Resources Top 5: Successful copper-gold explorer lobs curve ball, goes all in on lithium
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Here are the biggest small cap resources winners in early trade, Friday January 14.
ARL reckons it has confirmed high-grade massive nickel-copper-PGE sulphide paydirt at the ‘Emu Lake’, part of the Kalpini project near Kalgoorlie.
Significant results from this round of drilling include: 2.72m at 5.42% Ni and 0.85% Cu from 391.04m (including 1.23m at 8.22% Ni and 0.56% Cu from 391.04m).
The fertile horizon, called the ‘Western Ultramafic’ opens a new exploration search space, with Ardea controlling 20km of strike on this target zone.
Historically, exploration had been focussed about 1km north of this new find, ARL managing director Andrew Penkethman says.
“The Western Ultramafic is a separate and distinct high-magnesium ultramafic flow that was not prioritised by past explorers, presumably due to an absence of surface gossans [outcrop] as seen at the Binti Gossan,” he says.
“With the recently received assay results from core hole AELD0003 confirming high grade nickel sulphides located on an intact basal dacite contact with komatiite, we now have three adjoining drill holes with nickel sulphide mineralisation on the same contact which conclusively confirms that a discovery has been made.”
Importantly, mineralisation is open in all directions.
Nickel is usually found in two main ore types – sulphide or laterite.
Sulphides (class 1) are much cheaper and easier to turn into battery grade nickel sulphate than nickel laterites and fetch a higher price.
But supply of nickel sulphides is also declining because of a lack of new discoveries.
ARL is first and foremost an advanced nickel laterite play, with its flagship Kalgoorlie project – where a feasibility study is underway – already containing a large 784,000 nickel and 54,000t cobalt resource.
The $96m market cap stock is up 41% over the past month. It had $8m in the bank at the end of September.
The gold and base metals explorer will refocus on lithium (and related battery metals) backed by a new joint venture with aspiring battery chemicals producer EV Metals Group (EVM).
EVM is planning the staged development of a Battery Chemicals Complex in Saudi Arabia, which will produce up to 100,000tpa of lithium hydroxide monohydrate (LHM) and 450,000tpa of nickel sulphate.
The deal announced today will see EVM earn a 60% interest in the lithium rights in two initial 100% owned Zenith projects – ‘Waratah Well’ and ‘Split Rocks’ — by sole funding the completion of a feasibility study within 24 months (+$7m expenditure).
Zenith is free carried (doesn’t pay anything) and retains a 40% project share.
If it passes the FS stage, EVM will sole fund expenditure to a decision to mine, following which the parties will be required to fund future joint venture expenditure in accordance with their respective percentage shares.
EVM is also subscribing for 20m shares at 30c each –a 20% premium to the 10-day VWAP.
“The arrangement goes much deeper than just the joint venture on these two existing Zenith projects, Split Rocks and Waratah Well, with the parties also agreeing to jointly assess new lithium/ EV-metal opportunities throughout Australia where commercially appropriate to do so,” CEO Mick Clifford says.
“The new joint venture arrangement plays to the project generation strengths of the Zenith team, matching this up with the very strong commercial and engineering capability of the EVM group.
“The arrangement puts Zenith in a unique position to build a significant lithium business in conjunction with EVM.”
To allow the Zenith team to focus on EV-metal project generative activities, it is planned that the non-EV-metal projects, including base metals and gold assets will be demerged into one or more new companies to be listed on ASX.
Unlike several recent sad sack resources spinoffs this one could have some near-term money makers in the portfolio.
ZNC also owns a free carried 25% interest in the world class Earaheedy discovery, meaning it doesn’t pay anything on this project until the completion of a bankable feasibility study, often the final step before financing and construction.
Its joint venture partner Rumble Resources (ASX:RTR) owns 75% of the project.
It is also getting sniffs of something big at the Split Rocks (gold), Develin Creek (copper) and Red Mountain (gold) projects.
In June last year, a maiden drilling program at the previously untouched Red Mountain target hit a whopping 13m at 8g/t gold, including 6m at 16.7g/t gold from surface.
(Up on no news)
Two days ago Chinese magnesium prices hit yuan 55,000/mt ($US8,634/mt) amid low stocks – much higher than the average monthly prices of yuan 14,493/mt in January 2021 and yuan 13,556/mt in January 2020.
Market players expect Chinese magnesium prices to remain elevated, sources told S&P Global.
Long-time battler KOR has moved quickly to profit from positive investor sentiment in the supply constrained magnesium and phosphate markets.
In November, it decided to pull the pin on the planned sale of its increasingly valuable Winchester (magnesium) and Geolsec (phosphate) projects in the Northern Territory.
This followed approaches from two separate groups expressing an interest in developing ‘Winchester’, and discussions with magnesium metal users and magnesium buyers, including car makers (Fiat and Daimler).
KOR says Winchester “is the most attractive and advanced magnesium metal project under development anywhere in the world” because of the following factors:
Strong support from the local, territory, and federal governments
The $25m market cap stock is up 8% over the past month. The stock had ~$2m cash at the end of September, plus a small financing facility.
The gold focused explorer has uncovered rare earths potential at its ‘Mt Stirling’ project in WA.
Augur (shallow) drilling revealed a broad 1km scale yttrium anomaly, which is a key indicator of potential rare earth minerals, TNR says.
170 one-metre intervals from 41 holes have been submitted and are awaiting multiple-element (including rare earth assay suite analysis) assays.
TNR is expecting yttrium and rare earth element confirmation by the end of the month.
“Should these results provide us with positive confirmation we will look to develop this potentially significant target with a rare earths exploration program to commence as soon as possible,” TNR director Peretz Schapiro says.
“We are excited to potentially add a rare earths project to our development plans at the Mt Stirling Gold Project.
“The supply shortages of rare earths have been well documented and have led to significant price increases in the sector.
“These increases seem to be happening at a much faster rate than even some of the more bullish predictions from just a few months ago.”
The $35m market cap stock is up 35% over the past month. It had about $2.5m in the bank in December.
(Up on no news)
DM1 has fallen back from recent highs but remains in an exciting spot heading into 2022.
The company is prepping for drilling at its pipeline of targets: Belele (VMS), Dingo Pass and Dome (Ni-Cu-PGE), and the new “Gonneville-like” PGE project at Innouendy.
The recently announced Maiden Resource over Chalice Mining’s Gonneville Deposit — 330Mt @ 0.94g/t Pd+Pt+Au — provides an exciting comparison at this early stage of Innouendy exploration, DM1 said in December.
“Both projects sit on the important Craton Margin and consist of mafic and ultramafic intrusive rocks,” it says.
“The surface dimensions (as defined by the chrome anomaly at Innouendy and the Mineral Resource at Gonneville) are similar.
“The single hole so far drilled into the intrusion at Innouendy peaked at 0.59 g/t PGE whereas Gonneville averages 0.94 g/t over 330 Mt.
“Soil samples over Innouendy would appear to be significantly higher in PGEs than at Gonneville.”
An RC drill rig is due to commence drilling on the Belele VMS target on January 21, the company said earlier this week.
A separate rig is due to mobilise and commence the Innouendy program on completion of its current job, which is expected to be late January-early February.
DM1 is currently preparing tracks and drill pads into the Dingo Pass and Dome prospects which will use a combination of RC and diamond drilling.
The company will advise further when a start date is fixed for drilling these prospects.
The $18.5m market cap stock is up 100% over the past month. It had $2.8m in the bank at the end of September.