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Resources Top 5: Advanced gold and silver stocks catch a bid, ASX’s next nickel miner eyes first production in Q3
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- Pacific Nickel Mines get export permit for 9.2Mt Kolosori nickel project, mining to start Q3
- Advanced gold, silver stocks Rox and Investigator surge on safe haven demand
- Embattled gold miner Calidus also stages a recovery in early trade
Here are the biggest small cap resources winners in early trade, Tuesday March 14.
PACIFIC NICKEL MINES (ASX:PNM)
PNM’s flagship 9.2Mt Kolosori nickel project (80% owned) in the Solomon Islands is at the pointy end of the development cycle.
It’s been a busy year so far with the release of a feasibility study in February and today, the grant of crucial export approvals. The Export Permit, approved for three years, will allow the PNM to sell and export nickel ore produced from the project.
It also paves the way for financing to be finalised with mining major Glencore, which will provide a US$22 million project financing facility and take 100% of production over an initial four years.
“The company will now proceed with the finalisation of financing facilities being offered by Glencore with the aim of drawing down development funds at the earliest opportunity,” PNM CEO Geoff Hiller said.
“The company believes that the project holds relatively low technical risk and that capital payback will be achieved in under 12 months.”
Nickel laterite ores from DSO operations – a low-cost way to get into production — provide feedstock for nickel pig iron production suitable for stainless-steel producers, PNM said.
Few alternative sources of nickel laterite ore globally exist outside Indonesia (higher jurisdictional risk) and the Philippines (lower grade) to satisfy demand from the domestic Chinese producers.
The Kolosori open pit DSO laterite mine will pump out 1.5wmt per year for the stainless-steel sector at an average nickel grade of 1.57% over a 3 to 6-year life.
It will cost just $US18.6m to build, but the returns are attractive – over the extended mine life of ~6 years the operation boasts a post-tax NPV of $US83m ($118m) (at a discount rate of 8%) and post-tax IRR of 170%.
This mine life is expected to grow via near mine exploration and as PNM adds inferred resources to reserves.
PNM is estimating an operating margin of $US18 per wmt tonne of ore on life-of-mine sales price of $US75/t (1.5% Ni CIF China). Prices are currently around the $US71/t mark, according to SMM.
Mining DSO operations are expected to commence in late Q3 2023.
PNM also has the nearby Jejevo project, which is expected to follow same development blueprint as Kolosori.
The $30m capped stock is flat year-to-date, and down 33% over the past 12 months. It had $1.1m in the bank at the end of December.
INVESTIGATOR RESOURCES (ASX:IVR)
(Up on no news)
Like gold, the silver price is surging amidst safe haven demand.
That put the focus on advanced ASX silver stocks like IVR, which owns the advanced Paris project in South Australia.
A 2021 pre-feasibility study envisaged 26.7Moz of production over a short 5-7 year life.
Based on an all-in sustaining cost of $17.45/oz ($US11.61/oz) IVR is expecting life of mine free cashflow of between $487m-$602m. It would cost $131m to build.
Those numbers are based on silver recovery only; lead recoveries will be addressed in the DFS which is currently underway.
Meanwhile, a ~7000m step out drilling program was recently completed to grow the shallow 18.8Mt @ 88g/t silver and 0.52% lead resource (53.1Moz silver and 97.6kt lead).
Initial results have been solid – including a highlight 17m @ 130g/t from 175m – with the bulk of the assays due mid-April.
The $66m capped stock is up 40% year-to-date, and down 30% over the past 12 months. It had $7m in the bank at the end of December.
CALIDUS RESOURCES (ASX:CAI)
(Up on no news)
This fledgling WA gold producer has been hammered by a market with zero patience for underperforming mines.
The company poured its first gold at Warrawoona in May last year but faced two major Covid outbreaks in September, which it said restricted material movement and ore production.
The company delivered 191,000t at 0.85g/t for 5053oz of gold in December at high unaudited cash costs of $2050/oz.
Over the weekend, Barry Fitz said CAI looked to be on the recovery trail.
“The plan to add in higher grade underground production and develop the satellite Blue Spec deposit as a very high-grade source is still intact,” he said.
“Achieving both would carry annual output to 130,000 ounces.
“Calidus probably needs to raise some equity funds before long to get there but with the potential to reduce life-of-mine costs on an AISC basis to $A1700-$A1850/oz, there should be plenty of support.”
The $107m capped stock is down 10% year to date, and an eye-watering 71% over the past year. It had $12.4m in the bank at the end of December, and held $102m in debt.
ROX RESOURCES (ASX:RXL)
(Up on no news)
Earlier this month drilling pulled up an eye-watering 28m at 34.81g/t gold from 204m in a largely untested area outside the current 3.2Moz resource at the RXL – Venus Metals (ASX:VMC) Youanmi project JV in WA.
That includes a 10m section grading 79.55g/t from 211m.
RXL managing director Rob Ryan said the result from the first hole at ‘Youanmi South’ opens a new near-mine area for exploration and potential high-grade resource growth.
A recently published Scoping Study – the first proper look at the economics of (re)building a project – contemplated a 71,000oz per annum project.
Over an initial eight-year mine life it would produce 569koz of gold at an all-in sustaining cost of $1,546/ounce.
The pre-tax NPV came in at just over $300 million with an internal rate of return of 45%, assuming a gold price of $2,450/oz.
The $66m capped stock us up 70% year-to-date. It had $10.5m in the bank at the end of December.
READ: Q+A: How Rox Resources will pull another half a million oz of gold from Youanmi
TOMBADOR IRON (ASX:TI1)
(up on no news)
In mid-February, production resumed at TI1’s namesake mine in Brazil after road blockades impeding access to the mine site were removed.
Tombador produces the highest-grade lump ore produced in Brazil, the company said.
In the December quarter TI1 sold 83,900t of high-grade stuff, posting a small loss on revenue of $8.1m.
It still has about $13.9m worth stockpiled (that’s cost of production, not expected sales price) and cash in bank of $16.29m.
That’s after paying a maiden divvy last quarter.
The $61m capped stock is down 15% year-to-date, and 37% over the past 12 months.
