Monsters of Rock: Who had a tough first day at the office?

Chris Ellison backed mineral sands-rare earths IPO VHM endures tough first day
Element25 lines up manganese supply deal and US$30m investment with auto giant Stellantis
Miners up over 1% as gold shines

Like many others Monsters is officially back after its Christmas and New Year’s holiday, and it’s been a busy and fruitful return for the ASX mining sector.

Already today we’ve seen crazy gold hits, new copper producers, a $136 million takeover of a lithium junior and another executive departure at Fortescue.

But for some their first day at the office hasn’t been so sweet.

VHM (ASX:VHM) has all the makings of a hot stock, with rich lister Chris Ellison in the corner of the Victorian rare earth and mineral sands play.

After a $30 million, $1.35 a share IPO, VHM listed today ahead of a final investment decision in the second half of the year on its Goschen mineral sands project.

It boasts 629Mt of resources and 198.7Mt of ore reserves with a potential mine life in excess of 20 years, major project status from the feds and a memorandum of understanding for offtake with Chinese rare earths giant Shenghe Resources.

Investors weren’t biting on day one though.

VHM shares tumbled 14.81% as of 3.20pm AEDT. Ouch.

For his part, VHM’s managing director Graham Howard describes the Goschen project as “compelling” and “globally significant”.

“The gap between the increasing demand for high-grade, ethically sourced rare earths and critical minerals from stable jurisdictions and declining supply is anticipated to widen as the world continues to transition to renewable and environmentally friendly products,” he told the market.

“VHM is well positioned to become a world-leading producer and supplier of critical minerals.”

VHM (ASX:VHM) share price today:

Now manganese producers are soaking up investments from carmakers

Element25 (ASX:E25) owner of the Butcherbird operation in WA’s north has struck a landmark supply deal with US-Euro carmaker Stellantis, lifting almost 15% as the OEM took a punt on Aussie high purity manganese sulphate (HPMSM).

Car manufacturers have increasingly turned to direct deals with miners to ensure raw material supply for their growing EV businesses as pressure mounts on them to shift away from internal combustion engine production lines.

Manganese-rich battery chemistries are expected to grow in the nickel-cobalt-manganese cathode segment of the lithium ion battery market, displacing more expensive and ethically questionable cobalt supply.

Even Elon Musk, before his Twitter excursion, has previously trumpeted the potential of increasing manganese sulphate concentration in batteries, which rose in cost for the first time last year as raw material prices climbed.

Stellantis plans to make a US$30m investment in E25 in two tranches to partly fund the development of a US based high purity manganese sulphate facility, with take or pay commitments for 45,000t over its first five years (up to 10,000tpa).

The vast bulk of manganese supply currently, including that shipped from the Butcherbird mine south of Newman in WA, goes into alloys used in the steelmaking process.

But the holy grail for Aussie producers is to gain a foothold in the growing HPMSM battery market, currently heavily concentrated in China.

“Stellantis’ support for Element 25’s high purity battery-grade manganese sulphate project is a fantastic endorsement by one of the world’s largest automakers and supports our plans to become a globally significant long-term supplier of battery materials to meet growing global demand. We are fully aligned with Stellantis’ decarbonisation and electrification goals, which represent some of the most ambitious in the industry and E25 have a pathway to reach agreed net zero carbon emission goals under this deal,” E25 MD Justin Brown said.

“This is an important step in the delivery of our first production module which will combine Element 25’s innovative processing flowsheet and the high quality, ethically sourced manganese concentrate from our 100%-owned Butcherbird Project in Western Australia to deliver sustainable, ethically sourced battery grade manganese to the electric vehicle industry.”

Stellantis produces a range of well known car brands, including Fiat, Jeep, Lancia, Maserati, Opel, Peugeot, Ram, Chrysler, Alfa Romeo and Vauxhall.

The announcement follows a string of investments last year from EV makers in Aussie lithium and nickel companies.

Element25 (ASX:E25) share price today:

Gold sector flies as miners end day on a high

The All Ords gold sub-index climbed 2.45% to its highest point since May last year, with major gold stocks flying in a hot mining market.

Northern Star (ASX:NST), Evolution (ASX:EVN) and Newcrest Mining (ASX:NCM) were all in the green, with Resolute Mining (ASX:RSG) up over 13% and copper-gold miner Aeris Resources (ASX:AIS) climbing more than 10%.

Nickel producer Panoramic Resources (ASX:PAN) was also up over 5% after prices for the base metal lifted on Friday and it recorded a 13% lift in concentrate production at the Savannah nickel mine in the December quarter.

Uranium hopeful Paladin Energy (ASX:PDN) was up almost 10% as well, with iron ore miners the one question mark.

Chinese complaints on speculation in the iron ore market, often a pre-cursor to attempts to jawbone the price of the key commodity lower, saw futures fall, with FMG and Rio Tinto (ASX:RIO) in the red.

Majors BHP (ASX:BHP) and South32 (ASX:S32) bucked the trend across the rest of the blue chips, rising higher along with lithium giants IGO and MinRes (ASX:MIN).