Resources Top 5: A uranium player rises as Gina Rinehart cements junior iron ore deal

JV partners Legacy and Hawthorn cement earn iron ore in deal with Gina Rinehart’s Hancock Prospecting
Okapi increases resource at the ‘Tallahassee’ uranium project in Colorado by 81%
Carbine’s Muchea West has potential to host substantial, high grade, low impurity silica sand deposit

Here are the biggest small cap resources winners in early trade, Thursday, April 7

LEGACY IRON ORE (ASX:LCY) and HAWTHORN RESOURCES (ASX:HAW)

JV partners LCY and HAW have cemented a deal with a subsidiary of Gina Rinehart’s Hancock Prospecting, which will shell out an initial $9m to earn into the ‘Mt Bevan’ iron ore project in WA.

Hancock will make an initial investment of $9m to earn a 30% interest in Mt Bevan, with $8m cash being paid to Legacy and Hawthorn in proportion to their interest in the project (Legacy $4.8m and Hawthorn $3.2m).

The remaining $1m will be working capital.

Hancock will hold a 30% interest, LCY will hold 42% and HAW will hold 28% upon completion of the initial investment.

Hancock can earn an additional 21% by funding the completion of a pre-feasibility study (PFS), a detailed look at whether the project is economic to build.

Mt Bevan hosts a 1,170 million tonne magnetite resource @ 34.9% iron, 250km north of Kalgoorlie in WA.

While magnetite iron ore resources are lower grade than hematite in the ground, they can be concentrated into a higher-grade product.

Premiums for high-grade iron ore are increasing, partly because they generate steel with more efficiency.

That could only increase in the future with new tech, like green steel and hydrogen based direct reduced iron, expected to be reliant on higher-grade ores.

LCY ($185m market cap) and HAW ($41m market cap) are up 136% and 137% respectively since the deal was first unveiled November last year.

LCY, HAW share price charts

CARBINE RESOURCES (ASX:CRB)

Maiden drilling shows CRB’s ‘Muchea West’ project near Perth in WA has potential to host a substantial, high grade, low impurity silica sand deposit.

“This is not a matter of discovering sufficient material for a commercial operation, but more selecting the first development location and defining the product within that location,” managing director Peter Batten said today.

Strong words.

New results like 20m at 99.69% SiO2, 450 ppm Fe2O3 and 313 ppm Al2O3 from 1m confirm results from previous drilling in the high grade ‘Eastern Area’.

While most demand comes from the booming construction sector, high-quality silica sand can also be used in the glass, electric vehicle, and big battery sectors.

The potential final processed grade at Muchea West is significant, as it meets all the specifications for flat and container glass markets and for foundry glass at the top end of silica sand consumption market “and the upper price ranges for these products”.

Higher grade = more $.

“Carbine believes the quality of the Muchea West Silica Sand Project is exceptional and these results confirm that,” Batten says.

“The overall size and quality of the Muchea sand dune system ranks highly in the silica sand market.”

A maiden mineral resource estimate now underway, as is planning for the 10,000m 2022 drilling program.

The completion of this drilling will feed into a Definitive Feasibility Study, usually the most advanced of all project studies prior to a final investment decision being made.

It has been a solid turnaround for this former shell, which only acquired Muchea West, directly adjacent to near-term developer VRX Silica’s (ASX:VRX) ‘Muchea’ project, in July last year.

The $8m market cap stock is flat year-to-date. It had $3.6m in the bank at the end of December.

CRB share price chart

OKAPI RESOURCES (ASX:OKR)

The explorer will acquire 51% of the high grade ‘Hansen’ uranium deposit, increasing the company’s resource at the ‘Tallahassee’ uranium project in Colorado by 81% to 49.8 million pounds.

It also increases the overall grade at Tallahassee by 10% to 540ppm.

This deal — 22.2 million pounds U3O8 costing just $500,000 — transforms OKR “into significant player in the USA uranium market”, it says.

Hansen is a high-grade, shallow deposit immediately next to OKR’s 100%-owned ‘Taylor’ and ‘Boyer’ deposits.

Discovered in 1977, feasibility studies were completed and it was fully permitted to commence production prior to the collapse of the uranium market in 1982, OKR says.

OKR says it will continue to consolidate pounds in the district, but Tallahassee is now large enough to be progressed as a standlone asset.

“This acquisition represents a very important transaction for Okapi and its shareholders,” OKR managing director Andrew Ferrier says.

“By securing this strategic 51% interest in the Hansen Uranium Project, we now have sufficient resource inventory to advance the Tallahassee Uranium Project as a stand-alone asset.

“Recent geopolitical events have put increased focus on the importance of the US revitalising its domestically sourced uranium, which will undoubtably place a significant premium on US uranium assets such as Hansen.”

OKR also has uranium projects in neighbouring Utah and the world-class Athabasca Basin of Canada.

The $45m market cap stock is up 8% year-to-date. It had $4.45m in the bank at the end of December.

OKR share price chart

COHIBA MINERALS (ASX:CHK)

(Up on no news)

The small explorer recently expanded its South Australian portfolio to include the Warriner Creek prospect because of the strong potential for a major iron oxide-copper-gold (IOCG) discovery in BHP’s (ASX:BHP) backyard.

Iron oxide copper gold ore deposits (IOCG) — like BHP’s Olympic Dam mine or more recent Oak Dam discovery — can be tremendously large, and simple-to-process concentrations of copper, gold and other economic minerals.

CHK says the target depth at Warriner Creek is shallower than its Olympic Domain tenements, where drilling at the promising Horse Well prospect in reaching +1.3km depth.

A shallower target depth means drilling at Warriner Creek will be significantly shorter, and cheaper.

Under the farm-in agreement two holes are planned, with the first to be drilled to 600m depth. A subsequent hole, to 400m depth, can be drilled at CHK’s discretion.

The $19m market cap stock is up 80% year-to-date. It had $4.1m in the bank at the end of December.