COMMODITY CAPERS: The old adage goes that fortune tellers don’t ride horse because they have crystal balls, however there are some glass orb gazers who seem to have their antennae highly tuned.

The resources sector provides the optimum opportunity for investors brave enough to punt on the aspirations of geologists turned company directors.

Anybody who was fortunate, or canny, enough to get on the recent Azure Minerals slingshot was suitably rewarded for their investment when the price was at, in retrospect, a bargain at around 50 cents, before the ride began.

Not everybody, however, is adept at reading the potential prosperities of the junior end of town, but thankfully there are some out there prepared to put their neck, and reputation on the line.

As 2024 broke through the dismal investment pall that hung over the market in 2023, half a dozen or so analysts from broking firm ShawandPartners adjusted the vertical hold on their screens to provide punters with some foresight.

Not all companies covered were in the Resources realm, so we have included here the ones that we consider the most interesting to our readers.

 

AIC Mines (ASX: A1M)

ShawandPartners liked AIC’s ownership of the high-grade operational Eloise copper mine in Queensland and was looking forward to the company bringing its then recently-acquired Jericho copper deposit into production.

“A1M is the quality junior copper producer on the ASX,” the analysts said at the time.

“The company offers investors one of the few ways to invest in a simple leveraged exposure to the copper price.”

In March, AIC Mines announced an increase to the Jericho Ore Reserves to 3.2 million tonnes at 1.9 per cent copper and 0.4 grams per tonne gold for 61,100 tonnes of copper and 37,000 ounces of gold, which at the time represented an 86 per cent increase in contained copper and an 86 per cent increase in contained gold.

A subsequent increase of Resources and Reserves at Eloise took combined Eloise and Jericho Ore Reserves to 5.6 million tonnes at 2.1 per cent copper and 0.5g/t gold for 119,200 tonnes copper and 84,050 ounces gold.

The company’s combined Mineral Resources at Eloise, Jericho, plus Sandy Creek and Artemis leapt to 22.9 million tonnes at 2.1 per cent copper and 0.5g/t gold for 471,950 tonnes copper and 353,950 ounces gold.
After being granted the Jericho mining lease, AIC Mines commenced of development for the Jericho copper mine via an underground link drive directly from the Eloise decline.

This week, the company advised it had received firm commitments for $57.2 million to develop the Eloise to Jericho Link Drive.

 

Firefly Metals (ASX: FFM)

Firefly Metals had just rebranded from previous moniker, AuTECO and in the process readjusting its focus from gold to copper through the purchase of the Green Bay copper-gold project in Newfoundland, Canada.

ShawandPartners were fans of the company offering investors a simple exposure to copper exploration.

“Steve Parsons has rejoined as CEO and Mike Naylor as executive director,” ShawandPartners said.

“Both are well known to the market and have an established track record of success.”

The Green Bay copper-gold project hosts a mineral resource prepared in accordance with Canadian NI 43-101 of 39.2 million tonnes at 2.1 per cent copper for 811,000 tonnes copper equivalent (CuEq).

Firefly wasted little time getting the drill rigs spinning at Green Bay, which has demonstrated the mine hosts two distinct styles of copper mineralisation: One contains high-grade copper-gold massive sulphide zones (VMS) and the other a large-scale, copper-rich Footwall Zone (FWZ).

The drilling returned results with high grades and strong widths well beyond the existing resource boundary.

This provided impetus for the company to accelerate its growth campaign, with drilling being conducted from the underground exploration drive, making it faster, cheaper, and more accurate.

FireFly Metals was rewarded via a highly successful share placement, through which the company raised $52.2 million.

“We decided to raise such a substantial sum in light of the exceptional drilling results we have been generating and the increasingly obvious scope to grow the resource quickly by extending the known mineralisation and testing the compelling targets nearby,” FireFly Metals managing director Steve Parsons said at the time.

“The result is a game-changing event for FireFly.

“We are now fully funded for the next 18 months, during which time we will have two underground rigs and one surface rig working flat out to grow the resource.”

 

Metro Mining (ASX: MMI)

Metro Mining operates the Bauxite Hills bauxite mine in far north Queensland, from which the company ships approx. 5 million tonnes per annum of bauxite to China that it is in the process of expanding to 7Mtpa.

Being a bauxite producer at this point in time is fortunate with plenty of action for the commodity on a global scale.

According to the March 2024 Resources and Energy Quarterly from the Department of Industry, Science and Resources chief economist there has been growth in bauxite consumption.

The United Arab Emirates (UAE) increased global bauxite usage by 0.3 per cent year-on-year in 2023 to 361 million tonnes.

An Indonesian ban on bauxite exports boosted Australian bauxite export volumes and values by 4.3 per cent (to 37 Mt) and 48 per cent (to nearly $1.7 billion) year-on-year in 2023, respectively.

In the December quarter 2023, Australia enjoyed record export earnings of over $0.5 billion, most of which – some 98 per cent went to China.

An expected rise in bauxite exports in 2024 is likely to boost Australia’s aluminium, alumina and bauxite (AAB) export earnings to $17 billion in real terms in 2023–24 (Figure 11.14). Disruptions to bauxite exports from Guinea are expected. In Guinea, bauxite mines are dependent upon diesel for their operations.

Damage to a major oil depot in Guinea from an explosion in December 2023 hurt that country’s production as its mines rely on diesel fuel. The damage is likely to take more than two years to repair.

“As the world’s 2nd largest bauxite exporter, Australia is in the box seat to fill the loss of bauxite from Guinea,” the DISR bean counters said.

“In China’s Guangxi province, alumina refineries are encouraged to use imported bauxite with preferential support from the local government.”

Metro Mining CEO Simon Wensley visited Chine in March, when negotiations were concluded on contract volume and prices for Q2 2024.

The company’s offtake is fully committed for 2024 with three main customers and its FOB price for Q2 2024 will be up to 20 per cent higher than Q4 2023.

 

Peninsula Energy (ASX: PEN)

Peninsula Energy is restarting uranium production from the Lance ISR (In-situ Recovery) uranium project in Wyoming, US.

Uranium from Lance is leached from the orebody in an acid solution before being recovered in an ion-exchange resin.

“Nuclear energy is enjoying a renaissance around the globe as governments have realised that decarbonisation of power grids requires nuclear energy,” ShawandPartners said.

“There has been little investment in uranium supply since Fukushima and as a result, uranium prices are surging higher and could spike well above US$100/lb in 2024.”

When ShawandPartners covered the stock in December it noted the company was expecting first production in late 2024.

That is still on the cards with the company announcing an updated processing plan in August this year which declared first production was anticipated in December 2024 and ramping up to 1.8 million pounds steady state by 2029.

Peninslua Energy recently completed an Equity Raising banking approx. $106 million putting it in a strong financial position to complete key development and construction activities at Lance.

“The work at Lance is continuing at full pace and we remain on track for commissioning later this year,” Peninsula Energy managing director and CEO Wayne Heili said.

“This funding provides us with balance sheet strength to take us through until anticipated sustainable free cashflow generation in Q3 2025.

“We are still progressing debt discussions but felt this opportunity delivers a high-level of financial certainty to shareholders in respect to our funding requirements.”