Chieftain Chatter
Run Boris run…
Well worth watching the doco “The Rise and Fall of Boris Johnson” on Aunty. As evidenced by Trump, you can never rule out these lunatics making a comeback given the lack of alternative options.
Boris didn’t mind engaging in some extracurricular activities and like his US counterpart the two Teflon’s got away with it. The bumbling Johnson seemed to crave the public spotlight and endlessly manoeuvred to get the top job with plenty of innocent casualties along the way.
At his prime the public loved him from being Mayor of London, Brexit Campaigner, MP of a blue ribbon seat, Foreign Secretary and ultimately PM.
He is alleged to have tried to buy the rights to his biography rather than have the truth revealed, as they say “politicians and nappies need to be changed regularly…and for the same reason”
When banging on about uranium last week I forgot to mention the impact the energy hungry AI (Artificial Intelligence not Insemination) sector is having on power demand.
The largest US Nuclear plant operator Constellation Energy Corp. has been a stellar performer this year acknowledging that computing will continue to be the largest driver of power demand.
Data centre operators and general tech. companies across the board are looking for a stable economic power source and nuclear seems to meet their criteria.
CEO Joe Dominguez, “Everybody is looking for power,” he said. “People are looking at nuclear because AI demands a lot of power.”
The US Energy Department just announced a $1.5 billion loan to help reopen the Palisades Uranium plant in Michigan that shut down in 2022.
The US and UK governments announced fresh restrictions against dealing in Russian base metals (aluminium, copper, nickel) in a further attempt to curb Vlad’s military capabilities.
Russia respectively accounts for between 4-6% of global production of the three metals however, its rumoured that with regard to the LME Russia accounted for 36% of nickel,62% of copper and 91% of aluminium in LME warehouses.
The London Metal Exchange (LME) and other US & UK trading platforms immediately complied with the order banning any dealing in Russian metals on or after April 13.
Although not expected to have a monumental impact on prices in the short term, should the European Union join the party then prices would surge with the EU importing 500,000 tonnes of aluminium alone last year.
On the contrary, it may lead to a short dumping of Russian metal stockpiles produced on or prior to the April 13 deadline however, this would be a short term effect.
The sanctions also do not preclude the Rusky’s from selling these metals outside of the US and UK.
Markets had a shaky week with Israel and Iran going tit for tat and economic reports from US supporting further delays in interest rate cuts.
Tony Dwyer’s view on the market “We continue to believe the recent historic overbought condition and higher market rates should help limit significant upside from current levels, but the prospect for Fed rate cuts and more balanced EPS growth contribution should help the troops catch up to the generals in the second half and beyond.”
Commodities paired back some of their recent gains however the copper market remained robust hitting a two year high of around US$4.43 per pound.
Plunging TCRC’s (Treatment & Refining costs) illustrate a continued tight market for copper ore and the market remains well in contango.
Exploration and development capital has dwindled from $26 billion in 2013 to $14 billion in 2022.
Quote of the week...
“We cannot stress enough the fragility of supply” Canaccord on uranium supply deficit.
On the lighter side….
I had another one I wanted to put in but the fun police knocked it back on the grounds of “Inappropriateness” so, here goes…
School of hard rocks…
It maybe a simplistic view (of which I have many) but whenever a company deviates from its core business it usually spells warning signs….stick to ya knitting however, Macmahon Holdings (ASX:MAH) has ignored that and made a takeover offer for donga builder Decmil Group (ASX:DCG) for 30 odd cents a share representing about n 80% premium (strewth!). The transaction is part of MAH’s strategy of diversifying earnings into civil infrastructure and increase its ROACE, ( Return on. Mmmm) . Putting it politely DCG has been a dog of a low margin business but obviously they see upside there that others don’t, for example, DCG’s Homeground accommodation Village in Gladstone can bed 1,392 punters but only operates at around 20 odd pussent capacity. MAH have forecast cost synergies of $5m per annum and they also inherit $185m of tax losses and $54m of franking credits so definitely value there. Not surprisingly the deal has the unanimous support of the board and two major shareholders….thanks for coming! Is this the best use of MAH’s surplus cash? Time will tell.
Power infrastructure group Genus Plus (ASX:GNP) share price has been on fire of late with a chunky contract wins and now an earnings upgrade guiding its EBITDA for FY2024 to a 20% to 25% increase compared to 2023, up from previous guidance looking for between 10% and 15%.This would suggest earnings in the region of $45m in 2024 compared to $36.8m in 2023. The revised outlook is a consequence of some projects completing ahead of expectations and some projects starting earlier than anticipated.
The upgraded guidance, recent contract awards, and increased momentum in industry tailwinds, supports management’s confidence in the continued growth and resilience of the business and its continued growth into FY2025 and beyond.
GNP was awarded three projects associated with the Melbourne Renewable Energy Hub (MREH) - execution on and subsequent further wins in the battery storage space represents a significant opportunity for GNP, an opportunity that is still evolving.
Spartan Resources (ASX:SPR) get good coverage in the Chatter but they keep on delivering the goods and last week was no exception with a new discovery 150 metres along strike from the Never Never resource named Peppers.
The discovery hole was an impressive:
17.52m at 15.9g/t Au at about half a km depth.
Follow up holes have since been drilled about 50 metres up dip that have hit mineralisation with assays pending.
Peppers was the catalyst for a $80m raise and selldown from NRW Holdings (ASX:NWH) 56.9m shares all at 58 cents.
Core looks similar (yeah sure) but from a proximity perspective the following long section speaks for itself:
Predictive Discovery (ASX:PDI) released its PFS study for the development of its 5.4 million ounce oz Bankan gold project in Guinea.
In summary:
269,000 oz’s pa over a 12-year mine life.
AISC of $1,744/oz with a post-tax NPV5 of a billion Aussie
Maiden Ore Reserve of 57.7mt’s at 1.64g/t Au for 3.05m oz’s with a 2.1m oz contribution from the open pit and 739,000 oz’ from the underground.
Pre-production capex $700m for a 5.5 mtpa mill
PDI was marked down on the new as perhaps the reality of the current inflationary capex number scared investors away while crucial permitting is expected late in the year and a DFS to follow mid next year.
Rumour mills are working overtime that Gold Road Resources (ASX:GOR) are looking to acquire a 40% stake in Greenstone Gold out of Canada for around a billion dollars.
Greenstone is in a 60/40 partnership with Equinox Gold and Orion Mine Finance for the ownership of 4 projects and Orion is looking to exit
Greenstones assets are largely in predevelopment stage with one coming into production this year which has around 5.5m oz’s in reserves and will produce about 400,000 oz’s pa.
GOR subsequently announced they were going through the motions with the sale process and its believed negotiations are getting to the pointy end with GOR and one other party.
Hancock Prospecting splashed out another $40m last week to emerge with just under 6% of Lynas Corporation (ASX:LYC) essentially giving it a blocking stake for any merger with New York listed. MP Materials (NYSE:MP).
MP Materials which has a $A4 billion market cap. emerged with a substantial stake in LYC back in early April following chats around a potential merger between the two. Hancock did what they do and hoovered up 5.3% of MP just to have a bet each way
The raid has fuelled speculation that Hancock may emerge as a kingmaker in any rare earths mega-merger between Lynas and New York-listed MP Materials. Keeping in mind Hancock has also placed their hoof on a 10% stake in Arafura Rare Earths (ARU) and a 5.8% stake in Brazilian Rare Earths (BRE) giving them a nice foothold in the rare earths scene.
But wait, there’s more with Hancock entering into a joint venture arrangement with Titan Minerals (ASX:TTM) to acquire an 80% interest in their Linderos Copper Project in Ecuador for up to US$120m.
The terms of the agreement are as follows:
US$2 million payment to Titan to earn initial 5%.
10,000m of drilling, or additional expenditure of US$8 million, whichever occurs first, to earn an additional 25% (total earn in 30%).
15,000m of drilling, or additional expenditure of US$12 million, whichever occurs first to earn an additional 21% (total earn in 51%). Once Hancock have earnt 51%, they will pay Titan an additional US$1 million.
At the Decision to Mine, or at total expenditure of US$120 million, whichever occurs first, Hancock will earn an additional 29% (total earn in 80%).
Linderos is an early stage project with the maiden drilling campaign of eight diamond drill holes for 3,700 metres of drilling in 2022 at Copper Ridge, successfully confirming broad zones of copper porphyry mineralisation from shallow depths.
Six out of eight diamond drillholes ended in mineralisation with intersections of:
308m @ 0.4% Cu Eq from 54m
22m @ 0.5% Cu Eq from 524m
West African Resources (ASX:WAF) has reported infill drill results from its M1 South main zone at Sanbrado.
Significant results included:
24m at 55g/t Au
28.5m at 37g/t Au
28m at 28g/t Au
22.5m at 33g/t Au
25m at 29g/t Au
Noice, and the exploration drive at M1S is nearing completion with resource definition drilling planned in the current quarter.
Meanwhile at Kiaka, 130,000 metres of surface grade control drilling has started targeting the top 20m of resources with will form the first six months of production.
Keeping in mind WAF have guided they are on track for their calendar year guidance of 190,000-210,000 ounces at less than US$1,100/oz
SRG Global (ASX:SRG) has announced yet another round of contacts amounting to $150m, the new deals are with new and existing clients including:
Term contracts (between 3-5 years) in energy and resources sectors (including with NRG in Gladstone, Dampier Salt in the Pilbara, Delta Electricity in NSW, Stanwell in QLD, and BP in Kwinana)
Specialist inspection works (3 months) at West Gate Bridge in VIC
A term contract (3 years) with Evolution Mining to provide drill & blast and geotech maintenance services at Cowal gold operations in NSW
An infrastructure contract (14 months) for construction of a tailings dam with Pilbara Minerals at Pilgangoora
Regional road construction (4 months) with Genesis Minerals at their Leonora operations
This should see SRG generate $1 billion of revenue in FY24 and is consistent with the company’s goal of generating a recurring income stream.
Who’s shaking the tin…
Dart Mining (ASX:DTM) - $1m at 3.4 cents
Alvo Minerals (ASX:ALV) - $4.2m at 17.5 cents
Titanium Sands (ASX:TSL) - $2.1m at $0.0075 (plus 1:2 option)
Resource Mining Corporation (ASX:RMI)– $1m at 2 cents
Australian Strategic Materials (ASX:ASM) - $15m at $1.16
Empire Energy (ASX:EEG)– $30.8m at 16 cents
Westar Resources (ASX:WSR)– $2m at 1 cent
Norfolk Metals (ASX:NFL) - $415,746 at 15 cents
Burley Minerals (ASX:BUR)– $1.8m at 5 cents
Akora Resources (ASX:AKO) - $3.8m at 15 cents
Cobalt Blue (ASX:COB) - $5m at 11.5 cents (plus 1:1 option)
Challenger Gold (ASX:CEL)- $4m at 8.5 cents
Bass Oil (ASX:BAS) – $1.1m at 7 cents
Tolu Minerals (ASX:TOK) – $8.8m at 50 cents
Spartan Resources (ASX:SPR) - $80m at 58 cents
Viridis Mining and Minerals (ASX:VMM) - $8m at $1.25
Larvotto Resources (ASX:LRV) - $2m at 7.5 cents
WIA Gold (ASX:WIA) - $16.9m at 8 cents
A Zoom call with.....
Justin Tremain, Managing Director of Turaco Gold (ASX:TCG)
Last November, Turaco Gold announced a deal to acquire a 51% interest in the Afema gold project in the ‘Switzerland of West Africa’ aka the Ivory Coast from Endeavour Mining which they ultimately increase to 70% upon completion of a feasibility study. The Afema project is in the SE corner close to the Ghanian border and covers the extension and confluence of two large Ghanian gold belts. There has been extensive drilling done at two prospects Anuri (64m @ 3.08 g/t Au from 80m) and Jonction (40.6m @ 7.13 g/t Au) but these deposits are potentially refractory, so Teranga in 2018 discovered a new prospect Woulo Woulo. It drilled >22,000m on 40m spacings with some cracking results including 25m @ 4.44 g/t Au from 112, 66m @ 1.58 g/t Au from 48m and 83m @ 1.1 g/t Au from 10m. It was in the process of doing a maiden resource estimate before it was acquired by Endeavour Mining and basically the project has lain dormant since then. Initial bottle roll testing on the drill core demonstrated it was free milling but obviously further test work will be done. After raising $6m, TCG has hit the ground running with a couple of rigs and some excellent maiden results including 67m @ 8.4 g/t Au from 94m at Anuri and 17m @ 3.2 g/t Au from 87m at Jonction. RC drilling has also commenced at Woulo Woulo with the aim of maiden resource for all projects by the middle of the year. Justin and the team have good form in making $$ for shareholders – Renaissance Minerals taken over by Emerald Resources (now a $2.3bn mkt cap) and Exore takeover by Perseus Mining Ltd. The stock has performed well – almost doubling from the 9c raising price but with the dearth of good quality exploration projects with multimillion ounce potential we reckon this can track higher. Who knows? maybe JT gets the trifecta and we can all sail off into the sunset, however, in the interim you know they will have genuine red hot crack at it.