Resources Top 5: ASX newcomer, Russian coal producer, and diamond miner take Friday’s top prizes
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Here are your top ASX small cap resources winners in morning trade Friday, December 18.
Friday’s leading stock in early trade was Desert Metals (ASX:DM1) which made its debut on the ASX and went on to soar more than 100 per cent.
The nickel and copper explorer raised $5m in an oversubscribed IPO and is focused on its Narryer project located 120km northwest of Meekatharra in WA.
On the northern edge of the Yilgarn Craton the project is prospective for both gold and nickel and has nine exploration licences covering its area.
The company said its project has a similar geological setting to the Nova-Bollinger nickel-copper deposit and Chalice Gold Mines’ (ASX:CHN) Julimar discovery also in the Yilgarn.
Desert Metals is to undertake a 2,800km airborne electromagnetic survey in January for its project, and to drill test some of its prospects in early 2021.
Drilling costs will be party covered by a $150,000 grant from the WA government under its exploration incentive scheme.
The share price of Burgundy Diamond Mines (ASX:BDM) went up by 20 per cent in Friday trade without any substantive news from the ASX company.
The diamond company’s share price effectively doubled last week to 26c per share, and in response to an ASX query letter said it was unable to explain this.
“The company remains focused on its portfolio of diamond projects which includes a joint venture in Botswana where it expects drilling to commence in the first quarter of 2021, and an earn-in investment in Canada where sampling is on track to commence in mid-2021,” said the company in its response.
In a November company presentation, Burgundy Diamond Mines said the diamond industry was facing a significant supply shortfall over the next 10 years.
“The diamond cycle is currently at a very attractive position for project acquisitions,” said the company which estimated the industry’s value at $US12bn.
The supply shortfall facing the diamond market by 2030 ranges between 20 and 35 per cent of world demand, with an additional need for 35 million to 75 million carats per year.
The company’s strategy is to acquire a portfolio of world-class diamond discoveries at a low entry cost, and unlock value from these through disciplined project-level funding and technical expertise, it said.
Russian coal producer Tigers Realm Coal (ASX:TIG) took off in early trade after it completed the first stage of a $US30m capital raising.
The bulk of the equity raising, around $US20m, is being spent on the development of its coal handling and preparation plant (CHPP) in Russia.
The company is well placed to benefit from a change in China’s coal purchase patterns towards Russian coal from Australian product.
Tigers Realm ships product from Beringovsky port on the Pacific Ocean, and its Amaam North mine is located 37km inland by road.
The coal producer has an established customer base in Japan, China and Korea, and 70 per cent of its product is thermal coal and 30 per cent coking coal.
Cash costs for the miner are $US68 per tonne at Beringovsky port for washed, semi-hard coking coal product.
Once the CHPP is operational, Tigers Realm will be able to produce more coking coal which fetches higher prices than thermal coal.
The coal washing plant is expected to become operational in Q3 2021, with sales of washed coal starting in 2022.
Production from the company’s Russian coal mines is targeted at 1.2 million tonnes in the years 2022 and 2023, compared with 750,000 tonnes in 2019.
Institutional investors pledged $US12.7m ($17.2m) in the capital raising priced at $0.008 per share.
The offer opens to retail investors next week and closes in early January.
“Tigers Realm Coal has transformed itself from an exploration asset into a fully equipped and growing premium coal asset, poised to maximise production and sales capacity,” said the company in a December presentation.
Gold production at Ausmex Mining Group’s (ASX:AMG) Golden Mile project, a collection of historic gold mines in north west Queensland, is to start in early 2021.
The Golden Mile is a 2km-long gold mineralised zone 60km southeast of Cloncurry in Queensland, and 200m west of the Falcon and Shamrock historical gold mines.
Another historical gold mine in the area, Comstock, is the current focus for exploration and is 500m north of Ausmex’s flagship Mt Freda gold project.
The three historical mines are part of a joint venture between Ausmex at 80 per cent, and WH Soul Pattison (ASX:SOL) company Round Oak Minerals with 20 per cent.
Ore from the joint venture can be processed at Round Oak Minerals’ gold processing plant which has a capacity of 650,000 tonnes per year.
An infill drilling program is underway at Comstock, and has indicated an increase in gold grades which will be included in a new JORC resource estimate.
The Comstock historical gold mine was rediscovered by Ausmex in 2018, after becoming lost following the redirection of the nearby Cloncurry to Brisbane road 500m to the east.
Nickel explorer Nelson Resources (ASX:NES) rose on news of the start of 1,000 to 1,500m of drilling at its Woodline project in WA’s Fraser Range.
The explorer has completed electromagnetic surveys for its Redmill, Grindall, Socrates and Morris nickel deposit located 50km from IGO’s (ASX:IGO) Nova nickel-copper-cobalt mine.
“The company’s purchase of a diamond drilling rig, associated vehicles and equipment has been an immediate success,” executive director, Adam Schofield, said.
“The company is now able to operate its drilling programs in a flexible and nimble manner,” he said, adding it expected significant cost savings from the arrangement.