Resources Top 5: Has sentiment turned? Australia’s most advanced cobalt stock is now up ~120pc over the past month
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Here are the biggest small cap resources winners in morning trade, Friday July 14.
(Up on no news)
COB’s Broken Hill cobalt project (BHCP) in NSW is one of the only large scale, non-African, greenfield primary cobalt projects in the world.
With the amount of negative attention artisanal mining in the DRC is getting at present, that’s a big plus.
The 81,000t BHCP could be in production by mid to late 2025, it said last year.
It would produce +3,500tpa cobalt metal eq over 20 years at a very low all-in sustaining cost of $US12/lb – making it profitable even at record low prices.
According to Benchmark Mineral Intelligence, the beaten down battery metal is currently selling for US$14.50/lb-US$16/lb on the spot market, but the outlook is cautiously positive.
Will cobalt metals prices be able to move above $20/lb in 2023?
— S&P Global Commodity Insights Metals (@SPGCIMetals) July 12, 2023
COB also wants to build a $70m, 3,000tpa standalone refinery in the battery hub of Kwinana near Perth, WA to turn the BHCP’s 12,000tpa of mixed hydroxide precipitate (MHP) into higher value cobalt sulphate.
“We are engaged with a potential partner that owns a suitable property in the Kwinana district where we expect to commence refinery construction next year,” it says.
“The potential partner is further determining an appropriate level of equity ownership in the Kwinana Refinery Project via a funding contribution.”
The $180m capped stock is down 18% year-to-date, but has bounced back strongly from June lows.
The TSX-ASX listed stock is reporting better than expected grades – including a highlight 43.49 g/t Au over 2.1m — from underground development at its ~650,000oz Tuvatu gold mine in Fiji.
‘Face sampling’ on the URW1a and URW1b lodes returned 19.91g/t and 9.60g/t over the first 35m and 22.5m of mining, respectively.
Face samples are collected directly from the mining drive, providing “the most accurate representation of the grade of the material that we’re mining”, the company says.
The URW1 lode system was originally modelled as a single lode with average grade of 14.05g/t Au, it says.
“The grade from the URW1a lode is therefore stronger than anticipated while the grade from the URW1b lode represents additional upside.”
Construction of the mine is 74% complete, LLO said late last month. The project is on track for delivery of first gold in Q4 CY 2023.
A 2020 PEA (the equivalent of a scoping study) envisaged 331,400oz production over an initial five years, at a head grade of 8.57g/t.
Net revenue would be US$432m at an assumed gold price of US$1,400/oz.
But additional discoveries have been made since then. Last year, CEO Walter Berukoff said he was “confident that Tuvatu will one day fall in the ranks of notable multi-million-ounce Au deposits such as Porgera and Vatukoula.”
Porgera – which produced +20Moz between 1990 and 2017 — is the second largest mine in Papua New Guinea and one of the world’s top 10 gold mines.
The C$171m capped stock is flat year-to-date.
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PNM’s flagship 9.2Mt Kolosori nickel laterite project (80% owned) in the Solomon Islands is at the pointy end of the development cycle.
First mining is expected in October 2023.
Nickel laterite ores from DSO operations – a low-cost way to get into production — provide feedstock for nickel pig iron production suitable for stainless-steel producers, PNM said.
Few alternative sources of nickel laterite ore globally exist outside Indonesia (higher jurisdictional risk) and the Philippines (lower grade) to satisfy demand from the domestic Chinese producers.
The Kolosori open pit DSO laterite mine will pump out 1.5wmt per year for the stainless-steel sector at an average nickel grade of 1.57% over a 3-6-year life.
It will cost just $US18.6m to build, but the returns are attractive – over the extended mine life of ~6 years the operation boasts a post-tax NPV of $US83m ($118m) (at a discount rate of 8%) and post-tax IRR of 170%.
This mine life is expected to grow via near mine exploration and as PNM adds inferred resources to reserves.
PNM is estimating an operating margin of $US18 per wmt tonne of ore on life-of-mine sales price of $US75/t (1.5% Ni CIF China).
PNM also has the nearby Jejevo project, which is expected to follow same development blueprint as Kolosori.
The $30m capped stock is down 10% year-to-date.
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Another strong move on reasonable vols for the advanced ASX-TSX iron ore project developer, which is up 35% since the start of the year.
According to a feasibility study released March last year, the flagship Lake Giles project in WA would produce 3mpta of high-grade concentrate over a 25-year life.
The giant magnetite project will cost ~$800m to build.
MIO is forecasting a post-tax NPV of $US315m and IRR of 13%, based on a long-term China sales price of $US131.40/t for its 66.1% Fe concentrate product.
The company is now dabbling in nickel exploration at Lake Giles, where it has identified 319 historical drill holes with highly anomalous nickel 0.1% or greater.
MIO also owns 21.64% of WA lithium-gold spinout Infinity Mining (ASX:IMI), which recently added to its Pilbara lithium exploration ground.
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CUF continues to diversify, picking up ground ~100km from WA1 Resources’ (ASX:WA1) big niobium find in the west Arunta region of WA for shares.
It also acquired a lithium project in the Pilbara, which follows the purchase of a small lithium-rare earths project in the goldfields.
Meanwhile, CUF’s high grade JWD iron ore mine achieved record monthly export volumes for May.
“The quality of JWD lump is continuing to improve at depth, with recent shipments sold at a headline grade in excess of 63.5% Fe,” CUF said early June.
“This is leading to high demand from customers, with a May shipment completed to leading international steel mill, Hyundai, and a July shipment has been sold for delivery to a European mill at an attractive fixed price relative to index.
“While falling index prices over April and May make the project’s economics more challenging, the impact of this has been partially offset by a significant fall in sea freight prices (down more than 50% from last year’s highs), falling fuel prices benefitting road haulage costs and the weaker AUD.”