Pic: Tyler Stableford / Stone via Getty Images
Resources Top 5: This lithium stock has gained an eyewatering +3,600pc in 12 months
Mining
share
- Vulcan’s Pre-Feasibility Study (PFS) on its Zero Carbon lithium project in Germany well received by investors
- Tolga’s picks African Gold and Perpetual Resources make big gains
- Metal Bank (gold) and MC Mining (coal) up on no news
Here’s your top ASX small cap resources winners in morning trade Thursday, January 14.
VULCAN ENERGY RESOURCES (ASX:VUL)
This lithium play can do no wrong.
Producing battery-quality lithium hydroxide from hot, sub-surface geothermal brines in Germany allows Vulcan to use the renewable energy by-product to fulfil all its processing energy needs.
That equals low processing costs which, coupled with its location to end users, gives it big benefits over hard rock and traditional brine extraction, the company says.
Investors are all-in on Vulcan’s story.
The share price has rocketed from 18c to $6.70 over the past 12 months, substantially outperforming its lithium peers on the ASX in the process.
That’s an eyewatering +3,660 per cent gain for some very lucky holders.
Today’s +20 per cent gain is a response to a Pre-Feasibility Study (PFS) on its Zero Carbon lithium project in Germany, which shows “reasonable” Phase 1 construction costs of about $1.09 billion.
That would take just five years to pay back, as Phase 1 is expected to have the low operating costs of ~$US3,816.30/t of lithium hydroxide.
Phase 2 is even cheaper.
Hydroxide in a still-subdued market currently sells for between $US7,950 and $US10,150 per tonne, according to Benchmark Mineral Intelligence.
That’s a nice profit margin, as long as Vulcan can find the cash to build it.
(Up on no news)
South African coal producer MC Mining did it tough in 2020.
A nationwide lockdown in March to prevent the spread of COVID-19 continued to affect the MC’s cash flows past Q3 2020.
Its share price fell ~62 per cent between March and December.
But the company remains confident it will lock in the funds to develop its flagship Makhado hard coking coal project this quarter – which could explain today’s share price action.
A nine-month construction period will follow, with first coal sales in the first half of 2022, says outgoing chief exec Brenda Berlin.
“The development of the Makhado project is supported by favourable long-term hard coking coal markets and forecast growth in worldwide steel demand, driven by global economic development and urbanisation,” she says.
“Phase 1 has an internal rate of return in excess of 40 per cent and a payback of less than 2.5 years.”
Perpetual has a high grade silica sand project called Beharra about 300km from Perth in WA.
A PFS — an early look at whether a project is economic — is now 94 per cent complete, it says.
“The Board of Perpetual remain highly encouraged by the interim outcomes of the PFS and look forward to the announcement of final PFS details in February, which will allow the economic potential of the exciting Beharra high grade silica sand project to be more widely appreciated,” the company says.
Silica sands have an extensive range of uses including construction sand, proppant sand used in well fracturing, and foundry sand.
With increasing purity, uses include semi-conductor fillers, LCD screens, and optical glass.
High profile investor Tolga reckon silica sand – and Perpetual — is a sleeper.
“The comparison is VRX Silica (ASX:VRX), which has a $200 million market cap now,” Kumova said.
“PEC is probably about six months behind VRX in terms of its work, and its project is actually an extension of their deposit that goes into PEC’s licence, which means it’s almost identical in terms of how it looks from an economics perspective.
“The demand for sand, the sand price, and the amount of people reaching out for offtake in WA is incredible – I think this is a sector and project that could really surprise.”
(Up on no news)
Another one of Tolga’s picks (he’s also on the board), this West African gold minnow recently brought in the expertise of proven mine finders Peter Williams and Simon Bolster.
Credits to their name include Papillon Resources’ Fekola gold discovery in Mali – purchased by B2 Gold for $570 million in 2014 – and Gryphon Minerals’ Banfora gold discovery which led to an $84 million takeover by Teranga Gold in 2016.
“They see multi-million-ounce potential on the licences we just acquired at A1G, and I believe in their ability to do what they’ve done before, again,” Kumova said.
This junior explorer is hunting for big gold deposits in Queensland.
In late November, drilling at the Great Eastern target at the Eidsvold project got underway.
Magnetic, geophysics, soil sampling – they all support the existence of a very large-scale intrusion related gold system at Great Eastern, the company says.
Drilling to test the nearby Forty Horse and Mt Brady targets was also to be completed before the end of the year.
Results should be back from the lab very soon.
