Resources Top 5: Dirt cheap rare earths deals and a small lithium explorer with big neighbours
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Here are the biggest small cap resources winners in early trade, Tuesday March 1.
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The Tassie tin explorer is drilling to upgrade the resources at Severn, the largest deposit at its flagship 7.6Mt @ 1.1% tin (81,976t contained tin) Heemskirk project.
The resource upgrade is due mid-year and will feed into a pre-feasibility study on the project planned for H2 2023.
50% of annual tin supply (~389,000tpa) is used in electronics as solder, the ‘glue’ that connects everything electronic together.
But the International Tin Association says at least 50,000tpa of additional tin supply is needed to service new markets in solar ribbon, EVs and 5G technology by the end of the decade.
It’s been a wild ride over the past six months for prices, which surged ~80% from October lows to $32,000/t late January before falling back to US$25,500/t over the course of February.
Initial gains were driven by news of China’s reopening, constrained supply (due to violent protests in Peru) and strongly growing demand.
A significant global tin supply deficit in 2020 and 2021 is forecast to continue, SRZ says in its latest quarterly.
SRZ says it is well positioned to feed the market, with Heemskirk currently the highest-grade undeveloped tin resource in Australia and the third highest grade tin resource globally.
A 2019 scoping study at Heemskirk envisaged a 2,200tpa tin operation over a 10-year initial mine-life with “attractive economics” at a US$20,000/t tin price.
The $12m capped stock is up 20% year-to-date. It had $3m in the bank at the end of December.
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The vanadium-high purity alumina play listed in September last year following a $5m IPO with Japanese petroleum heavyweight Idemitsu on the register (32% stake).
Its main game is the advanced Lindfield vanadium project in Queensland, which has a resource of 210Mt at 0.39% V2O5 (vanadium pentoxide).
A recently completed drilling campaign will be used to add to the existing JORC resource, and complete metallurgy and pilot plant test work and a scoping study.
With drilling now in, the company has kicked off the planned scoping study ahead of schedule.
Met test work to produce battery grade vanadium and HPA is underway, with CMG planning to use a small third-party vanadium plant to test samples from Lindfield in Q3.
While adoption of vanadium redox flow batteries has been relatively slow — representing just 10% of the stationary battery market to date — the battery metal is widely expected to become a key resource as the world moves increasingly towards electrification to support net zero emissions.
Vanadium consumption in batteries is forecast to grow at an average compound rate of 41% per year from 2022 to 2031.
$5m capped CMG is up marginally year-to-date. It had $3.7m in the bank at the end of December.
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In 2022, plummeting iron ore prices forced a bunch of junior ASX miners to shutter high-cost operations.
With iron ore prices now on the recovery trail, these operations are viable again.
In January, small, Tony Sage-backed iron ore miner CuFe pushed the restart button on the small but high-grade JWD iron ore joint venture in the Pilbara, which shipped first ore in October 2021.
CUF said first product was expected to be ready for haulage to port by the end of January and, to protect itself from future price volatility, is building a hedge book to cover future sales.
Yesterday it reported a maiden inferred mineral resource of 12.7Mt at 55.4% Fe (with a 48% cutoff) for its small scale, 50% owned Yarram project.
That includes a higher-grade component at a 55% cutoff of 5.6Mt at 60.4% Fe.
The Yarram project’s key advantage may be its proximity to port, the company says.
“The project proximity to Darwin Port (110km) and nearby infrastructure has always been the key attraction to us of Yarram as it provides the opportunity for a low haulage and port cost, which is typically the key challenge for smaller iron ore projects,” exec director Mark Hancock says.
“If the studies which we are kicking off come confirm that, it would enable the project to operate across the range of iron ore price cycles.”
The $15m capped stock is up 80% year-to-date. It had $5.5m in the bank at the end of December.
This battler emerged from voluntary administration December 2021 with two priority projects in Queensland – ‘Mount Jess’ (copper and iron ore) and ‘Gunnawarra’ (nickel and cobalt).
It is now dipping its toe into rare earths, acquiring the fairly advanced ‘Sandy Mitchell’ project in North Queensland for just $200,000 cash.
A bunch of exploration work has already been done on the project by previous owners, which included state-owned Japan Organization for Metals and Energy Security (JOGMEC).
This exploration returned very high grades up to 18.4% TREO hosted in sands, which could be panned into a concentrate allowing “low-cost, fast start up, straightforward beneficiation by gravity processing”, AHK says.
The company, which sees opportunity for a quick, low capex development, is already applying for a mining licence.
It is also reviewing old drilling data to define a resource.
“We are well-advanced in the review of the historical data and follow up exploration is likely to focus on defining more pan concentrates across multiple areas of the tenement area, metallurgy and engineering test work to define a mining operation,” exec chair Roger Jackson says.
“As a further reflection of our confidence in the project, we have held preliminary discussions with potential customers that are establishing processing operations in Australia.
“In terms of the make-up of the Rare Earths elements at Sandy Mitchell, Ark will focus more on extracting higher-priced Heavy Rare Earths Elements, as highlighted, as these are well represented in historical reports assessed to date.
“This is one characteristic that makes Sandy Mitchell unique and commercially appealing.”
The $8m capped minnow is flat year-to-date. It had $2.4m in the bank at the end of December.
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Recently listed lithium-gold explorer LRD has two key projects: Horse Rocks (lithium) and Gabyon (gold), both in WA.
Early stage work has defined a bunch of targets for drilling at Horse Rocks, nestled between Mt Marion — owned by major miner Mineral Resources (ASX:MIN) — and $136m takeover target Essential Metals (ASX:ESS).
Maiden drilling is pencilled in for March/April, LRD says.
“Horse Rocks, situated between Essential Metals, currently under a takeover offer from Tianqi Lithium Energy Australia (IGO & Tianqi) and Mineral Resources continues to provide all the right signals,” managing director Barnaby Egerton-Warburton said early February.
“The refined geochemical anomalies at the Horse Rocks lithium project are an exciting next step in the exploration of the project.
“These highly encouraging results will allow us to refine our drilling program, which is planned to comprise up to 6,000 metres of RC and will commence shortly after the completion of the heritage survey.”
The $6m capped stock is flat year-to-date. It had $3.4m in the bank at the end of December.