Resources Top 5: Another offtake signed as battery makers fight for dwindling resources

Australian Mines signs binding nickel-cobalt offtake with battery maker LGES
Aspiring niobium producer Globe awaits all-important mining license
Nexus hits 14m at 8.80g/t gold at ‘Wallbrook’ project in WA

Here are the biggest small cap resources winners in morning trade, Monday August 16.

AUSTRALIAN MINES (ASX:AUZ)

Roskill’s Global Li-ion Battery Gigafactory Dataset now shows global Li-ion battery capacity in the development pipeline has exceeded 4,000 GWh.

Mammoth numbers like this need a lot of raw materials, it says.

Competition for these scarce resources is fierce.

LGES — a subsidiary of LG Chem, the world’s #1 producer of advanced batteries for the electric vehicle industry – has now inked a binding offtake with AUZ’ ‘Sconi’ nickel-cobalt project in QLD.

Sconi, when fully developed, will be one of the lowest cost battery materials producers in the world with a project life of more than 30 years, the company says.

The deal will help LGES “gain an upper hand in securing stable supply of key ingredients for EV batteries, as race to procure raw materials for EV batteries became fierce amid growing global demand of EVs”, the battery maker says.

It recently signed a similar offtake with fellow QLD nickel-cobalt play Queensland Pacific (ASX:QPM).

During the initial 6yr term of the offtake agreement with AUZ, LGES will buy 71,000 dry metric tonnes of nickel and 7,000 dry metric tonnes of cobalt as mixed hydroxide precipitate (MHP).

This is enough nickel and cobalt to power 1.3 million high-performance EVs, LGES says.

The agreement has one Condition Precedent – AUZ must secure financing for construction of the Sconi project on or before 30 June 2022 (or such later date as the parties may agree).

“Australian Mines will now move swiftly to finalise agreements with a range of financing partners,” AUZ says.

GLOBE METALS AND MINING (ASX:GBE)

(Up on no news)

Aspiring niobium producer Globe is waiting on an all-important mining license.

“No formal reason has been put forward for the delay in grant of the mining licence nor a timeframe for resolution,” the company said last week.

“Instead, the Malawi Government has requested patience and has advised Globe that it does not require any further information or require the Company to undertake any further actions.”

In June, the Malawi government recommended Globe receive the mining licence in a “significant step forward for the company’s goal of becoming a niobium producer”.

Alloys containing niobium are used in jet engines and rockets, beams and girders for buildings and oil rigs, and oil and gas pipelines.

The company has surged +250% since the news to its highest point in about nine years.

NEXUS MINERALS (ASX:NXM)

Three holes drilled at the ‘Crusader’ prospect – part of the ‘Wallbrook’ project in WA – have pulled up more thick, high grade gold.

Highlights including 14m at 8.80g/t (within 19m at 6.57g/t from 141m) follow on from previously announced hits like 10m at 6.42g/t (within 17m at 3.97g/t from 182m).

$26m market cap Nexus has now hit Crusader mineralisation over +600m of strike and down to +500m deep.

“These high-grade results from the Crusader prospect have again shown excellent continuity of mineralisation with broad, high-grade gold intersected,” managing director Andy Tudor says.

“With highly encouraging results from the first 11 holes in this drilling campaign, we are eagerly awaiting the results from the further 8 holes drilled (including diamond tails) in the current exploration program at Crusader.”

If current drilling at the adjacent ‘Templar’ prospect returns the goods then this gold-rich corridor will be 1.6km long.

“The diamond drilling currently underway at Templar is delivering some very interesting core, increasing our confidence in the Crusader / Templar 1.6km+ corridor with every drillhole,” Tudor says.

AMERICAN RARE EARTHS (ASX:ARR)

(Up on no news)

This $51m market cap stock is up 287% over the past year as the rare earths thematic picks up a head of steam.

Long-time director Geoffrey Hill, who bought almost $50,000 worth of shares on market earlier this month, would probs be pleased.

The company recently increased indicated resources at the flagship ‘La Paz’ rare earths project in Arizona by 117%.

Total resource tonnage increased 33.1% to 170.6 million tonnes, while the total rare earths grade increased 5.2% to 391ppm from 372ppm.

Mineralisation remains open, ARR says, “demonstrating the potential for La Paz to be one of the largest rare earths projects in North America”.

KULA GOLD (ASX:KGD)

(Up on no news)

In July, Kula pulled up a highlight 10m at 7% halloysite from 40m (8.8m true thickness) within a larger 55m intersection at the ‘Airfield’ project in WA.

Kaolin is used in everything — paper, rubber, paint, ceramics, fibreglass, cosmetics, high purity alumina (HPA) and pharmaceuticals are just some notable examples, with about 5kg of kaolin also used in the manufacture of each car.

The company believes the Exploration Target is between 30 and 100Mt of kaolin material, based on the current thickness and the nature of the process that forms the wide zones of kaolin in weathered granite.

An RC rig was booked to continue drilling in mid-August to test this exploration target.

$14m market cap Kula is up 75% in 2021.