Resources Top 5: ‘Transformational’ acquisitions and the hunt for a golden clone bears fruit
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Here are the biggest small cap resources winners in morning trade, Wednesday August 4.
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This small South African coal producer says prices for thermal – the stuff used in power plants – continues to increase.
“The API4 forward curve is currently trading at approximately over $US120 per ton for July 2021 and predicts an average selling price of $US115 for the next 12 months,” it said on July 30.
The company – which has just $214,000 in the bank — aims to ramp up its throughput to 75,000 tonnes a month in the September quarter.
A new acquisition will turn Bowen into “a significant multi-mine coking coal producer”, the $97m market cap stock said today.
A deal was signed with New Hope Corp (ASX:NHC) for 90% of the Lenton JV in NSW, which includes the mothballed ‘Burton’ mine and associated infrastructure, plus the high-quality ‘New Lenton’ development project.
These assets have a replacement value of ~$300m, the company says.
Bowen will pay $20m upfront (of which $10m can be cash or scrip at Bowen’s election) plus potential milestone and royalty payments up to the maximum value of $77.5m.
This delivers on Bowen’s strategy to be the “next leading independent ASX coal producer” – targeting production of approximately 5mtpa by 2024.
“This will be a transformational acquisition for Bowen Coking Coal that delivers on our strategy to create the next significant coking coal producer in the Bowen Basin,” executive chairman Nick Jorss says.
“The Burton mine has a proven track record, with over 18 years of uninterrupted production up until 2016 producing a coking coal brand that was known for its high quality, low ash and low sulphur.
“We look forward to bringing the Burton brand back to the seaborne market as we play our part in supplying this critical mineral into the steel industry as annual steel demand looks set to grow substantially through to 2050.
“This acquisition presents a great opportunity to generate substantial value for Bowen shareholders for many years to come.”
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A maiden 3000m drilling campaign at the historic Sala project in Sweden is off to a great start, with exceptionally high grades of silver and zinc intersected in the first hole.
Announced yesterday, the hole returned an interval of 0.95m grading 348 grams per tonne (g/t) silver, 12.2% zinc and 5.9% lead from a depth of 592.58m within a broader zone of 6.8m at 123g/t silver, 2.3% lead and 1.4% zinc from 589.75m.
Importantly, the mineralisation is adjacent to the historical Sala mine that produced over 200 million ounces of silver at an average grade of 1,244g/t.
In June, Alicanto sold a non-core gold project for $5.1m to help fund ‘aggressive’ exploration at Sala and the nearby Greater Falun project in Sweden.
Alicanto is knee-deep in a three-rig, 20,000m drilling program to find a ‘company maker’ at Greater Falun, along strike from the historical Falun mine which produced 28 million tonnes at 4% copper, 4g/t gold, 35g/t silver, 5% zinc and 2% lead.
The explorer’s belief that there is a repeat of the historical ‘Twin Hills’ gold mine on their ground is looking more likely by the day.
Twin Hills recorded historical production of 1,100 tonnes of ore at a very high average grade of 23.6 g/t. These days, anything above 5g/t is considered high grade.
New drilling by eMetals around the old WA mine just pulled up a very nice 5m at 23.67g/t, 62m from surface.
Further drilling is scheduled along the southern and northern extent of this discovery hole, eMetals says.
“We have sought a repeat of the historical Twin Hills gold mine on the tenement and are delighted with the early success,” director Mathew Walker says.
“Exploration of the company’s earlier auger anomalies has led to a highly encouraging strike of high-grade gold at shallow depths.
“Further work is planned to follow up this result which remains open to the south, and potentially to the north.”
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Greenland is a high-risk, high reward rare earths/uranium play.
Progressing its mammoth ‘Kvanefjeld’ project in southern Greenland to production is dependent on getting regulatory approvals from a new government and the local community — both who don’t appear to like the idea very much at all.
The public consultation phase for Kvanefjeld has been extended to 13 September 2021, the company said late July.