Now’s The Time to Shop for Lithium Stocks: Southam Says

THE CONFERENCE CALLER: Lithium explorers are feeling down and out due to a slump in prices but one managing director says that’s the perfect time to buy. By Kristie Batten

According to Bell Potter Securities, most lithium stocks were down 30-40% in January.

Cygnus Metals (ASX: CY5) is one of those, down 42.5% in January.

But managing director David Southam has seen this all before, having been a director of lithium success story Kidman Resources before it was sold to Wesfarmers in 2019 during the last “lithium winter”.

“If there’s ever a time to be looking at lithium stocks, now is the time to look into it,” he told attendees of the 2024 RIU Explorers Conference in Fremantle.

Cygnus has a market capitalisation of just $20 million but is quietly working to tick off milestones at its three lithium projects in Canada.

A key achievement last year was the announcement of a 10.1 million tonne at 1.04% lithium oxide maiden resource at the Pontax project.

Southam pointed out the resource was delineated after just 10,000m of drilling.

“We’ve got 44 kilometres of strike and we’ve really only tested a couple [of kilometres] so there’s plenty more to be found there,” he said.

“We’re drilling there now.”

Pontax is just 30km south of Arcadium Lithium’s James Bay project, which is North America’s largest lithium deposit.

Cygnus says the almost identical mineralogy between the two deposits indicates the same or similar source granite.

The company also owns the earlier stage Auclair project, which is 60km from the 55.7Mt Whabouchi deposit.

Spodumene-bearing pegmatites have been confirmed over a 6km strike length.

Further field work, including soil sampling, is underway across the large land package.

“It’s not necessarily sexy, but with 416 square kilometres, it’s how you pinpoint where to explore,” Southam said.

Cygnus’ third James Bay lithium project is Sakami, which is just 44km from Patriot Battery Metals’ Corvette discovery.

The project has never been explored for lithium and initial work was cut short by last year’s wildfires in the region.

Cygnus’ 823 square kilometre landholding in the James Bay lithium district makes it the largest ASX-listed landholder in Quebec.

“We’re also next to large deposits,” Southam said.

“All the major companies are in the region but exploration is something which is missing in all of their portfolios.”

Cygnus has also made a clay-hosted rare earths discovery at Bencubbin in Western Australia.
“This is really flying under the radar,” Southam said.

The company has discovered large-scale rare earth element enrichment over a 22km strike length and is now awaiting metallurgical test work from ANSTO.


Spartan Onto ‘Something Special’ at Never Never

THE CONFERENCE CALLER: Spartan Resources (ASX: SPR) was feeling the love at the RIU Explorers Conference after announcing visible gold in its deepest hole to date at the Never Never gold deposit in Western Australia. By Kristie Batten

On a down-day for ASX gold stocks, Spartan shares jumped nine per cent.

Drilling hit 20.5 metres of what the company described as “typical” Never Never-style mineralisation, with indicative heavy silicification and biotite-chlorite alteration from 871.5m down-hole.

The core included small specs of visible gold at 878.7m down-hole.

The intercept is located down-plunge and more than 170m below the current Never Never resource of 952,000 ounces at grading 5.74 grams per tonne gold.

Spartan managing director Simon Lawson told RIU delegates the deposit was now the height of the world’s tallest building, the Burj Khalifa in Dubai.

“We’re pretty confident it keeps going,” he said.

“The consistency of this deposit is unlike anything I’ve ever seen in my 20 years of experience.”

Spartan has five drill rigs on site at Never Never ahead of a resource update due mid-year.

Lawson said the company’s focus for 2024 was drilling to de-risk the project.

“I’m not going to apologise for that,” he said.

“We will continue to de-risk the project.”

Spartan is no stranger to risk after having to suspend the Dalgaranga gold plant in 2022, which was processing circa one gram per tonne dirt.

What followed was a difficult recapitalisation in early 2023.

“We didn’t have a lot of friends back then,” Lawson said.

But the struggling company drilled just 600m from the plant and discovered Never Never, which proved to be a game-changer.

“It’s substantial vindication for why we made those tough calls,” Lawson said.

Other new high-grade results reported today included 15m at 6.06g/t gold from 358m, including 3m at 23.65g/t outside the resource at Four Pillars, and 23.8m at 2.44g/t gold from 379m, including 5m at 5.23g/t at Sly Fox.

A new exploration target for the project is due by the end of the month.

Spartan is targeting a reserve estimate of at least 300,000 ounces at more than 4g/t gold, which will put it on the path to achieve its goal of a minimum five-year high-grade mine plan.


Odyssey Gold Increases Tuckanarra Mineral Resources

THE DRILL SERGEANT: Odyssey Gold (ASX: ODY) released an updated Mineral Resource Estimate (MRE) for the company’s Tuckanarra project in the Murchison Goldfields of Western Australia.

The updated MRE incorporates a new MRE for the Highway Zone based on results from diamond drilling completed in November 2023.

The Tuckanarra MRE now totals 5.14 million tonnes at 2.5 grams per tonne gold for 407,000 ounces of gold (above a 0.9-2.0g/t Au cut-off).

The new MRE for the Highway Zone comprises and Inferred resource of 0.79 million tonnes at 3.8g/t gold for 97,000 ounces of gold.

Recent drilling at the Highway Zone highlighted underground potential with a high-grade shoot intersected over 150m of strike, including:

7.35 metres at 9.5g/t gold, 11m at 7.8g/t gold and 12m at 6.5mg/t gold.

“This resource upgrade demonstrates the potential for continued growth of shallow oxide resources and also the addition of high-grade underground mineralisation,” Odyssey Gold director Matthew Briggs said in the company’s ASX announcement.

“We have increased our overall resource grade to 2.5g/t gold, and the maiden underground resource for the Highway Zone contains a substantial 65,000 ounces at 5.8g/t gold.

“This underground resource grade is double the grade of underground resources being mined nearby.

“Targeted drilling at Highway Zone highlights the predictability of the high-grade shoot and 150m of strike.

“Additional drilling is planned to delineate continuing extensions of the resource along strike and at depth.

“Odyssey will continue to systematically unlock the value and true potential of this asset through further targeted drilling programs as we aim to build on this very solid foundation.”




Accelerate Resources Confirms Strong Prinsep Lithium Mineralisation Continuity

THE DRILL SERGEANT: Accelerate Resources (ASX: AX8) recently completed an infill and extensional rock chip sampling program at the company’s 100 per cent-owned Prinsep lithium project in Western Australia.

Accelerate Resources reported that results from the sampling program had confirmed the continuity of lithium mineralisation across the mapped width extent of the main northern pegmatite to 60 metres, and increased the eastern strike extent of known mineralisation by an additional 300m to 1.5 kilometres northern pegmatite trend.

The company describes the Prinsep lithium project as an advanced drill-ready exploration project just to the south of Karratha and a stone’s throw (35km) from Azure Minerals’ (ASX:AZS) Andover lithium discovery.

“We continue to be excited by the high-grade lithium results from our recently completed sampling activities at the Prinsep project, which is located in the Karratha-Roebourne hard-rock lithium belt that also hosts Azure Minerals’ Andover lithium discovery,” Accelerate Resources CEO Luke Meter said in the company’s ASX announcement.

“Results from the four north-south rock chip sample traverses over the Prinsep northern pegmatite, as well as extensional sampling, have now extended the known mineralisation at Prinsep beyond 1,500 metres.

“Importantly, these latest assays continue to clearly demonstrate the continunity and potential scale of the Prinsep lithium discovery in the West Pilbara, which gives us great confidence and momentum as we advance towards our maiden drilling program scheduled for early Q2 this year.”




Experts Provide Crucial Tips for Juniors to Heed in 2024

THE CONFERENCE CALLER: Experts at the RIU Explorers Conference in Fremantle have offered some advice to juniors for the year ahead. By Kristie Batten

The market for juniors has deteriorated since the start of January, though the strong turnout at the conference is a sign there’s still plenty of interest.

ANZ relationship manager – junior resources Tim Robertson said there was one word to sum up the year ahead: volatile.

The bank forecasts little upside in battered lithium or nickel.

For lithium, ANZ expects production to rise by 40% this year, while demand will only increase by 25%.

“We could see further lithium projects being deferred or existing projects curtailed,” Robertson said.
On the macroeconomic front, the US election will be a key theme of 2024.

“The $64 million dollar question is this: what would a second Trump presidency look like?”
Robertson posed.

While there’s speculation Trump would repeal the Inflation Reduction Act, Robertson noted that two thirds of the IRA money to date has gone to Republican districts.

“You could mount an argument that Republicans, rather than Democrats, are benefitting from the IRA,” he said.

“It poses a conundrum for Trump.”

Interest rates and inflation will be another area to watch in 2024.

Robertson warned juniors with decent cash balances to manage them carefully.

“For juniors with cash balances, unfortunately interest rates coming down is not so good,” he said.

Geopolitical turmoil and reducing interest rates are likely to benefit the gold price and Robertson said ANZ expected the price to average above US$2000 an ounce.

BDO corporate finance partner Adam Myers said there should be a pick-up in merger and acquisition activity, based on the number of inbound inquiries being received.

Already during the conference, Horizon Minerals and Greenstone Resources have announced a merger and Hammer Metals and Carnaby Resources have confirmed merger discussions.

Hamilton Locke partner, corporate Jeremy Newman warned juniors to get their market compliance and disclosure right.

“If you get the little things right, it improves your reputation with investors and the regulator and makes the big things easier,” he said.

“The ASX is particularly active in a quiet market so we can expect a more interventionist ASX in 2024.”

Newman said areas of focus for the ASX was visual mineralisation estimates, production targets, scoping studies and acquisitions.

The inclusion of the term “bag of dicks” in the JORC tables of Great Boulder Resources’ announcement last week led Newman to his final piece of advice.

“A gentle reminder to proof-read your tables.”



Hot Lithium Stock Kali Metals Debuts at RIU Explorers Conference

THE CONFERENCE CALLER: ASX newcomer Kali Metals (ASX: KM1) announced its highest-grade lithium results yet ahead of its first presentation as a listed company. By Kristie Batten

Kali Metals listed on the ASX on January 5 after a heavily oversubscribed initial public offering that closed within hours, raising $15 million.

“And we could have raised that several times over,” managing director Graeme Sloan told the RIU Explorers Conference in Fremantle.

A spin-off of Kalamazoo Resources and Toronto-listed Karora Resources, Kali attracted attention when ASX 100 lithium and iron ore producer Mineral Resources invested in the IPO.

MinRes held just under 10% of Kali when it listed and has increased its stake to 14% since via on-market purchases.

Kali owns ground in the Higginsville lithium district, just south of MinRes and Ganfeng Lithium’s operating Mt Marion mine and to the northwest of MinRes’ newly acquired Bald Hill mine.

The company had reported rock chip samples grading up to 3.69% lithium oxide at its Spargoville project but bettered that today with a rock chip grading 5.05% from the Flynn-Giles prospect.

“They’re some big numbers,” Sloan said.

Flynn-Giles sits within a 2km-long soil anomaly.

Other new results reported today included 2.64% lithium oxide at Flynn-Giles and 2.57% at the Parker-Grubb anomaly to the west.

“This area is certainly looking very good for us,” Sloan said.

At the Widgiemooltha project, the company also reported rock chip results of more than 2% lithium oxide at two separate prospects.

Soil sampling will continue across eight prospects at Higginsville with reverse circulation drilling to begin at Spargoville later in the current half.

Kali also has ground in the Pilbara, a region Sloan describes as “the land of the giants”.

Its DOM’s Hill and Marble Bar projects are adjacent to Pilbara Minerals’ Pilgangoora and MinRes and Albemarle’s Wodgina mines.

Those projects are subject to a joint venture with Chilean lithium giant SQM, which can earn 70% by spending $12 million over four years.

On the east coast, Kali has tenements in the Lachlan Fold Belt.

All up, the company holds 3854 square kilometres of ground, in what Sloan describes as one of the best hard rock lithium exploration packages in Australia.

“If you want to take something away, it’s that massive land package.”



Rox Resources Identifies High Priority Mt Fisher-Mt Eureka Gold Targets

THE DRILL SERGEANT: Rox Resources (ASX: RXL) will have an orderly queue forming at its booth at the RIU Explorers Conference this morning after announcing results from recently completed geophysical Gradient Array Induced Polarisation (GAIP) surveys at the company’s Mt Fisher and Mt Eureka projects in Western Australia.

Rox owns 100 per cent of the Mt Fisher gold project and the 51 per cent gold rights (rights to earn up to 75%) of the Mt Eureka gold project, both of which are located in the Northern Goldfields of WA.

The projects are at an advanced exploration stage with an existing gold Mineral Resource of 187,000 ounces of gold defined at Mt Fisher – Mt Eureka with much exploration upside identified across the broader tenement package.

Rox completed six Gradient Array Induced Polarisation (GAIP) geophysical surveys at the projects.

Each of the GAIP surveys were designed to advance the project exploration pipeline by defining potential sulphide-rich chargeability anomalies that represent drill-ready targets along the known gold mineralised trends.

The geophysical surveys identified multiple walk-up drill targets, located along strike from known gold mineralised trends that are characterised by high-sulphide content consistent with the causative geology of GAIP anomalies.

“The geophysical surveys conducted recently at Mt Fisher and Mt Eureka have highlighted a number of walk-up drill targets,” Rox Resources managing director Robert Ryan said in the company’s ASX announcement.

“The surveys have detected potential sulphide-bearing structures, which could host gold mineralisation as seen elsewhere in the tenement package.

“The 1,150 square kilometres tenement package represents a district-scale exploration opportunity for both gold and nickel sulphides, that Rox will continue to advance in order to generate value for our shareholders.”




Hammer Metals Welcomes Sumitomo JV Continuation

THE DRILL SERGEANT: Hammer Metals (ASX: HMX) should be taking questions without notice at the RIU Explorers Conference this morning after announcing it is in confidential discussions regarding a potential merger with Carnaby Resources (ASX: CNB).

Hammer Metals said discussions at this stage remain confidential and incomplete and are at a relatively early stage, adding that there is no certainty that a transaction between the companies will eventuate.

The company released another announcement regarding recent exploration activities and the status of its Mount Isa East Joint Venture with Sumitomo Metal Mining Oceania (SMMO) in North Queensland.

Hammer explained that SMMO has reached a milestone $6 million of exploration expenditure under the JV and has now elected to continue funding the joint venture.

However, Hammer signalled its intention to dilute its interest in the JV in order to preserve capital to focus on its 100 per cent-owned prospects.

“We are very pleased that our partner in the Mount Isa East Joint Venture, Sumitomo Metal Mining Oceania, has elected to continue to fund the JV after reaching the $6 million earn-in milestone,” Hammer Metals managing director Daniel Thomas said in the company’s ASX announcement.

“This is another important and positive milestone for our Mount Isa exploration efforts and secures the continued support of Sumitomo Metal Mining as a valued strategic partner in this part of our portfolio.

“Importantly, this will ensure that we have ongoing funding for exploration activity within the JV, with the first cab off the rank being the start of drilling in early March at the high-priority Shadow South IOCG target.

“This is a large and compelling IOCG target with significant geophysical, geochemical and geological characteristics.

“We are looking forward to seeing what this drilling can deliver.

“We have also now received all of the assay results from drilling completed late last year across multiple prospects within the Mt Isa East JV.

‘The results included several relatively narrow but very high-grade and broad spaced mineralised intercepts, several of which are considered to be worthy of further follow-up.”




Azure Minerals Reports More Impressive Lithium Results from Andover

THE DRILL SERGEANT: Just to underline why it was a worthy winner of The Graig Oliver Award at the RIU Explorers Conference, Azure Minerals (ASX: AZS) reported more lithium intersections from its Andover project in Western Australia.

Azure Minerals released assays it said continued to demonstrate drilling success at Target Area 1 (TA1) with the intersection of numerous exceptionally thick spodumene-bearing intervals within the AP0011 pegmatite.

Multiple broad (>100m) mineralised intersections were returned from AP0011 pegmatite, including:

112.9 metres at 1.63 per cent lithium oxide (Li2O) from 408.5m (~107.0m True Width), including 24.6m at 2.17 per cent Li2O from 424.7m (~23.3m True Width);

152.3m at 1.15 per cent Li2O from 330.7m (~137.1m True Width), including 34.7m at 1.73 per cent Li2O from 331.6m (~31.2m True Width); and

112.0m at 1.24 per cent Li2O from 299.1m (~73.5m True Width), including o 40.6m at 1.55 per cent Li2O from 360.1m (~26.6m True Width).

“The latest assay results from diamond drilling of the AP0011 pegmatite have returned some of the thickest and highest-grade mineralised intersections received to date,” Azure Minerals said in its ASX announcement.

“Importantly, these assayed intervals correlate very strongly with previously reported visual spodumene observations.”

Azure has eight drill rigs currently operating at the project’s TA3 target to continue extensional drilling to define the extents of the mineralised pegmatites and infill drilling to provide sufficient density to support a maiden Mineral Resources Estimate.

A ninth diamond rig is still turning at AP0011 to undertake large diameter core drilling to provide bulk samples for the metallurgical test work program.





Will Lithium Money Funnel Back to Gold?

THE CONFERENCE CALLER: The lithium price rout and associated decline in equities could be an opportunity for the long-struggling junior gold space. By Kristie Batten

That was the view of the Canaccord Genuity team during the opening panel discussion at the RIU Explorers Conference in Fremantle.

While the price of lithium declined by 85% in 2023 and has continued to decline, the gold price was the second-best performer (behind uranium) and has tested new highs already this year.
Canaccord is bullish on gold for 2024.

“The macro paints a reasonably strong picture for it to be potentially reaching new highs this year,” Canaccord gold analyst Tim McCormack told delegates.

McCormack sees little chance of US debt dropping and gold had typically performed well coming out of an interest rate-hike cycle.

He also noted that while the Australian dollar gold price was up $500 an ounce over the past year, the share prices of the larger ASX-listed producers were flat to slightly lower.

“There’s a really big disconnect in those prices,” McCormack said.

“You kinda scratch your head about that a bit.”

McCormack said the average generalist fund remained underweight gold.

“You’re having a situation where there has been a very legitimate pool of money into other sectors – lithium and things like that – and that is diminishing in my view,” he said.

“And hopefully that results in a focus back into the gold sector and will funnel money back into that sector as well.”

On lithium, Canaccord analyst Tim Hoff said pricing could remain depressed for the next 9-12 “or maybe 15” months due to a “wave of supply”.

However, he said demand was still strong, albeit potentially delayed.

“The thematic is still in place,” Hoff said.

Hoff said the mainstream media was running the line that the electric vehicle revolution was dead.
“That couldn’t be further from the truth,” he said.

Hoff added that the notion that hydrogen would be used for transportation and displace lithium was “absolute rubbish”.

Meanwhile, McCormack said that attending conferences like RIU provided a potential opportunity to be ahead of the market, though it was difficult.

“The reality is the Azures, the Gruyeres, the Tropicanas don’t come around often,” he said.

McCormack said he was early into De Grey Mining in late 2019/early 2020 but it wasn’t a regular occurrence.

He noted most investors were late to the party on discoveries and didn’t catch on until the share price had doubled or tripled.

“Don’t be put off by that if it’s a true tier one discovery,” McCormack said.

McCormack looks out for three key factors when looking at mining stocks: asset, management and jurisdiction.

Canaccord has been supporters of leaders like Bill Beament, Raleigh Finlayson and Mark Clark.

“You sort of close your eyes and say ‘take my money’ – those guys deserve it,” McCormack said.