I've got a fever and the only thing that can cure it is more high-grade silver. Pic: Getty Images
Resources Top 5: High grade silver hit just what the doctor ordered for Iltani
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- Iltani Resources runs higher on Queensland silver hit
- Emmerson Resources a potential gold takeover target, says Bridge Street
- Patriot Lithium revives Zambian copper deal
Your standout small cap resources stocks for Monday, December 16, 2024.
ILTANI RESOURCES (ASX:ILT)
At a touch over US$30/oz, silver prices have moved upwards solidly this year for a ~28% gain.
That’s not too dissimilar to gold, but silver stocks seem to have taken a special place in investors’ hearts and minds, with exploration successes in the mixed precious and industrial metal seeing outsized gains.
Iltani’s ~25% lift on Monday is a case in point, coming off the back of assays from a four-hold RC program at the Orient East prospect north of Charters Towers in North Queensland.
Notable results mainly came from hole ORR042, which returned 19m at 378.8g/t silver equivalent from 64m downhole and 5m within that at 427.2g/t AgEq from 67m.
Slightly deeper was a hit of 6m at 746.7g/t AgEq from 75m including 2m at 1376.5g/t AgEq from 76m and 1m at 1707.2g/t AgEq from 77m.
There’s a measure of selectivity that comes with these internal intercepts, but the grades, touted as the best found at Orient to date, have at least caught the eyes of small cap punters.
The raw metal contents of that intersection came in at 574g/t silver, 147.5g/t indium, 14.2% lead and 11.15% zinc.
But it its down dip from an intercept of 7m at 342.5g/t AgEq and 1m at 1063.9g/t AgEq from 37m downhole in ORR041, showing some measure of continuity for the high grade stuff.
Other hits from the recent assays included 22m at 104g/t AgEq from 66m in hole ORR043 along with 5m at 217.1g/t AgEq from 80m, and 6m at 77.5g/t AgEq and 8m at 97.1g/t AgEq from 45m in hole ORR0455.
More results are expected later this month and in January, with an exploration target due to be tabled in Q1 2025. A resource infill drill program will take place after the wet season is over early next year.
Iltani MD Donald Garner called the intercept in ORR042 to the best to date in grade and thickness, saying Orient could be “Australia’s best silver-indium deposit”.
“Multiple high-grade zones intersected at shallow depths, such as the results in ORR041 and ORR042 within 60m of surface, reinforces the investment case for potential open pit mining at Orient East, and with the mineralisation open at depth demonstrates the UG potential as well,” he added.
“We are expecting to receive the remaining assay results from the Orient East drilling, with 15 drill holes pending, plus 7 drill holes at Orient West and 1 drill hole at Orient South over the next 4 to 8 weeks.”
An existing exploration target at the adjacent Orient West has been tabled of 74-100Mt at 55-65g/t AgEq with a 30g/t AgEq cut off grade and a higher grade zone of 20-24Mt at 110-120g/t AgEq with an 80g/t AgEq cut off.
CYCLONE METALS (ASX:CLE)
(Up on no news)
Part of a wide stable of companies chaired by Perth businessman Tony Sage, Cyclone’s 2024 performance has turned on the back of a deal with Brazil’s Vale.
The penny stock is now trading with greater liquidity after a share consolidation and rights issue as well, stocking up the Canadian iron ore play with over $3.5 million in additional cash.
The MoU with Vale, the world’s largest high grade iron ore producer, provides a potential pathway to development for Iron Bear, a large magnetite asset near Schefferville in Labrador.
Vale could take a 75% stake in the project should it invest US$12o million or take it to a decision to mine.
That may seem like a lot, but the development costs will be substantial, and 25% of a project of the scale of Iron Bear – which has over 16.5Bt of ore at 29.5% Fe which testing has shown could be upgraded to a direct reduction grade concentrate – would be substantial.
Located close to Champion Iron’s Bloom Lake and Rio Tinto’s Iron Ore Company of Canada, both in the order of 10-15Mtpa, Iron Bear’s product is a rare breed, with less than 10% of the seaborne iron ore trade suited to consumption in ‘greener’ DRI plants, which rely on natural gas as a reductant rather than coal and produce around a quarter or less of the greenhouse gas output as conventional blast furnaces.
EMMERSON RESOURCES (ASX:ERM)
(Up on no news)
A research report on ERM dropped Monday from Bridge Street Capital Partners, which happened to place 5 million buckaroos into the NT gold hopeful at a fairly slim 3.5% discount to its pre-placement price of 5.5c.
Those shares are already very much in the money, with ERM hitting 7.1c today.
ERM holds exploration tenure on its own in the Northern Territory’s Tennant Creek and NSW’s Macquarie Arc regions, but its big gambit is a JV at Tennant Creek with a private firm called Tennant Consolidated Mining Group.
At least it was. TCMG just got bought out by LSE listed Pan African Resources PLC, a mid-tier producer with a market cap of around 1.5 billion Aussie dollars.
It represents a major departure in strategy for the 200,000ozpa South African-focused gold miner, and puts a large pool of capital behind the development of a 400,000oz at 5.2g/t resource over which Emmerson holds a 6% uncapped gold royalty along with 2% of the copper and silver earnings.
TCMG had already started work on a carbon-in-leach processing plant in which Emmerson had no exposure to no capital or operating costs, with the JV agreement between Emmerson and the now Pan African ensuring royalty payments over the equivalent of 60,000oz of gold sales by May 2026.
That accrues whether the mines are in production or not, which Bridge Street analyst Dr Chris Baker says is worth around $15m after tax to ERM at current gold prices of more than $4000/oz.
Bridge Street’s modelling suggests ERM could derive $58m in royalties over five years if gold holds at $4000, with an upside case of $132m over a decade. Baker says the Nobles plant is due for commissioning in the second quarter of 2025, placing a target on Emmerson for a potential takeover.
“We are pleased to read from a recent release that “the Board of Emmerson intends to utilise this material revenue stream to enhance shareholder value,” he told clients, placing a 13c base case valuation and 21c upside case on ERM stock.
“This may include capital management initiatives such as dividends, capital returns, share buy-backs or a combination of these.”
These are sentiments seldom expressed by companies in the gold sector, especially at the microcap end.
“We see ERM as a prime takeover candidate, either by one of the multitude of royalty companies worldwide, or by Pan African itself, to effectively extinguish the royalty. We estimate the royalty will add around US$130/oz to the cost of gold from JV tenements at the current gold prices.”
The structure of the JV is complex, but involves Tennant Mining (now Pan African) spending up on exploration to earn a 75% stake which enables TMCG to mine small deposits of under 250,000oz in exchange for the free carried royalty.
Any deposits larger than that, none of which have been identified to date, would see ERM take a 40% stake dropping to 25% after the earn-in is completed in 2026.
Some are held 100% by TMCG, including the Nobles Nob mine where the 840,000tpa CiL plant is being built, while ERM also has its own 100% owned tenements prospective for gold and copper that sit outside the JV.
Around 1.3Moz of resources and 380,000oz of reserves are held in the JV, with ounces from the JV tenements over which the royalty applies to account for over half the production modelled by Baker.
PATRIOT LITHIUM (ASX:PAT)
No longer solely doing what it says on the tin, Patriot Lithium has spent much of the past year diversifying into copper in the face of a major dive in lithium prices, which has hurt interest in small caps.
After terminating an option that would have seen PAT emerge as a 90 owner of the Kitumba project earlier this month, PAT has returned with a new agreement to acquire the asset, located it says in the heart of Zambia’s first copper district.
Patriot will now pick up an 80% stake in the exploration licence northwest of Mumbwa in Zambia’s central province.
Covering 255km2, the licence sits just 2km south of Sable Antelope and Hippo, the country’s first commercial copper mines in operation as early as 1897.
What’s the aim? PAT is hoping to uncover an iron-oxide copper gold deposit similar in nature to the nearby Kitumba held by Sinomine, where a historic reserve posted a decade ago contained 31.5Mt at a very attractive grade of 2.04% Cu.
The Chinese firm has now committed to build a US$600 million, 50,000tpa copper mine at Kitumba, placing the spotlight back on the region after the discovery of massive sediment hosted copper deposits to the north of the country turned attention away from the Central Province in the 1990s, Patriot said.
“Sinomine’s Kitumba Copper Deposit is expected to be one of the first new, large scale, mines in the area for many decades.”
The Zambian government has set ambitious plans to become a major force in copper production by lifting production from ~700,000t last year to 3Mt by 2032.
Under the terms of the deal, PAT will pay US$50,000 and issue 2 million shares to Newlight, a Zambian registered company, for the 80% stake, subject to among other things due diligence, regulatory and ASX listing approvals and the formation of a special purpose vehicle which will hold the exploration licence.
Should a development proposal not come to light within five years, the project will revert back to the vendor, though PAT will have the right to extend it for 12 month periods.
While it has fallen from the heights of over US$11,000/t seen earlier this year, copper pricing remains strong at a touch over US$9000/t according to the LME. Demand is expected to lift significantly from the energy transition and urbanisation, with a number of experts viewing it as one of their favoured commodity markets.
WHITE ENERGY COMPANY (ASX:WEC)
(Up on no news)
White Energy has a pretty unusual portfolio of assets that includes a coal briquetting technology developed by a consortium led by the CSIRO and some early stage copper exploration sites.
Chaired by coal billionaire Brian Flannery, WEC has been quiet of late having spent the earlier part of the year in now completed court disputes with a Singaporean based partner.
Its latest substantive news came in the form of an update on early stage exploration from the Specimen Hill project near Biloela in Queensland.
Located near the Briggs copper project and Mount Morgan mine, WEC is farming into a project held by Tectonic Gold, a company listed on the UK’s Aquis Exchange.
WEC also drilling over 1700m into a target called Coronation in South Australia, looking for copper and gold near BHP’s Prominent Hill mine.
Drilling was wrapped up in October, but as of the miner’s last quarterly samples were still in the process of being analysed.
At Stockhead, we tell it like it is. While Cyclone Metals is a Stockhead advertiser it did not sponsor this article.
