Paterson Province from the world’s biggest miner Newmont (ASX:NEM) which took over Newcrest in a $26 billion merger.

It was half-expected that London-listed Greatland would look to consolidate its stake in Havieron on the back of Newmont’s divestment plans for the project, saying it was is in a “strong position” to buy back a majority stake if the gold major decided to sell.

And so it did, however it also bought one of Australia’s most famous gold mines nearby too, in Telfer.

The transaction is a US$205.7m cash payment to Newmont with US$167.5m in Greatland scrip, with an additional US$100m linked to the gold price and production metrics.

“I am pleased that Telfer and Havieron are being sold to Greatland, a company with a highly experienced management team and board of directors. I have full confidence that the Greatland team will be outstanding stewards of these assets,” NEM CEO Tom Palmer said.

The news has been welcomed by Antipa Minerals (ASX:AZY) boss Roger Mason, who says that the acquisition demonstrates a development and growth commitment to the region that has been absent for some time.

“From our perspective and almost by default the deal significantly increases the value of the gold ounces in the region, particularly those close to Telfer and Havieron,” Mason says.

“There’s a lot of positives and the deal will show a spotlight on the region for other mid-tier developers and mining majors that might be hungry for gold development opportunities.”

That includes Rio Tinto (ASX:RIO) which holds the Winu project and its Citadel JV (Rio: 68%, Antipa: 32%) with Antipa. The latter also has JV’s with IGO at Paterson and Newmont with Wilki, as well as its own 1.8Moz Minyari Dome gold asset.

Cutting costs and banking cash

After sacking 150 staff at its head office and shutting down a 1000-staff iron ore operation iron WA’s Yilgarn, MinRes has subsequently made a cool $1.3 billion – $1.1 folding, and a $200 million performance add-on – from the 49% sale of its iron ore haulage road to Morgan Stanley’s infrastructure arm.

Another $200m will go to Chris Ellison’s multi-commodity mining business if Onslow Iron hits a 35mtpa run-rate before the end of FY26.

“As production volumes rise, cash inflows will increase significantly, facilitating a rapid deleveraging of the balance sheet,” MinRes said.

“Cash inflows include mining services and haul road income, neither of which are correlated to the iron ore price. In addition, MinRes will receive 80 per cent of its project joint venture partners’ share of free cash flows from Onslow Iron operations as repayment of the carried expenditure loan.”

Apart from the cash injection, cost-cutting will save about $120m in opex and $180m in capex, says the mining major.

Lithium bottom?

UBS says lithium has bottomed out and an 11-23% upside in chemical prices is due this year on the back of the shutdown of the Jianxiawo lepidolite mine in China.

Sky Han from the UBS team 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.”

Reporting from Benchmark Gigafactories APAC Conference in Perth today, Stockhead’s very own mining guru Josh Chiat witnessed an exchange between MinRes lithium CEO Josh Thurlow and BMI analyst Cam Perks on what the closure of the mine could mean for the sector.

On the back of the news >$1bn market-capped lithium ressies Liontown Resources (ASX:LTR) and Wildcat Resources (ASX:WC8) rose significantly today.

Interestingly, big hitter Arcadium Lithium (ASX:LTM) (part ex-OG WA lithium hunter Galaxy Resources) jumped too, climbing 12% even after deciding to close its Mt Cattlin mine in WA early next year.