Resources Top 5: $120m government cash splash has these HPA, vanadium and rare earths stocks flying high
Here are the biggest small cap resources movers in early trade, Wednesday, March 16.
The Queensland high purity alumina (HPA) project developer has been awarded a $45m government grant.
It’s all part of a wider $250m cash splash designed to build our own industrial capacity and reduce reliance on China for critical metals.
“China currently dominates around 70 to 80 per cent of global critical minerals production and continues to consolidate its hold over these supply chains,” Energy and Industry minister Angus Taylor said.
“This initiative is designed to address that dominance.”
A4N’s $45m grant will go towards building the full-scale ‘HPA First’ project, which is expected to produce ~10,000tpa HPA for sale to the lithium-ion battery and LED lighting industries.
There’s up to ~5kg of HPA in every electric vehicle. Benchmark Mineral Intelligence’s James Clark has previously said the multiplier effect of EV growth “means high purity alumina demand in 5 and 10 years will be very significant”.
And that is on top of demand from the established, but still growing, LED market.
A4N’s low cost, high purity project will make +$US191m in free cashflow per year and cost $US209m to build.
The stock is already fully funded to build a smaller Stage 1 precursor production facility, which is scheduled to commence commercial production from the September quarter this year.
It says it is “in the mature phases of market outreach and project financing with respect to the full scale HPA First project, with the expectation of positioning the HPA First project to final investment decision”.
The $457m market cap stock is down 7% year-to-date. It had $36m in the bank at the end of December.
Another government grant beneficiary, this time $49m to support development of AVL’s vanadium project in WA.
Vanadium is used in critical aerospace and chemical applications, is a key component in high strength and specialty steel products and has an important and growing use in vanadium redox flow batteries (VRFB).
The Australian Vanadium project is one of the most advanced vanadium projects being developed globally.
It would cost ~$US399m ($541m) to build and expects to produce 24.3 million pounds (11,022 tonnes) of V2O5 per annum at a low all-in cost of $US5.04/lb, over an initial mine life of 25 years.
A bankable feasibility study – the most advanced of all studies prior to making a final investment decision – is well underway.
AVL also has a battery subsidiary called VSUN Energy, which is focused on developing the market for VRFBs for energy storage.
“Our project will create hundreds of jobs in Australia and help to build the critical vanadium industry both locally and internationally,” AVL MD Vince Algar says.
“We have developed an innovative and collaborative approach to building a fully integrated project, from mine through to processing and end use in the steel and battery markets.
“We look forward to working with our partners to bring the Australian Vanadium Project into production and further develop downstream opportunities for green steel and the vanadium redox flow battery market.”
The $131m market cap stock is up ~50% year-to-date. It had $5.8m in the bank at the end of December.
The rare earths stock was awarded $30m in government cash to help build a $90m rare earths separation plant at its ‘Nolans’ project.
Data suggests that about 95% of the world’s heavy rare earths come from China and neighbouring Myanmar.
All that production is effectively funnelled through China’s downstream industry, then used domestically or exported overseas.
Investors should primarily be focused on the magnet rare earths – neodymium, praseodymium, dysprosium and terbium.
Rare earth permanent magnets are a crucial component in wind turbines and in the drive train of hybrid and electric vehicles.There’s a couple of kilos of rare earths magnets in every EV, and about a tonne in every MW of power produced by wind turbines.
Nolans, 135km from Alice Springs, “is Australia’s only shovel-ready Neodymium Praseodymium (NdPr) project”, ARU says.
“It is a globally significant development with potential to supply around 5 per cent of world NdPr oxide demand, with an ore to oxide business model that will see downstream processing established locally and enable Australia to play a leading role in the diversification of critical raw materials,” it says.
“The Nolans separation plant will be the first of its kind in Australia and the second outside China, producing separated rare earth oxides and enabling the development of diversified rare earth supply chains.
“Rare earth separation technology does not currently exist in Australia, and Nolans presents an opportunity to develop a higher value product that leverages Australian mineral processing expertise.”
Arafura is targeting a Final Investment Decision for the $1.05bn capex project in the second half 2022, with detailed front-end engineering and design (FEED), offtake and project funding activities underway.
The $350m market cap stock is up about 50% year-to-date. It had $41m in the bank at the end of December.
(Up on no news)
The phosphate explorer formerly known as Celamin was in the investor doghouse due to a multi-year dispute with its partner in Tunisia over a tidy looking phosphate project.
But after scoring a big win in the local courts PHO is now in full control of the ‘Chaketma’ project, which is being pushed towards development.
This week it delivered a 50% increase in its KEL mineral resource – one of two at Chaketma — in a major step towards the start of feasibility studies.
The project now has a total resource of 148.5Mt at 20.6% P2O5.
Already PHO is talking up the potential of a 30-year mine life at an initial production rate of 1.5Mtpa.
“We’re excited to see such a significant step-change at the KEL phosphate prospect,” PHO executive director Taz Aldaoud says.
“Not only has the size of the resource increased substantially, but equally positive is the enhancement in confidence of the resource thanks to a large conversion of tonnes into the Measured & Indicated category.
“There’s plenty of upside at this deposit with drilling to date covering just less than half of the surface area of known KEL mineralisation.
“Work is now underway to deliver an upgrade at the neighbouring GK deposit.”
The $36m market cap stock is up 87.5% year-to-date. It had $3.1m in the bank at the end of December.
The tiddler keeps hitting thick, shallow dipping spodumene (lithium ore) bearing pegmatites at the Salinas project in Brazil.
All six diamond holes drilled to date have hit a series of stacked spod peggies along a 600m stretch, LRS says.
Check out these large green spod crystals:
Logging has confirmed that the individual pegmatites range in true thickness to a maximum of 21.1m, with a cumulative intersection of over 36m in one hole.
“The growing thickness along with the rich spodumene pegmatites is further indication that Latin may have a very compelling lithium project on its books,” LRS MD Chris Gale says.
“We look forward to receiving the assay results from these spodumene pegmatites in the next few weeks.
“The company’s market cap is approximately $60m, and much lower than our lithium peers, which we expect offers strong potential for re-rating as positive assay results confirm the strength of the Salinas project.”
The now-$72m market cap stock is up 60% year-to-date. It had $2.2m in the bank at the end of December.