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Here are the biggest small cap resources winners in early trade, Tuesday October 26.
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There are only a handful of current or likely magnesium producers outside China, which is slashing production due to an ongoing power crisis. Buyers are getting desperate.
Another metal going berserk, courtesy of China’s energy crunch. Magnesium (a key element to produce steel and aluminum alloys) has gone up 225% since January. Europe, which buys 95% of its magnesium from China, will run out of the metal by late November https://t.co/Vzdupn4tNP pic.twitter.com/eD4V593IiZ
— Javier Blas (@JavierBlas) October 22, 2021
$20m market cap KOR is currently in a pause pending a further announcement after shooting up almost 100% in early trade.
This sleepy explorer has been trying to develop, or sell, the ‘Winchester’ magnesium project in the NT for over a decade.
Over the last few months, KOR says it has been approached by two separate groups expressing an interest in developing Winchester.
The latest unsolicited proposal would see the two parties “jointly develop the Winchester quarry where the other party will fully fund the development in exchange for sharing the future profits from the quarry”.
No commercial terms have been met as yet, KOR said September 30.
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LMG plans to develop a 3000tpa operation which will convert fly ash from the Yallourn coal operations in the Latrobe Valley into magnesium and a host of other industrial products.
Latrobe still has engineering and other studies to complete before issuing tenders for construction of its plant in January next year but managing director David Paterson said end users facing supply woes out of China were already desperate to get their hands on mag product.
“That’s why we keep on talking about diversity of supply,” he told Stockhead on September 30.
“We’ve had probably at least three or four inquiries a week, probably one a day.”
“We’ve had two today just on can we supply mag at a price, at any price, because they can’t get supply.”
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China and Europe-based MGL isn’t a miner, but it does sell primary and recycled magnesium alloys into the auto, power tool and electronics sectors.
In the first six months of 2021 the metals businesses experienced a ‘difficult period”. The principal constraint on Magontec’s metals business in China is the absence of raw material supply, it says.
“Auto sector output was constrained, logistics costs rose sharply, magnesium prices were volatile and Magontec’s key magnesium alloy cast house at Golmud, Qinghai province, PRC continued to source its raw material from regional Pidgeon producers pending resumption of supply from the Qinghai Salt lake Magnesium Co Ltd (QSLM),” the company says.
“Until this supply re-commences the MAQ business will continue to be unprofitable at the EBITDA line and, with depreciation charged on this currently non-performing asset, will continue to negatively impact reported profit.”
MGL’s other metals businesses — recycling of magnesium alloy scrap in Germany and Romania — is also challenged.
“A slowdown in the automotive sector due to chip shortages, among other issues, has reduced volume throughput for the European recycling facilities over the last 12 months and we don’t expect a recovery in the short-term,” the company says.
A maiden drilling program pulled up visual copper at ‘Hermitage’, one of a cluster of targets held by ERM in the 5.5Moz gold, 470,000t copper Tennant Creek Mineral Field (TCMF).
Drill hole HERC002 and HERC003 intersected thick zones of malachite (copper ore) chalcopyrite (copper ore), interspersed with native copper.
Here’s what that looks like:
HERC003 terminated in mineralisation at 192m, ERM says.
Drilling continues, and first assay results are expected in the current December quarter.
Hermitage has not seen any systematic, modern exploration since the 1980s.
The first phase of this exploration is aimed at following up historic hits like 9m at 12.8g/t gold from 176m and 23m at 4.84g/t gold and 3.7% copper from 203m.
$37m market cap ERM has been treading water, up 7% over the past month and down 6% year-to-date.
This aspiring fertiliser miner has presold 30,000 tonnes per annum of natural phosphate fertiliser from the ‘Três Estradas’ Phosphate Project (TEPP) in Rio Grande do Sul, the southernmost state of Brazil.
The MOU — with well-known fertiliser and agribusiness distributor Tuch — potentially represents well over half of AGR’s projected first year of TEPP sales, estimated at 50,000 tonnes, the company said.
The sale price from AGR to Tuch is $74 per tonne FOB for the product in bulk. Operational expenditure has been estimated at just $11/t.
The project, which will cost just $8m to build, is expected to produce 306,000tpa over 18 years following a three-year ramp up, AGR added.
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