Resources Top 5: Gina Rinehart shells out cash for iron ore JV, this junior is +480% since pivoting to lithium in September
Here are the biggest small cap resources winners in early trade, Monday November 15.
This former iron ore junior is now all-in on lithium after cementing a deal with Chinese battery materials giant Yahua to find and develop Aussie projects.
Yahua Group is one of China’s major lithium chemicals producers.
With a customer base that includes Tesla, BYD Auto, Zhenhua E-Chem and Sinopec, the company is in the process of expanding to 93,000tpa of lithium hydroxide and 1,000tpa of lithium metal by 2025.
Yahua and EFE will work together on the development of ‘Trigg Hill’ lithium tantalum project in the Pilbara – which EFE is in the process of acquiring — and on the purchase of further lithium projects.
Trigg Hill is an old tantalum and tin mine operated during the 1960s and early 1980s. Pegmatite outcrops (source of lithium spodumene) cover ~5sqkm of the project area, EFE says.
After the acquisition and an initial exploration target for Trigg Hill is locked in, the parties will establish an exploration and development JV. The parties’ respective interests in the Trigg Hill JV are yet to be agreed, EFE says.
“We are excited to be working with Eastern Iron, who we believe is likely to be a strong source of spodumene concentrates in the future,” Yahua Group managing director Xin Gao says.
“We see many potential cooperation between us on acquisition and development of lithium projects and look forward to exploring a deeper relationship over time.”
~$60m market cap EFE is up 77% over the past month and 610% year-to-date. It had $3.6m in the bank at the end of September.
(Up on no news)
CPN’s Carawindah Brook project is ~40km north of Julimar and within the same host rocks, the company says.
Drilling restarted late last month, with both RC and diamond drill rigs now testing multiple targets at the ‘Yarabrook Hill’ prospect.
CPN believes that only a small fraction of the entire intrusion has been drilled by Caspin or its predecessors.
“Most of the previous drilling has focussed only on where mineralisation comes to surface, but there remains a large portion of the prospective basal sequence that is potentially obscured by overlying sequences and present at depth where it is unrecognised and remains to be tested,” it says.
The diamond program is expected to consist of ~1,500m, whilst the RC program is expected to continue through until Christmas.
$83m market cap CPN is up 13% over the past month, and 110% year-to-date. It had $13.7m in the bank at the end of September.
OAU’s strategy is to pursue early, low-cost gold production.
This will, in theory, give the small cap the cash to explore for large gold and base metal deposits across WA without having to go back to shareholders.
OAU has now signed a native title agreement over the ‘Crown Prince’ and Lydia’ projects, which means mining lease applications can now be granted.
The Lydia deposit was discovered in 1912 and shallow prospects were mined to about 30m depth.
At Crown Prince, historical production was 29,400 tonnes for 20,178oz at a very high recovered grade of 21.7g/t to a depth of 90 metres. The unmined shallow stuff provides a current mineral resource estimate 56,000oz.
There are opportunities for growth however, with deeper drilling continuing to hit thick, high-grade gold outside the current resource envelope.
OAU says it will continue to work on development plans for the Crown Prince resource “and will update the market in due course”.
The $25m market cap stock is down 10% over the past month. It announced plans November 2 to raise $1.4m for drilling across its projects.
A subsidiary of Gina Rinehart’s Hancock Prospecting will shell out an initial $9m to earn into the ‘Mt Bevan’ iron ore project, owned by Hawthorn Resources and Legacy Minerals (LCY 60%, HAW 40%).
Mt Bevan hosts a 1,170 million tonne magnetite resource @ 34.9% iron, 250km north of Kalgoorlie in WA.
While magnetite iron ore resources are lower grade than hematite in the ground, they can be concentrated into a higher-grade product.
Premiums for high-grade iron ore are increasing, partly because they generate steel with more efficiency.
That could only increase in the future with new tech, like green steel and hydrogen based direct reduced iron, expected to be reliant on higher-grade ores.
Hancock will make an initial investment of $9m to earn a 30% interest in Mt Bevan, with $8m cash being paid to Legacy and Hawthorn in proportion to their interest in the project (Legacy $4.8m and Hawthorn $3.2m).
The remaining $1m will be working capital.
Hancock will hold a 30% interest, LCY will hold 42% and HAW will hold 28% upon completion of the initial investment.
Hancock can earn an additional 21% by funding the completion of a pre-feasibility study (PFS), a detailed look at whether the project is economic to build.
The demand of premium high grade iron ore products from magnetite has been growing due to its efficiency and ability to reduce the environmental pollution for the steel industry, Legacy chief exec Rakesh Gupta says.
“I am highly confident that with the support of our parent company NMDC Limited (A Government of India Enterprise), Hancock Prospecting Pty Ltd and Hawthorn, this Project would be successfully developed and would bring a social- and economic boost to regional Yilgarn province, WA and ultimately Australia,” he says.
Hawthorn managing director Mark Kerr called it a transformational deal for shareholders.
“Hawthorn is delighted to see Hancock join us to expedite development of our top-quality iron ore project,” he says. “All steel mills favour high-grade ore as they seek to reduce emissions going forward.”