Resources Top 5: Monster copper, nickel projects and two small mine developers

Celsius hopes to develop its monster 338Mt MCB copper-gold project in the Philippines
Aston keeps gaining on recent maiden 2.82Mt nickel resource at Edleston project in Canada
Estrella (nickel), Aguia (phosphate) near production at their respective low cost projects

Here are the biggest small cap resources winners in early trade, Friday March 3.

CELSIUS RESOURCES (ASX:CLA)

(Up on no news)

“There are many examples of companies that perform well in the market on projects that are essentially rubbish,” veteran stock picker Warwick Grigor said late last year.

“As an analyst I look for companies and projects of merit that have been mispriced in the market, whereas I look for good promotion when I am wearing my traders’ hat.”

CLA is one company with a project of merit coupled with not-so-great promotion, he says.

This ambitious minnow is hoping to develop its monster 338Mt MCB copper-gold project in the Philippines, which contains 1.6Mt copper and 1.3Moz gold at a 0.2% copper cutoff.

A December 2021 Scoping Study envisaged a 22,000tpa copper, 27,000ozpa gold operation with a 25-year mine life.

Highlights from the study includes a Post-tax NPV (8%) of US$464m and IRR of 35%, assuming a copper price of US$4.00/lb and gold price of US$1,695/oz.

It would cost US$253m to build the thing with a payback period of ~2.7 years.

CLA is now in the process of securing a mining licence.

Meanwhile, third party interest in CLA’s long-mothballed Opuwo cobalt project in Namibia is rising.

Opuwo’s 225.5Mt resource grading 0.12% cobalt, 0.43% copper, and 0.54% zinc makes it one of the largest undeveloped cobalt projects outside of the Democratic Republic of Congo.

“The company has received strong interest from parties interested in partnering on the Opuwo project; a data room has been established with a number of Non-Disclosure Agreements being signed,” the company said late January.

The $30m capped stock is down 15% year-to-date. It had $1.75m in the bank at the end of December.

ESTRELLA RESOURCES (ASX:ESR)

(Up on no news)

In 2020, a spectacular nickel intersection at T5, part of the Carr Boyd project in WA, pushed ESR into #5 spot on Stockhead’s Best Performing Resources Stocks of the year.

It has been on the downward slide since then, with the company recently putting a pin in T5 to focus on advanced feasibility studies and trial mining at its Spargoville nickel project, just down the road.

Following a sustained appreciation of the nickel price, ESR is working to rapidly bring the project into production.

In November, ESR inked an ore processing and offtake deal with Glenore’s Murrin Murrin operations for a bulk metallurgical sample from the historic, small, but high grade 5A pit at Spargoville.

The 2500t sample was delivered to Murrin Murrin in February.

Pricing and final payments are confidential and will be determined over March and April, ESR says, although it estimates a $500,000 to $750,000 profit.

“Results from the bulk metallurgical sample will provide the company with a strong basis to advance a Definitive Feasibility Study (DFS) and fully develop the 5A nickel mine ore resource using simple pit cut back mining methods,” it says.

5A’s current resource of 124,000t at 1.9% nickel, 0.15% copper and 0.04% cobalt (for 2370t nickel, 190t copper and 50t cobalt), includes 16,000t of very high-grade transitional massive sulphide material grading 7.8% nickel.

ESR believes it will be able to start mining 5A this financial year subject to statutory approvals, positive DFS and financing.

The $25m capped stock is up 40% year-to-date. It had ~$1.1m in the bank in February.

ASTON MINERALS (ASX:ASO)

(Up on no news)

On 21 February ASO released a monster maiden resource at the Edleston project in Canada of 2.82Mt nickel and 115,000 tonnes of cobalt.

The large, low-grade orebody (0.3% nickel eq) at ‘Boomerang’ is part of a ~6.5km long, 500-150m wide, and over 500m deep target area.

“Like BHP’s Mt Keith mine in WA (0.52% nickel) it is a bulk tonnage disseminated deposit, capable of producing world-scale amounts of nickel for multi decades,” Barry Fitzgerald says.

“Similar-scale projects held by juniors in Canada have been attracting the attention of the big end of town.

“Anglo American recently took up a 10% stake in the Toronto-listed Canada Nickel which owns the Crawford project (3.48Mt contained grading 0.24% nickel), and Japan’s Mitsubishi took a 15% interest in the Turnagain project (4.8Mt grading 0.21% nickel).

“Apart from multi-decades of mine life, their scale of operation means they could potentially produce in the bottom half of the nickel industry cost curve (Turnagain has reported a $US2.81/lb cash cost potential).

“Boomerang is in the same league, with a higher grade too.

“So don’t think ‘low’ grade means low profits. These things can throw off huge amounts of cash when mining and processing treatment rates get up to 40mtpa-plus.”

The project also hosts a 1.5Moz gold resource at an ore grade of 1g/t.

The $135m capped stock is up 50% year-to-date. It had $5.4m in the bank at the end of December.

AGUIA RESOURCES (ASX:AGR)

(Up on no news)

AGR is close to getting into production at its Três Estradas phosphate (TEPP) and Andrade copper projects in Brazil.

However, construction at Três Estradas has been stymied by civil action after a Federal Public Prosecutor slapped the company with an emergency injunction in 2021 to put a stay on environmental licensing for the TEPP, granted 2019.

AGR now says settlement negotiations are going well.

“The parties are now expecting the presentation of a supplementary technical report by the Public Prosecutor’s Office technical team this week,” it reported March 1.

“Such report will be discussed in the next settlement hearing to be scheduled for mid-March.

“Once that happens, the company expects to be closer to a written settlement that would end the litigation altogether and allow the commencement of construction.”

The TEPP – considered a project of importance by the Brazilian government — is expected to produce 306,000tpa over 18 years following a three-year ramp up.

It will cost just $8m to build.

A March 2021 early-stage project study at Andrade showed 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 capped stock is down 8% year-to-date. It had ~$2.1m in the bank following a recent placement at 4.5c per share.

FIREBIRD METALS (ASX:FRB)

(Up on no news)

Spun out of Firefly Resources — the gold explorer that secured a memorable and strange merger with Gascoyne Resources (ASX:GCY) last year — FRB’s aim is to develop a “significant manganese production hub” in the Pilbara with an operating life of over 20 years.

Manganese is a key ingredient used to strengthen steel but is also finding favour as a component in lithium-ion batteries.

It has started a scoping study into the production of HPMSM (high-purity manganese sulphate monohydrate) at the flagship Oakover project, 85km east of Newman.

The explorer last month announced it had successfully produced a 99.8% purity manganese sulphate monohydrate crystal from its Oakover ore, meeting battery grade specification and containing upwards of 32% manganese.

“This is an outstanding result and places Firebird and Oakover in a very strong position moving forward,” FRB MD Peter Allen, sometimes referred to as Mr Manganese for his decades of experience in the sector, said.

“It is highly encouraging that this result meets the requirements for battery grade specifications and highlights the high-quality nature of our flagship Oakover Project.

“Importantly, we are developing Oakover at a time where demand for manganese within the lithium-ion battery sector continues to grow rapidly, as electric vehicle and battery cathode manufacturers have stated their desire to increase the amount of manganese within lithium-ion batteries, due to the cost benefits obtained whilst maintaining energy density.

“We have taken a major step as a manganese developer and we will now focus our attention to rapidly progressing and completing our high-purity manganese sulphate scoping study, which we announced in October.”

The $14m capped stock is up 25% year-to-date. It had $2.6m in the bank at the end of December.