Sellers of Hope: How mining experts feel about the outlook for metals in 2024

Mining experts have given their take on the outlook for commodities like nickel, uranium, lithium and copper for 2024 at the WA Mining Club

Aura Energy’s Andrew Grove says the nuclear sector is growing faster than previously neglected uranium stocks can supply plants

Canaccord Genuity’s Courtney Libby says lithium could be entering counter-cyclical play territory

“Seller of Hope”: That’s how Argonaut PCF vice-chairman Liam Twigger once referred to his job trading gold mines when approached by a punter at the pub.

Chairing a panel of industry experts for the WA Mining Club yesterday of industry, those most optimistic in the mining space appear to be zeroing in on uranium and copper as the metals of the day.

Meanwhile, sold off commodities like lithium and nickel could provide hidden gains if they have indeed found their floor, amid negative sentiment that has sent the battery metals sector to the brink and sapped the space of capital.

Among the positives for the market, Twigger says, is that Australia is now the market of choice for resources capital, with a number of Canadians looking to chase money Down Under.

“The ASX has taken a global leadership position in terms of raising capital. Ten years ago it was always Canada and the Toronto Stock Exchange was the big one and we’d have some follow on here,” he said.

“But for the last five years, we’ve raised more money and you’re getting Canadians coming to Australia. And now projects in South America are getting a good hearing on the ASX.”

Courtney Libby, an investment banking associate at Canaccord Genuity, said interest from investors was coming in fastest for uranium and copper.

Uranium prices rose to post-Fukushima highs of US$107/lb last month before dropping back to US$96/lb over the past week, well above most incentive price levels. Meanwhile, copper has remained in a holding pattern at around US$8500/t as investors wait for US Fed rate cuts or Chinese stimulus to give it the boost the tightly supplied sector needs.

“There are no surprises that uranium, on the back of the uranium price doubling (is seeing money flow). We’ve done four uranium deals so far this year, we’ve just raised $30 mil for Lotus (ASX:LOT),” Libby said.

“Copper as well we’re seeing a lot of interest in particularly because there’s not a lot of options of pure play copper companies on the ASX at the moment.
We had the Metals Acquisition (ASX:MAC) IPO, which was upsized.

“We’ve had Hillgrove (ASX:HGO) start producing copper as well.”

Is nickel dead yet? Not by a long shot

Meanwhile, Lunnon Metals (ASX:LM8) MD Ed Ainscough said the nickel sector in WA was far from dead despite concerns about the fate facing BHP’s (ASX:BHP) Nickel West division after the giant miner flagged it could place the lossmaking business on care and maintenance.

Ainscough said quality resources at high grades could make money at prevailing prices of around US$17,500/t, despite concerns Indonesia’s growing supply line has structurally shifted prices down.

If BHP is to shut the Kambalda concentrator due to a lack of third party material, he suggested it should be compelled to sell it, or share the infrastructure so companies with the grade to compete in the current environment can make use of it.

“What BHP does, obviously the cards are up in the air. But to remove that uncertainty, we need some guidance. We need some decisions to be made,” he said.

“Between ourselves and say Wyloo, we’ve got about 300,000 tonnes of nickel in the ground in and around Kambalda at just under 3%. Put that in context, that’s what Nova was when it was discovered at a 1% cut off, it was about 300-odd thousand nickel tonnes at 3.4%.

“If you found Nova today it would get built. So this isn’t really much about price.

“It’s about the quality of what’s being produced and this uncertainty has created this kind of equity market capitulation.

“If they do shut it and they try and warehouse it. Again I said publicly, if they don’t value it I would more than happily to take it off their hands for $1 and use it or lose it I guess would be my grab.”

Equity flying in for uranium stocks

Aura Energy (ASX:AEE) managing director Andrew Grove, whose company has a large permitted project at Tiris in Mauritania with prices suddenly returning to levels that could underpin new investments, said equity markets had turned sharply for uranium stocks.

He said the factors that led to the surge in prices in the past 12 months, including short and long term supply shortages and an ambitious nuclear capacity build out globally led by India and China, had not gone away.

“They’re building again the capacity we’ve got now in the next 15-20 years. So there’s a strong growth in nuclear power which reflects in the price of uranium,” he said.

“And given that we’ve been sitting at sub US$30 for 10 years there’s been no exploration, no new mines no invested capital into the existing operations.

“It’s a big catch up and whether they can catch up with that growth remains to be seen.”

Canaccord’s Libby predicted there would be more M&A in uranium as the bull cycle evolved and companies looked to stake a claim in the commodity or grow their market share.

She also sees more corporate activity on the cards from gold miners looking to pick up resources near their mills and potentially in lithium, where prices appear to have bottomed at US$850/t for 6% Li2O spodumene concentrate in recent weeks.

“We believe in the EV thematic, so that mid to longer term we still believe there will be a turnaround and it just gives a chance … for people to be counter cyclical at the moment but all the supply demand thematics, they all still stack up,” she said.

At Stockhead, we tell it like it is. While Aura Energy was a Stockhead advertiser at the time of writing, it did not sponsor this article.