Resources Family Feuds as Fledgling Minerals Mature

COMMODITY CAPERS: Gold, it seems, has become the wayward child of the Australian Resources family as siblings copper, lithium and battery minerals, grab investor attention.

It could be said that Gold is presently demonstrating many ‘oldest child syndrome’ symptoms.

It has demonstrated over-achiever tendencies in recent times with USD prices averaging $1,933 (approx. A$2978) an ounce in the first half of 2023.

The high Australian dollar gold prices resulted in an increase to Australia’s gold exports by 7.6 per cent year-on-year to $13 billion in the first half of 2023.

In the first half of 2023, Australia exported US$4.1 billion worth of gold to China, a rise of 28 per cent year-on-year while exports to other financial hubs, including the US, UK, Switzerland, Hong Kong and Singapore produced a combine worth of US$6.6 billion — a 6.2 per cent increase year-on-year.

It hasn’t all been positive news on the Australian gold front, however, with the local industry producing just 149 tonnes of mined gold in the first half of 2023, down by 2.6 per cent year-on-year, a fall that was mainly attributed to heavy rainfall in the Northern Territory, as well as northern parts of Queensland and Western Australia.

“Production at Newmont’s 15 tonnes per year Tanami project in the NT decreased by 18 per cent year-on-year to 5.9 tonnes in the first half of 2023,” the Department of Industry, Science and Resources (DISR) said in its Commonwealth of Australia Resources and Energy Quarterly September 2023.

“Production at Evolution’s 2.5 tonnes per year Ernest Henry project decreased by 43 per cent year-on-year to 0.7 tonnes in the first half of 2023.

“Production at Newcrest’s 20 tonnes per year Cadia mine in NSW fell by 15 per cent year-on-year to 8.9 tonnes in H1 2023.”

The DISR bean counters, however, are optimistic for Australian gold’s immediate future, noting that Australian gold mine production is forecast to increase over the next two years from 302 tonnes in 2022–23 to 312 tonnes in 2024–25.

This increase is anticipated to be delivered from new projects and mine expansions scheduled to come online.

“Production will continue to ramp up for recently commenced projects, such as Red 5’s King of the Hills project, Pantoro’s Norseman project, and Calidus’ Warrawoona gold project,” DISR explained.

“Bellevue Gold’s 5.7 tonnes per year Bellevue gold mine in WA produced first gold from toll treatment in August, with production and processing onsite expected to come online over the second half of 2023.”

If copper was undergoing therapy, it would be diagnosed as displaying classic middle child attributes of feeling inadequate compared to gold the elder and the younger battery-focused siblings.

The importance of copper was highlighted in May this year when mining powerhouse, BHP acquired OZ Minerals, hoovering up the target’s copper and nickel assets in South Australia.

At the company’s recent AGM, chair Ken Mackenzie explained the acquisition will result in BHP combining the Carrapateena and Prominent Hill mines acquired from OZ Minerals with its Olympic Dam asset and Oak Dam project, to create a new copper province – to be called Copper South Australia.

Mackenzie outlined BHP’s decarbonisation and energy transition intentions as it reshapes its current project portfolio to meet future mineral demands.

“This deliberate reshaping of our portfolio, positions BHP to create value for today and into the future,” Mackenzie told shareholders.

“We now have a portfolio that stands to benefit from the increased demand generated from the global megatrends playing out around us.

“Our portfolio includes copper for renewable energy, nickel for electric vehicles, iron ore and higher-quality metallurgical coal for the steel required to build decarbonisation and other new infrastructure.”

It is becoming increasingly difficult though, for gold not to fall into the first-born trap of secretly resenting its younger siblings and the achievements thereof.

Companies exploring for the shiniest of metals are finding it more difficult to hold investor focus as each passing week brings a new lithium discovery to the attention of ASX punters, who are more than pleased to throw their hard earned at any sniff of the essential battery ingredient.

Lithium had already emerged as a market darling before Wildcat Resources claimed a “major lithium discovery” in September based on results from the first drilling program undertaken at the company’s Tabba Tabba lithium tantalum project in the Pilbara, near Port Hedland in Western Australia.

Wildcat Resources released the first assay results from maiden drilling at the Tabba Tabba project which it claimed had confirm high-grade lithium mineralisation from surface in the project’s northern and central pegmatite clusters, demonstrating potential for a large-scale lithium camp.

Most of the excitement stemmed from the central cluster results that included:

TARC086
85 metres at 1.1 per cent lithium oxide (Li2O) from surface (down-hole length), including 59m at 1.5 per cent Li2O from surface and 218m at 0.8 per cent Li2O from 16m; and

TARC089 (down-hole length)
Including 22m at 1 per cent Li2O from 31m, including 23m at 1 per cent Li2O from 152m, including 51m at 1.5 per cent Li2O from 183m to end of hole – estimated true width is approximately 53m.

A second batch of assays quickly followed from the opening drilling program at Tabba Tabba, from which Wildcat claimed confirmation of Tabba Tabba hosting multiple pegmatite clusters containing high-grade lithium mineralisation over broad and continuous intervals.

“The second batch of assay results reinforces our belief that we are onto a terrific lithium discovery at Tabba Tabba,” Wildcat Resources managing director Samuel Ekins said at the time.

“The system is showing it has significant scale, we are seeing impressive intersections at multiple locations and the central pegmatite cluster seems to be getting better with depth.

“We are very excited about the potential and look forward to more results as we continue to aggressively explore the project.”

The ranks of hot lithium exploration companies soon expanded with TG Metals reporting on exploration drilling activities at the company’s Lake Johnston lithium-nickel-gold project in, also in WA.

TG Metals conducted RC drilling designed as an initial test of the Burmeister lithium soil anomaly it had previously defined that covers an area of approximately 4.5km by 1.7km, with the Phase 1 drilling testing a higher tenor area of anomalism.

Drilling intersected spodumene bearing pegmatite with high-grades up to 2.28 per cent lithium dioxide (Li2O).

Better results include:
9m at 1.35 per cent Li2O from 30m, including 1m at 2.03 per cent Li2O from 32m and 1m at 2.21 per cent Li2O from 37m; and

9m at 1.62 per cent Li2O from 87m, including 1m at 2.28 per cent Li2O from 87m.

Just last week, TG Metals had to talk its way out of a speeding ticket from the ASX by providing an update on lithium exploration activities at the Lake Johnston project.

TG Metals informed the market of having conducted infill and extensional soil sampling (400m x 50m spacing) over the area immediately east of the company’s recent spodumene rich pegmatite discovery at Burmeister.

The company said the results from the sampling defined a new area of lithium in soils anomalism, which has been identified as the Jaegermeister prospect that is larger in scale than the Burmeister soil anomaly.

“Since the discovery of the spodumene pegmatites at Burmeister, the deposit models we have been considering have been based on the Earl Grey lithium mine area,” TG Metals CEO David Selfe explained.

“With this in mind, the lithologies at Jaegermeister, were always going to be a target.

“The current drilling at Burmeister, targeting up dip, down dip and along strike of the known high-grade lithium pegmatites, will provide knowledge we can apply to the Jaegermeister area and provides us with another quality drill target for early 2024.

“We are eagerly anticipating the next drilling results from Burmeister.”

The Wildcat and TG Metals discoveries are timely, especially given Australia already leads global lithium extraction, and national mine production is forecast to continue growing.

“Mine production of spodumene is forecast to rise to 3.3 million tonnes (Mt) in 2023–24 and 4Mt in 2024–25, up from to 3.1Mt in 2022–23,” DISR said.

“Rising mine production will be driven by the expansion of existing mines, including Greenbushes, Finniss, Wodgina, Pilgangoora, Mt Marion and Mt Cattlin.

“Greenfield production is also due to commence at Mt Holland and Kathleen Valley over the outlook period.”

Although lithium receives the lion’s share of battery element exposure there are other elements, of which Australia has plenty of that are set to benefit from an expected period of global battery market growth.

Battery technology has been almost deified by market scribes in recent years as everybody talks up the clean energy, electric vehicles, and consumer products revolution.

This battery demand growth is also generating opportunities for producers of not only lithium, but other contributors, including manganese, graphite, cobalt, and nickel.

These minerals are featured in the official US, EU and Canadian critical minerals lists, reflecting their importance in terms of future requirements.

So, how does gold compete?

As far as electronics go, gold is used for such items as light-emitting diodes (LEDs) and in printed circuit boards but is limited in its contribution to modern technology advancements.

Its main markets remain in China and India in the form of jewellery and retail investment in gold bars and coins.

The current great gold irony is that after a strong 2022 and with wars raging around the planet, consumption of the usual safe haven investment in 2023 is forecast to decrease by 9.5 per cent to about 4,300 tonnes.

The decline is expected to be mainly driven by lower official sector buying — which will nevertheless remain high in historical terms, at around 750 tonnes.

“World gold consumption is forecast to rise gradually after 2023, to reach about 4,400 tonnes by 2025,” DISR said.

“Demand growth is expected to be largely driven by increasing jewellery consumption, with investment demand and technological usage contributing to a lesser extent.”