Resources Top 5: A big rare earths acquisition, a popular lithium DFS, and Nathan Tinkler goes all-in on AQC
Here are the best performing small cap resources stocks in morning trade, Thursday September 8.
Another huge rerate for the once maligned tiddler, which is up 600% over the past month.
Former coal baron Nathan Tinkler via his company PPC has now upped his bid for control of AQC and its mothballed Dartbrook operation to $1 per share.
That dwarfs the 36c per share offered by M Resources — – largest shareholder in Bowen Coal (ASX:BCB) and significant shareholder in Stanmore Resources (ASX:SMR) – which also wants to acquire the formerly producing operation.
For Tinkler’s deal to go though, AQC’s largest shareholder Trepang would need to agree to convert the debt it is owed into a direct 40% interest in Dartbrook “on terms acceptable to PPC”.
Should such an agreement not be forthcoming from Trepang, then PPC would repay all outstanding debts to the Trepang parties, although there is no detail provided as to how this would occur, AQC says.
“Given the non-binding proposal needs the support of Trepang to proceed, either by Trepang agreeing to convert the Trepang Debt or by Trepang agreeing to the debt being repaid by PPC (with the consequence that Trepang would need to agree to a forbearance until their debt is repaid by PPC), AQC requested urgent advice from Trepang as to whether Trepang is willing to support the NBIO and satisfy the pre-condition,” the company says.
“Trepang has advised the company that they are seeking advice on the proposal. A further response is awaited from Trepang.”
WC1 has inked a deal to acquire “one of the most advanced clay rare earth assets in Australia” for 39 million shares, subject to shareholder approval.
The Salazar project, 120km northeast of Esperance in WA, has an existing 43.5Mt of 1192ppm TREO (total rare earth oxide) resource featuring low levels of uranium and thorium.
(Most REEs are associated with radioactive uranium and thorium, which makes processing and waste disposal tricky.)
This project is already well advanced, WC1 says, with over eight years of exploration, metallurgical and technical studies conducted to date.
“Salazar Minerals was one of the first companies to appreciate the potential for clay REE deposits in Australia,” it says.
“The tenements were first acquired in 2011 (granted in 2012) with the private company carrying out several aircore drilling programs to test for REE mineralisation.
“In total 165 aircore and RC holes for 6393m have been drilled within the tenements, leading to the discovery and delineation of the Newmont deposit.”
Once the deal is complete WC1 intends undertake a program of aircore drilling, initially aimed at extending resources at Newmont.
It will also undertake further metallurgical testwork and marketing studies.
WC1 listed on the ASX about a year ago in a $5.5m IPO with a focus on NSW’s copper-gold rich Cobar mining district.
The $8m market cap stock is up ~100% year-to-date. It had $3.1m in the bank at the end of June.
The high-flying lithium project developer has released its 239,000t Paradox project definitive feasibility study (DFS), which “confirms outstanding economics and ESG credentials for Phase 1 development”.
The headline numbers for Phase 1 are as follows:
ASN has assumed a long-term price assumption of ~US$19,000 per tonne of battery grade lithium carbonate for the purposes of this economic analysis.
At current lithium carbonate spot prices of ~US$70,000 per tonne, pre-tax NPV and IRR jump to $5,149m and 98%, respectively. That’s super profits territory.
“The DFS confirms the technical and financial viability of a major new source of high purity Lithium Carbonate available for the rapidly growing US market,” ASN executive chairman Bruce Richardson says.
“The project delivers industry leading ESG credentials based on direct lithium extraction utilising Sunresin technology using lower energy and water consumption, and with spent brine being reinjected back into the Paradox.
“Significantly, there remains material upside beyond the DFS announced today based on future Mineral Resource upgrades associated with the recently completed drilling campaign at Cane Creek and the future Western Expansion drilling campaign, as well as incorporating Bromine production into stage 2.”
The $413m market cap stock has been a standout over the past month, gaining almost 200% on strong news flow.
The stock formerly known as Torian Resources just put together a fantastic ‘Intro to Rare Earths’ presso for the New World Metals investor conference.
“The supply of permanent magnet materials will need to increase substantially to meet the demand of a growing EV industry,” it says.
“Demand for permanent magnets and the REEs they contain may nearly double between now and 2030.
“Some sources even suggest a quadrupling.”
The formerly gold focused explorer uncovered rare earths potential at its ‘Mt Stirling’ project in WA earlier this year.
The mineralised corridor is now 5.4km by 1.3km but could be much larger as drilling hasn’t found the edges yet.
There are other things that make Mt Stirling stand out, ASR says.
“Mt Stirling’s REEs deposits contain an extraordinarily high ratio of heavy REEs to light REEs of about 65%,” it says.
“The project also contains significant levels of highly valuable scandium as well as substantial cobalt, gold and nickel.”
The company is still receiving results from over 10,000m of drilling at the project, it says. Met test work is being undertaken, with results due later this month or next month.
A maiden resource is due out in Q4.
The $30m market cap stock is up 20% year-to-date.
(Up on no news)
The small coal miner shot up this morning before going into a trading pause “pending a further announcement”.
It’s a great time to be in coal, and MCM is hoping to reap the benefits of historically high prices.
MCM recently completed a Bankable Feasibility Study – the most advanced of all project studies – on its flagship 296Mt ‘Makhado’ hard coking coal project in South Africa (68% interest).
The BFS envisages a production of 13.7Mt (coking) and 11.9Mt (thermal) over a 22-year mine life. Post-tax IIR and NPV were estimated at 38.2% and $268m, respectively.
The project would use existing infrastructure to minimise upfront costs, which have been estimated at $41m.
MCM plans to start certain early-works activities at Makhado later in CY2022 and funding dependent, construction is planned to commence in early CY2023.
Meanwhile, a recently entered coal sales and marketing agreement will see coal exported from MCM’s small Uitkomst operation “ensuring the colliery benefits from the prevailing international coal prices”.
That means potentially bigger profits going forward, starting in the current quarter.
The $100m market cap stock is up 450% year to date. It had $3.4m in the bank at the end of June.