Sheffield gets Thunderbird mineral sands lease; shares hit new high
Sheffield Resources has been granted a mining lease for its “Thunderbird” mineral sands project in northern Western Australia, paving the way for construction to begin.
That leaves environmental approval — expected this month — as the project’s final hurdle.
This morning the stock lifted 7 per cent to hit a new high of $1.275 before cooling to $1.21 just after 11am AEST.
Analyst Paul Hissey from Royal Bank of Canada gives Sheffield an ‘outperform’ rating and a share price target of $1.50.
“The receipt of the mining lease for Thunderbird is positive, and in our view, investors should consider permitting to now be a formality,” Mr Hissey said.
“Native Title negotiations proceed in parallel, and SFX has involved relevant stakeholders throughout the process to ensure its social license to operate is maintained.
“With A$95m of loan facilities secured by the Northern Australia Infrastructure Facility and permitting nearing a completion, we retain a constructive view on the Thunderbird Mineral Sands Project given its long life/low cost metrics for investors seeking exposure to the mineral sands space.”
Zircon demand remains strong
Global zircon supply is declining at a rate of about 4.7 per cent each year through to 2026 – demand is forecast to grow 2.8 per cent each year over the same period.
Sheffield, which is targeting initial production in 2019, says zircon will account for over 60 per cent of revenue from Thunderbird.
Mr McFadzean told Stockhead at last month’s annual Diggers & Dealers mining conference in Kalgoorlie, WA that Sheffield has already locked in binding supply agreements for all of its zircon and is in the process of squaring away deals for its ilmenite.
“So 77 per cent of our gross revenue for the first five years is now locked away in binding contracts,” Mr McFadzean said.
“On top of that we’re now just finalising our ilmenite, or our titanium feedstock. So we anticipate being around that 90 per cent of gross revenue under binding take or pay contracts within a couple of months.”