Sandfire investors are getting a front row seat to the copper boom. Pic: Getty
Mining
Here’s your top ASX small cap resources winners in morning trade Tuesday, December 1.
Miner Sandfire Resources (ASX:SFR) — one of a only a few copper-focused producers on the ASX – is building a new mine in Botswana.
Copper is on a tear right now, and the outlook is bright.
Using strong cash-flow from its company-making DeGrussa mine in WA (the company had ~$304m in the bank at the end of September) Sandfire will spend ~$350m to build the T3 Motheo copper-silver project.
It could be a huge money spinner for the ~$866m company, which was a 4c penny stock just 11 short years ago.
A project study outlines an initial 12.5 year operation producing ~30kt of copper and 1.2moz of silver each year.
Based on a forecast copper prices, T3 could generate $US664 million ($A948 million) in pre-tax free cash-flow.
But this is only the start; Sandfire plans to expand operation quickly.
“While the Definitive Feasibility Study and board approval announced today encompass the ‘base case’ 3.2mtpa development of the T3 Project, the key message for our shareholders and investors is that this is the start of a much bigger long-term copper production and exploration story for Sandfire in Botswana,” Sandifre boss Karl Simich says.
“This is, in effect, the dawn of a new global copper province – as evidenced by the scale of the new underground mining operation currently being constructed immediately to the north-east of our project by Cupric Canyon Capital at their Khoemacau project.”
The bigger picture is the key growth steps Sandfire will be taken soon after production starts in early 2023, Simich says.
“The recent A4 discovery, for which we have today announced a maiden Inferred Resource containing 100,000 tonnes of copper at an average grade of 1.5 per cent copper, is the most immediate and obvious opportunity within the ~1,000km2 T3 Expansion Area,” he says.
“We anticipate being in a position to commit to that expansion during project construction, with the overall goal of ramping up to the higher production rate shortly after commissioning.”
Sandfire’s news could explain why neighbouring copper explorer Cobre (ASX:CBE) got a big boost this morning.
The stock is acquiring about 8,100sqkm of ground within the Kalahari Copper Belt, right next to Sandfire and Cupric Canyon:
Ausmex Mining (ASX:AMG) is one of only a handful of gold stocks that have struggled over the past 12 months after a 15,000m drilling program at its high grade Mt Freda complex in Queensland failed to meet the hype.
But investors welcomed the news that the company is on track to start mining – and making money — in 2021.
Mining at three historic gold mines – Comstock, Falcon and Shamrock – will kick off in the first quarter.
“EARLY DRAFT, PRE-FEASIBILITY STUDY AND BUDGETS INDICATING HIGH MARGINS FROM MINING AND PROCESSING,” Ausmex hollers.
These mines are part of a group of eight that make up the Golden Mile project.
Under the terms of a JV agreement, miner Round Oak must process all the ore from the Golden Mile and any other mine that is developed within the JV tenements. That saves Ausmex a lot of cash.
Ausmex is also planning to mine its flagship Mt Freda mine during 2021.
A resource update at Mt Freda is due this month, but the company is not focused on maximising the tonnes and grades at this early stage, it says.
“Drilling up a major high tonnage resource can come from cash flow from the early mining,” it says.
“Due to the shortage of drill rigs due to the mineral boom, drilling costs have risen and the backlog of samples at the assay laboratories has been frustrating for the company, however, we are nearly thru [sic] that period and look forward to a prosperous 2021 for Ausmex.”
Gold and silver miner Austral Gold (ASX:AGD) has projects in Chile, Argentina, and the US.
Its flagship mine is the Guanaco/Amancaya project in Chile, which produced +16,000oz of gold equivalent during the third quarter of 2020: a~76 per cent increase from Q2.
Production from the mines remain on track to achieve 2020 guidance of 55,000-60,000 gold equivalent ounces, it says.
Iron ore-gold explorer CZR Resources (ASX:CZR) – formerly Corizon – recently initiated a prefeasibility study on its advanced Robe Mesa iron ore project in the Pilbara “in response to the increased demand and pricing for direct-shipping iron-ore”.
The Robe Mesa PFS is expected to be completed before the end of this year and will deliver “CAPEX, OPEX, a potential mining reserve and provide a pathway, timeline and indicative costing to move the project forward”, the CZR says.
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