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Mining
Here are the biggest small cap resources winners in early trade, Tuesday October 27.
(Up on no news)
Potash prices have soared by up to 300% since the start of the year, sitting above US$700 per tonne (CFR Brazil Spot).
CRU Group’s updated Sulphate of Potash (SOP) Price Forecast Analysis says this is a combination of rising demand, poor international crop yields, surging crop prices and margins.
Not to mention the impact of EU sanctions on Belarus muriate of potash (MOP) sales since June, which usually account for around 20% of the global supply.
One stock hoping to benefit is German based potash explorer SHP, which recently signed a drilling contract for the first 665m deep confirmatory hole at its ‘Ohmgebirge’ Mining Licence area.
The aim of the drilling is to collect potash core samples to verify drilling by the former East German state in the 1980s.
The confirmation drillholes will allow SHP to upgrade current inferred resources to indicated within the mining licence area, thus allowing the release of a Scoping Study in Q1 CY22.
$75m market cap SHP is up 118% over the past month, and 191% year-to-date.
Right now, CMD’s main game is the ‘Soalara’ limestone project in Madagascar, where an upcoming drilling program is expected to result in an upgraded resource.
The Soalara deposit includes a sequence of horizontally bedded limestones 70-90m thick from surface. Phase 1 drilling – 4-5 vertical diamond holes each to 100m depth — will kick off January, the company said today.
Site and access preparation plus drilling is expected to take around 40 days using a single rig, with assay lead times expected around 8-10 weeks.
CMD is also engaged in a legal brawl with the Ghanian government over its ‘Gbane’ gold project, which is in the same neighbourhood as the 5+ million ounce Namdini resource, previously owned by Cardinal Resources’ (ASX:CDV).
Cardinal was acquired at $1.075 per share – a 237.5% increase from the start of 2020 — after a frenetic bidding war between a couple of Chinese and Russian miners.
CMD isn’t the only Aussie company to have trouble in Ghana of late, and says it is exploring litigation options.
The $7m market cap stock is up 50% over the past month.
Last year, a spectacular intersection at the flagship Carr Boyd project in WA pushed ESR into #5 spot on Stockhead’s Best Performing Resources Stocks of 2020.
The explorer has not been able to maintain share price momentum in 2021. It hopes to change that with new greenfields discovery at ‘Broonhill’, 1.4km north of the original ‘T5’ discovery.
Drilling has now hit a 12m zone of nickel-copper sulphides — including 2m of massive sulphides (the best stuff) – in a hole which bears all the hallmarks of the 2019 hole CBP043 which led to the original T5 discovery at depth.
“It was this historic hole that led the company to drill and locate the T5 massive sulphides at depth, so we are particularly encouraged by what may come of this find,” ESR boss Chris Daws says.
“In addition, the intersection of further nickel-copper sulphides in an area which already hosts the historic Carr Boyd mine and our T5 Discovery illustrates the significant potential of this region for discoveries.”
The Phase 4 RC program still has another 2km of highly prospective basal contact yet to explore, the company says.
A busy week for this aspiring fertiliser and copper miner.
Yesterday, AGR announced it had 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 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.
Today, it made a comparison between the prolific Kalahari Copper Belt (KCB) in southern Africa and the Rio Grande Copper Belt in southernmost Brazil, where AGR’s copper assets are located.
The KCB is an area renowned for its prolific output of copper over the past 60 years. Over the same 60-year period, Southern Brazil did not attract the level of investment necessary to fund continuous exploration, AGR says.
The only exception has been the ‘Campaquã’ mine, now exhausted, located in the Rio Grande Copper Belt that was mined continuously for 100 years.
“We strongly believe in the potential of the Rio Grande Belt and with continuous mineral exploration over the coming years believe that it can develop into a major mining district,” AGR managing director Dr. Fernando Tallarico says.
“We will continue to explore for copper along the Belt whilst progressing our Andrade Copper Project into production and look forward to updating our shareholders on further developments.”
In March, an early-stage project study and updated resource shows “positive economics” for development of Aguia’s Andrade copper deposit in Brazil.
Results show an impressive 67.1 per cent internal rate of return (IRR) on a 1mtpa copper sulphate (salt) operation over 14 years.
Average earnings before tax would be almost $20m a year – and it would cost just $10m to build the thing.
The $23m market cap stock is up 44% over the past month, but down 10% year-to-date.
(Up on no news)
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.
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.”
The $83m market cap stock is up 205% over the past month.
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