Future Metals Positioning for PGM Rebound

THE CONFERENCE CALLER: While platinum and palladium prices are trading at cyclical lows, Future Metals (ASX: FME) says it will be ready when prices eventually recover. By Kristie Batten

Future Metals owns the Panton project in Western Australia’s Kimberley region, which has a resource of 92.9 million tonnes at 2 grams per tonne palladium equivalent for 6 million ounces of contained palladium equivalent.

Its current operational plan is based on a resource of 37.2 million tonnes at 3.3 grams per tonne palladium equivalent for 3.9 million ounces, including a high-grade component of 10.8Mt at 7g/t palladium equivalent for 2.4Moz.

“You simply do not find grades this big in the Western world,” Future Metals executive chairman Patrick Walta told the RIU Explorers Conference in Fremantle.

“That grade … is massive and it affords us a lot of flexibility and the ability to get a big operation up and running in a tier one jurisdiction.”

There has already been more than $50 million spent at Panton, including a 500 metres decline, which Walta said shortened the time frame to production.

A scoping study outlined capital costs of $267 million for an operation producing 117,000 ounces per annum of platinum group metals, as well as 1200 tonnes per annum of nickel and 134,000tpa of chromite, at all-in sustaining costs of US$789 an ounce over nine years.

That would make Panton a top five PGM producer in the Western world, which Walta said made the company and project “investable” and gave it credibility.

“At the moment, PGM prices are low but that’s fine – we don’t want to be a producer right now,” he said.

“In fact, we’re quite happy to see production coming out of the market.”

Under the base case scenario, the scoping study returned a post-tax net present value of $153 million, internal rate of return of 21% and a payback period of 4.1 years.

Using a five-year average PGM price case increased the NPV to $311 million, the IRR to 31% and the payback period to 3.2 years.

Palladium is currently trading at around a six-year low and consultancy Metals Focus expects prices to remain under pressure this year.

Last week, ANZ noted that platinum looked inexpensive against the backdrop of a growing market deficit.

The bank is bullish on platinum and neutral on palladium, but said it expected palladium prices to recover.

Walta said that at the current PGM basket price, 40% of producers were underwater.

“The top quartile is haemorrhaging cash, supply is being stripped out of the market,” he said.

“A lot of that top quartile is old, deep, South African mines that were really propped up by really high prices over the past couple of years – they shouldn’t be in production, and they won’t be.

“The curve will change; supply will be stripped out of the market.

“It’s a story as old as time – the cure for low prices is low prices.

“We will be ready for that price rise.”

 

Hamelin Gold Excited by Multiple Tanami Prospects

THE CONFERENCE CALLER: Greenfields explorer Hamelin Gold (ASX: HMG) is hopeful of making the next major discovery in Australia’s elusive Tanami province. By Kristie Batten

Hamelin Gold’s 3500 square kilometres of ground makes it the dominant landholder on the Western Australian side of the Tanami.

Its ground sits directly along strike from Newmont Corporation’s 20 million ounce Callie mine, part of the world-class Tanami operations.

“It’s odd in an orogenic belt to have such a giant and not a string of 2-5 million ounce deposits within the same province and that’s the sort of scale opportunity we believe that Hamelin Gold has,” managing director Peter Bewick told the RIU Explorers Conference in Fremantle last week.

The reason, Bewick suggested, that another giant had not yet been found, as due to there being little to no outcrop in the region and extensive sand cover.

“You could hide pretty well anything under there,” he said.

“Given Callie has such a small footprint, we think there’s ample opportunity to hide a few Callies in 3500 square kilometres.”

Bewick said exploration is in Hamelin’s DNA.

Given the difficulty and expense of exploring in the Tanami, Bewick acknowledged the company had to be good at prediction and detection.

“Without going broke drilling holes all over the place,” he added.

The company has turned to technology to assist.

Use of CSIRO’s “groundbreaking” Ultrafine soils technology has already yielded results, identifying two large soil anomalies in the Sultan gold corridor.

Initial drilling returned an “outstanding” 7.6m at 3.2 grams per tonne from 326.2m, including 1.1m at 15.9g/t gold.

“One thing we generated was a beautiful 1km gold anomaly under sand cover with a 700m-long bedrock gold anomaly underneath,” Bewick said.

“We’re super excited to get an RC rig out here.

“This is the sort of footprint that could be sitting over a major gold system.”

However, it’s not the gold potential that caught the eye of the world’s largest miner.

Hamelin drilled a hole into a “rather weird-looking magnetic anomaly” called Hawkeye.

“What we got was not what we expected,” Bewick said.

The hole hit magmatic nickel-copper sulphides.

“It’s the first time this style of mineralisation has been identified in the Tanami,” said Bewick.

It was that result which prompted Hamelin to apply for BHP’s exploration accelerator Xplor.

Last month Hamelin found out it was one of six successful applicants out of a total of 529 companies and prospectors who applied.

As part of the program, Hamelin will receive up to US$500,000 of non-dilutive funding from BHP and receive mentoring and technical support.

There’s also the potential for additional investment and partnerships down the road.
“We’re pretty excited they’re excited,” Bewick said.

“If it’s of interest to BHP, it could be fascinating for our shareholders.”

Hamelin is well-placed for a junior explorer. Aside from the interest from BHP, global major Gold Fields and ASX 200 producer Silver Lake Resources each hold 15 per cent of the company.

Hamelin’s current market capitalisation of $11.9 million and healthy cash balance of $5.2 million (at December 31), gives it an enterprise value of just $6.7 million.

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.

 

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.”

 

 

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.

 

Azure Minerals Wins Prestigious Craig Oliver Award

THE CONFERENCE CALLER: Lithium takeover target Azure Minerals has been named as the recipient of the 2024 Craig Oliver Award. By Kristie Batten

The award, handed out this morning on day one of the 2024 RIU Explorers Conference in Fremantle, is in honour of mining executive Craig Oliver, who died in a plane crash in 2010.

His youngest daughter Sascha was on hand to present the award.

Azure Minerals managing director receives the award from Sascah Oliver flanked by Jaxon Crabb and Stewart McDonald of the RIU Explorers Conference 

Azure beat out other nominees Genesis Minerals, Boss Energy and Santana Minerals.

Accepting the trophy, Azure managing director Tony Rovira pointed out that the award wasn’t for exploration or production but a true all-rounder award.

“I think Azure this year has certainly met the criteria,” he said.

Azure had been exploring in Mexico for many years but pivoted back to Western Australia in 2020 with the Andover nickel-copper project, a 60:40 joint venture with legendary prospector Mark Creasy.

“For a company to be successful, you need a vision,” Rovira said.

The vision switched to the lithium potential of Andover, and as they say, the rest is history.
Andover has an exploration target of 100-240 million tonnes at 1-1.5% lithium oxide, which, if realised, would make the deposit globally significant.

Previous winners of the Craig Oliver Award are OZ Minerals (2023), De Grey Mining (2022), Bellevue Gold and Chalice Mining (2021), Stavely Minerals (2020), MOD Resources (2019), Pilbara Minerals (2018), Evolution Mining (2017), Metals X (2016), Doray Minerals (2015), Northern Star Resources (2014), Sirius Resources (2013), Silver Lake Resources (2012) and Independence Group (now IGO, 2011).

OZ, MOD, Doray and Sirius have since been acquired, while Silver Lake is now merging with Red 5.

Azure is also subject to a A$1.7 billion takeover offer from Chile’s SQM and Gina Rinehart’s Hancock Prospecting.

It’s rare for large companies to pounce on a pre-resource explorer but they clearly see Andover’s potential.

Azure reinforced that potential today by announcing new drilling results including 112.9m at 1.63% lithium oxide; 152.3m at 1.15% lithium oxide; and 106.1m at 1.3% lithium oxide.

A maiden resource estimate is due by mid-year.

 

Explorers Conference Set to Ignite 2024

THE CONFERENCE CALLER: The market for junior explorers may have been a touch gloomy so far in 2024 but if there’s one thing the sector has demonstrated time and time again, it’s resilience. By Kristie Batten

In the final months of 2023, gains in the junior sector were driven by frenzied interest in the lithium market, which has since cooled as the lithium rout hits operating mines.

“The good performance in December, when we seemed to have turned the corner, has been met with a baseball bat in January,” Far East Capital’s Warwick Grigor noted recently.

“That has come as a surprise to most of us, including me.”

Grigor noted the large-cap mining stocks were performing well but wondered when that might trickle down to the juniors.

“The failure of many zombie stocks might clear the decks, but it will still hurt the confidence of those who have been hoping for a recovery,” he said.

“Another bout of fundraising on any recovery in share prices will divert liquidity into those issues.”
Grigor said finding the next crop of outperforming stocks would be more rewarding than waiting for a recovery.

 

RIU Explorers Conference

 

As well as being one way to find the next hidden gem, the RIU Explorers Conference, being held in Fremantle next week, will be a great measure of sentiment in the small to mid-cap arena.

The line-up includes 90 company presentations, spanning from the smallest of microcaps through to ASX 200 producers. There’s sure to be something for everyone with gold, lithium, copper, nickel, rare earths, uranium, high-purity alumina, graphite, zinc, cobalt and even helium represented.

The event will also feature keynotes from Canaccord Genuity, Hamilton Locke, ANZ, BDO, BHP Xplor, ABC Refinery, S&P Global Market Intelligence, ERM Australia Consultants, SRK Consulting and Noah’s Rule.

Day one will see the presentation of the Craig Oliver Award, which has been handed out since 2011 in honour of the late Sundance Resources finance director.

This year’s nominees are nickel-copper explorer-turned-lithium explorer and takeover target Azure Minerals, newly minted uranium producer Boss Energy, ASX 200 gold sector newcomer Genesis Minerals and high-grade New Zealand gold explorer Santana Minerals.

Despite the subdued market for juniors so far in 2024, organisers Vertical Events are expecting more than 2000 delegates in Fremantle next week, including a strong interstate and overseas contingent.

 

The state of exploration

According to S&P Global Market Intelligence, global non-ferrous exploration budgets were fairly steady in 2023 after reaching a nine-year high in 2022.

Budgets last year fell by just 3% to US$12.8 billion. Gold budgets dropped by 16%, offset by a jump in exploration for green metals, including a 77% surge in lithium budgets.

Copper budgets rose by 12% to $3.12 billion, the biggest year-over-year jump since 2014, and the third consecutive year of double- digit percentage growth, while nickel budgets rose by 19%.

Budgets for grassroots exploration fell by 9.8% due to a tightening of equity markets making it harder for juniors to raise money.

S&P expects exploration budgets in 2024 to remain steady once again though if current financing conditions remain as they are, a sub-5% fall in budgets this year would be the most likely scenario.
However, it only takes one discovery to rev up a weak market.

Sirius Resources surged by more than 4000% in 2012 – during a bear market – when it announced the discovery of the Nova nickel-copper deposit.

Similarly, Chalice Mining announced the discovery of the Julimar nickel-copper-platinum group element deposit on the same day as the COVID-19 global market crash in 2020. At its peak, Chalice shares were up nearly 5000% and to this day, it remains the only pre-resource explorer ever to crack the ASX 200.

With drilling rates still at elevated levels, the next discovery could be just around the corner. And as they say, a rising tide floats all boats.

 

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