Resources Top 5: FIRB hurdle cleared for EMR potash deal

Highfield Resources is closer to a big potash deal after the Foreign Investment Review Board approved an investment from a Chinese conglomerate
Arrow Minerals sets date for Guinean bauxite scoping study
Cassius Mining, NewPeak Metals, Latrobe Magnesium also higher

Your standout small cap resources stocks on Tuesday, January 14, 2025.

HIGHFIELD RESOURCES (ASX:HFR)

Owen Hegarty-led EMR Capital’s bid to enter the potash sector with the help of a major Chinese investor has passed a key hurdle, with the Foreign Investment Review Board approving a complex deal that will effectively merge ASX-listed Highfield Resources with the potash subsidiary of Hong Kong listed Yankuang Energy.

Yankuang is well known in the Australian market, notably as the primary backer of leading New South Wales coal producer Yancoal Australia (ASX:YAL).

A separate subsidiary, Yancoal Canada, will be folded into Highfield along with the Southey potash project in Saskatchewan, adding to the advanced Muga project in Spain, where Highfield already has approval to mine.

The US$479 million development would produce 1Mtpa of muriate of potash, with total capex for its two staged development of ~US$800m.

Yankuang’s addition to the party brings the project, which will supply the fertiliser market for three decades, added financial firepower.

HFR is seeking to raise US$220 million in equity capital from Yankuang and other Chinese and strategic investors and acquire the Southey project for consideration valued at US$286m.

Yankuang will, in effect, subscribe for US$376m worth of ordinary shares in HFR at a price of 50c.

“This positive result from FIRB is another major step in getting the deal to completion. FIRB’s timely approval is the result of presenting a solid application. The Company is making significant progress with regards to the other jurisdictional approvals for the transaction,” CEO and MD Ignacio Salazar said.

Alongside Yankuang, which will become Highfield’s largest shareholder, the completion of the deal will also see renewable energy investors Beijing Energy and trader Singapore Taizhong Global Development come on board as strategic backers. EMR, as of its most recent notice, holds 23.16% of the $125 million capped potash developer’s stock.

The deal also requires the approval of regulators in Spain, Canada and China.

CASSIUS MINING (ASX:CMD)

(Up on no news)

Cassius announced a keep-the-lights-on $1m raising to sophisticated and professional investors on Monday, giving it fresh capital to progress a limestone project in Madagascar with a resource of 340-440Mt at 97% purity (depending on selective or bulk mining methods).

More critical for investors is the outcome of litigation that will be going on in the background, with Cassius having taken the government of Ghana to court, filing a US$277m ($443m) claim that it lost the opportunity to develop and establish a producing gold mine from its licensed area in the Talensi district of the West African country.

Its prospecting licence was not renewed, but claims aired previously in the media have been even more extraordinary. A Sydney Morning Herald investigation claimed a Chinese miner tunnelled underground and took gold from Cassius’ concessions, the investigations adding the Chinese company Shaanxi had been accused of killing artisanal miners with poisonous gases.

The next step in the arbitration claim is for Ghana to file its defence including supporting material and witness statements.

“The independent experts, company’s lawyers, key witnesses as well as the Board have all worked tirelessly and effectively to complete the substantial task of filing the Company’s claim against Ghana over many months,” CMD managing and technical director David Chidlow said on announcing the filing of the claim in December.

“We look forward to progressing the case and achieving a successful outcome for the benefit of Shareholders and the Company, whether that be at hearing or any earlier potential settlement.”

There is a recent history of Australian-listed winning claims for the expropriation of their projects by African and European governments.

Indiana Resources (ASX:IDA) won a claim with the International Court for the Settlement of Investment Disputes in 2023 against the Tanzanian government. It later settled to pay US$90m to the miner as recompense for the Ntaka Hill nickel-copper project. Former coal explorer GreenX Metals (ASX:GRX) won a similar claim for $490m against the Polish government.

Sarama Resources (ASX:SRR) last month also submitted a request for arbitration with the ICSID against the Burkina Faso government, seeking no less than $180m for the alleged expropriation of its Sanutura project.

READ: On the cusp of a gold boom, this miner’s world collapsed – now it wants justice

NEWPEAK METALS (ASX:NPM)

NewPeak has a 17% stake in fellow ASX-listed Lakes Blue Energy (ASX:LKO), which received the second $3.5m instalment for the $6.5m sale of its 49% interest in Victorian Petroleum Exploration Permit 169 to majority owner Armour Energy.

The project contains the Enterprise North onshore exploration target in the Otway Basin, with its future development to deliver an ongoing royalty stream of 4% of the wellhead value of any petroleum produced from the lease.

NPM has a number of focuses of its own, notably acquiring a vanadium project in Queensland last year in the vicinity of Julia Creek.

It also has uranium exploration campaigns afoot in the Northern Territory, engaging Pinata Resources Pty Ltd to carry out an inaugural field exploration program at the Treuer Range project.

NPM is looking for targets similar to the Bigrlyi deposit, held by Energy Metals Limited in an exploration licence retention in the north of NPM’s EL33611.

Bigrlyi has been reported to host a total mineral resource estimate of 6.32Mt at 1530ppm U3O8 and 960ppm V2O3 at a cutoff of 500ppm U3O8 for 21.3Mlb of uranium oxide and 13.3Mlb of vanadium pentoxide.

LATROBE MAGNESIUM (ASX:LMG) and ARROW MINERALS (ASX:AMD)

Sent a speeding ticket for its shares heading in the reverse, falling from 1.95c on Friday to 1.1c yesterday, LMG has rebounded today after a response to the ASX’s price query insisting there was no news the report the market wasn’t already aware of.

The company, which is looking to produce magnesium from fly ash, is working through feasibility studies on a 10,000tpa commercial plant in Victoria’s Latrobe Valley and a larger 100,000tpa plant in Sarawak, where site clearing is expected to finish this quarter.

A demo plant in Victoria is expected to start operations in the first quarter of 2025, in wait of a ~$13 million tax rebate.

Arrow shares rose around 9% after confirming it would have a mineral resource estimate complete by the end of March for its Niagara bauxite project in Guinea, with a scoping study due for completion by the middle of the year.

Supply cuts and strong demand in China have seen prices for high quality Guinean bauxite – 45% alumina and 3$ silica – hit record high levels of US$130/t.

“In parallel to resource estimation work, we have started some of the key work streams associated with the Scoping Study, which will evaluate Niagara as a potential standard DSO project,” AMD MD David Flanagan said.

“The decision to advance the resource and the study at the same time was taken in light of the highly successful drilling program we have just completed.

“Given that the project is showing all the signs of being a Tier 1 mineral deposit, we are not waiting until resource modelling is complete to progress the work we can. Everything that can be done in advance is underway. The study is likely to focus on the thickest and largest areas of high-grade mineralisation drilled to date.”

Arrow is hoping to benefit from its proximity to the multi-billion dollar railway line being built to support the Simandou iron ore mine.

“The Niagara project is within trucking distance of the Simandou (Trans-Guinean) multi-user railway and work has commenced to assess potential haulage solutions,” Flanagan said.

“We are at a time of record alumina and bauxite prices, and we fully intend to move as quickly as possible to deliver resources, scoping and feasibility studies, achieve regulatory approvals and secure product sales.”