Chieftain Chatter

Season 5

Episode 162

Tit for tat…

The actual implementation of 25% aluminium and steel import tariffs drew a prompt response from the various aggrieved nations including:

  • Canada announcing new 25% tariffs on about C$30 billion of US-made products, including steel, aluminium and consumer products matching the US tariffs “dollar for dollar”.

  • The EU imposed duties on a range of US imports worth up to €26 billion

  • And China, although not a major steel exporter to the US vowed, "all necessary measures" in response.

  • Meanwhile, Australia are considering a 25% tariff in US vegemite imports but, its only under consideration as Marbles doesn’t want to upset Uncle Don!

Risk positions continued to be unwound last week at levels not seen since Covid shook our world as belief grows that tariffs will derail the US economies soft landing prospects and force it into recession. Goldman Sachs highlighted that the de-risking process is taking place when Hedge Fund managers leverage in equities exposure was at a 5-year record level of 2.9 times their book. Goldmans have consistently purported higher growth for longer but have now trimmed their expectations and raised their recession odds from 15 to 20% while JP Morgan increased their odds from 30 to 40%. However, slowing GDP growth will only re-fuel the Federal Reserve’s pace of interest rate cuts. Slashing the federal workforce and reducing government expenditure seem logical and required initiatives to curtail the debt spiral however, there will be growth implications. The likelihood of these workers being soaked up by the private sector appears more unlikely as private investment potentially comes to an abrupt halt under the new regime. Tariff impositions will have short term inflationary implications for the US and hence the consumers are understandably in “caution mode” as they await to see the outcomes. When quizzed on the recessionary implications of his policies the ducker and weaver responded, “There is a period of transition because what we’re doing is very big,” he said. “What I have to do is build a strong country. You can’t really watch the stock market.” To be fair, Trump inherited an economy with steady growth, record stock markets but a mountain of debt and housing market in standstill mode. Given his historical bias towards growth orientated policy the current approach has put investors on the back foot. He doesn’t appear to be changing course simply because of a few share market disruptions however, the uncertainty around his ultimate plan only adds fuel to the fire.

News of the Indonesian Government proposing to raise royalties on miners only further instilled my resolve never to invest there. According to a newswire their Mineral Resources Ministry is considering a significant increase in royalties from the current levels which will apply to all commodities. The implementation of Presidents Prabowo’s new policies to return them to 8% GDP growth levels has seen his respective ministries being requested to slice their budgets in order to fund his new initiatives. ASX listed Nickel Mines (ASX:NIC) had an immediate 20% slashed from their market capitalisation which wasn’t helped by one of their major shareholders selling a 4% stake at a 10% discount.

Although mining underpins the bulk of the Indonesian economy, in recent times the prices of their two biggest exports, nickel and coal have been under significant pressure.

As a result of global instability and in particular the Ukraine war the price of antimony has rocketed providing some speculative appeal to the junior explorer’s lucky enough to have a few sniffs of the commodity. Antimony is a critical element used to increase the hardness of alloys and hence is used in the manufacture of bullets, explosives, and shrapnel weapons. Although the industry is dominated by China and Russia there is a global shortage which has led to a four fold price increase in the last 12 months or so ably assisted by China placing export controls on antimony. Locally, Larvotto Resources (LRV) have produced a compelling PFS on their Antimony/Gold project in NSW which could see commercial production within twelve months. Military applications remain a small segment of antimony’s demand, which is dominated by flame retardants, lead-acid batteries and the chemicals industry and excluding the batteries, the world needs about 120,000 tonnes a year and it’s only producing about 80,000 tonnes according to LRV’s MD Ron Heeks.

Quote of the week….

“I would love to see Australia get in the game of supplying uranium, maybe going down that nuclear road themselves,” (Tariff included of course!)

US Energy Secretary Chris Wright.

On the lighter side….

 

School of hard rocks…

West Aussie boat builder Austal (ASX:ASB) has taken advantage of a recent share price surge to lock in a $200m capital raise at $3.80 which was a 15% discount to their recent $4.50 closing price.

Long serving Founder and Chairman until recently John Rothwell is also utilising the opportunity cash in a few chips, offering a further $50m worth of his holding should the placement be fulfilled.

ASB’s ultimately successful US expansion has delivered a forward order book of in excess of $14 billion (unless Don changes his mind overnight!) and the proceeds of the raise will be used to partly fund its Final Assembly expansion program which has a price tag of US$300m and will facilitate the delivery of current and future steel hulled ships for the US Navy and US Coast Guard once they are constructed thus enabling the final assembly, lift/launch and docking of the large vessels.

You may recall TMK Energy (ASX:TMK) reported in January that all 6 of their pilot production wells were talking to each other and producing (non-commercial) quantities of gas from their Gurvantes XXXV Coal Seam Gas Project in Mongolia. They have subsequently followed up that the reservoir pressure is reducing towards critical desorption levels, and they have achieved a record daily production of gas well above the previous innocuous fart! The record daily production rate achieved was 463m3 or around 16.5Mscfd despite one of the best producing wells being offline for repairs for the majority of this test. TMK’s CEO Arnold Plamer commented: “The Project continues to deliver encouraging trends in both gas and water production. With 5 of the 6 wells now producing at design fluid levels, we are making demonstrable progress in reducing the reservoir pressure, one of the key reasons for drilling the additional production wells late last year. We have also successfully operated the Pilot Well Project through a second very cold and tough winter. This demonstrates that the greater development of this enormous new coal seam gas resource is very achievable in Mongolia. We remain highly confident that the Pilot Well Project will confirm a commercially viable resource in the coming months.”

Ramelius Resources (ASX:RMS) share price fell off a cliff following the release of their updated mine plan for Mt Magnet which will result in 2.1m ounces of production over 17 years. The updated plan has revealed a flatter but longer production profile leading to most analysts realigning their numbers to suit. With regard to cost guidance as per below there has been some variations with AISC’s peaking in FY2029 ($3,155) and ratcheting down for the remaining life of mine. The increased mine life has come at a cost with growth capex blowing out to $833m due to a chunky $336m for the pre-strip at Eridanus. Overall, RMS reiterated their FY2025 production guidance of 270,000-300,000 ounces at AISC of between $1,500-1,700 per ounce.

Mt Magnet mine plan update. Source: RMS, March 2025 

Meeka Metals (ASX:MEK) released further results from the new shallow lode at Turnberry South which has hit a western lode which should improve the overall inventory and open pit economics.

Results included:

  • 21m at 5.1g/t Au from 51m

  • 18m at 3.6g/t Au from 83m

  • 11m at 4.0g/t Au from 52m

  • 14m at 1.4g/t Au from 37m

MEK is on track for first production in the middle of the year which is forecast to yield 40,000 ounces at AISC of between $2,400 and $2,500 per ounce.

Rox Resources (ASX:RXL) are powering ahead with their 35,000m diamond and RC program utilising five rigs at the Youanmi Gold Project near Mt Magnet with the aim of growing the near-mine resource and convert Inferred to Indicated Resources. With in excess of 22,000 metres completed the program has identified new shallow mineralisation (Prospect) between the existing Pollard and Youanmi resource.

Results from Prospect included:

  • 6m @ 19.08g/t Au from 220m

  • 7m @ 9.14g/t Au from 195m

  • 4m @ 6.87g/t Au from 169m

Additional results at Interceptor and Youanmi Main included:

Interceptor

  • 1m @ 40.93g/t Au from 145.1m

  • 8m @ 4.32g/t Au from 52m

Youanmi

  • 5.82m @ 4.51g/t Au from 379m

  • 2.09m @ 6.80g/t Au from 436.9m

  • 3.26m @ 3.65g/t Au from 454.7m

The PFS for the Youanmi underground highlighted an inventory of 849,000oz’s @ 4.5 g/t producing around 100,000 ounces per annum at an AISC of $1,676/oz for 7 years with a pre-production capex of $245m for a 750,000tpa plant.

NexGen Energy (ASX:NXG) has received in a kick in the goolies from authorities for the approval of their Rook Uranium Project development with the Canadian Nuclear Safety Commission (CNSC) indicating the hearing dates will be much later than first expected. The Hearing will occur in two parts, on November 19, 2025, and February 9-13, 2026. NXG commented “To be clear, there is no reason for this delay. The regulatory process has been abused and turned into a tyranny of inaction, deceit and dishonesty. Again, the Project has already been approved by the Province of Saskatchewan in November 2023 and formally endorsed through the execution of Impact Benefit Agreements by all of the Indigenous communities in the Project Area.” The project has a massive resource is 257mlb’s @ 3.1% U3O8 with over 60% of the resource having grades of 17% which is unheard of given the average production grade around the globe is 1%. The project has the potential to generate annual EBITDA of over C$3billion, making it one of the most profitable mines in the world, in any commodity. With a three- and half-year construction timetable the latest news only extends the likelihood of first production to 2030/31. Surprisingly, First Nations groups have reacted negatively to the announcement and are calling for the commission hearing to be brought forward.

More disappointment from St Barbara Mines (ASX:SBM) with revised production and cost guidance continuing to head in the wrong direction. FY 2025 production guidance has been lowered from 65,000-75,000 ounces to 55,000- 65,000 ounces while AISC’s have increased from $3,400-$3,800 to $3,900-$4,200 per ounce. The downgrade is largely due to delays in mining higher grade ore at Simberi resulting in lower average mined grades in the first half. They are expecting improvement in the second half following the implementation of a new crusher in February which has increased overall throughput which has also been assisted by additional mining fleet which should underpin continued improvement the second half.

Centaurus Metals (ASX:CTM) have received their key environmental approval following the awarding of their Installation License for their Jaguar Nickel Project in Brazil. This is the final environmental hurdle required for the project to receive an official mining license and hence this is expected to be issued in the next few months. The Installation License provides CTM with the formal right for construction of the Jaguar project to commence in line with the current project design once a suitable funding package has been finalised. It also enables CTM to submit an application to the State Development Department for tax incentives related to a range of goods and services including fuel and major equipment. Now partnering and funding can kick off in earnest.

Who’s shaking the tin…

  • Celsius Resources (ASX:CLA) - $3.3m at $0.008 (plus 1:2 option)

  • Aguia Resources (ASX:AGR) - $1.5m at 3.8 cents

  • Global Uranium (ASX:GUE) - $9m at 6.5 cents

  • Black Cat Syndicate (ASX:BC8) - $65m at 76 cents

  • Forrestania Resources (ASX:FRS) – $500k at 2.5 cents

  • Rimfire Pacific Mining (ASX:RIM) – $2m at 2.5 cents (plus 1:1 option)

  • Catalina Resources (ASX:CTN) - $2.77m at $0.0025 (plus 1:5 option)

  • Green Technology Metals (ASX:GT1) - $4m at 4 cents

  • Helios Energy (ASX:HE8) - $1m at $0.007

  • Resolution Minerals (ASX:RML) - $1.7m at 1.1 cents (plus 1:2 option)

  • Kalgoorlie Mining (ASX:KAL) - $4m at 6 cents

A quick jaunt to the Euroz Rottnest conference…

The Silver anniversary edition – 25 yrs

I always look forward to the second week of March - post reporting season, footy about to start, still good weather and of course the annual Euroz Hartleys Rottnest conference. This year was the biggest and I would say the best ever – 85 insto clients, 57 presentations over 2.5 days, beers galore and excellent tucker. There were some Rottnest virgins – Mr Regal was there and David Paradice back for his first visit in about 15 yrs. The genius of 20 min presentations compared to the old +40min meant the chance of dozing off was significantly reduced. Bun Bun started proceedings off with a look back at the first conference with about 6 companies presenting over 3 days and lots of free time for jet ski’s (thanks Orbital), strategy sessions at the pub and fishing... oh how times have changed.

GMD was first cab off the rank and Ral started talking about Bunny’s ... I was slightly hazy from the night before... was this, Tim Bunney? Easter Bunny? Playboy Bunny? eventually I worked it out... maybe a ‘snare’ used in greyhound racing, would have been a more appropriate analogy! Mr West African was next up and boy what a story... looks like it’s got +$3 written all over it. It’s amazing that there are still some fund damagers out there that don’t know who the great man is. Paddy Grieg from ASB was in ‘preferred status’ zone in the first session... it was almost like they knew ASB were going to raise $200m on that day !! – well played boys and a shout out to G Train – it’s only been 20yrs in the making. Other highlights on Day 1; EMR showing how to get shit done with minimal fuss, David S still pumped on the growth outlook for ANG, Simon Lawson was as enthusiastic as ever and the new Spartan caps were sensational with some punters confusing Simon with some Irish fund manager. Every time I see Madar I wish I was a 25yr old diesel mechanic travelling around the world (not really, but they make it look exotic). I confess to skipping the last few preso’s to enjoy a few beverages off the back of a boat in Geordie, followed by a lamb chop at Bull’s place and then onto the night function at the Basin. Macca made a great speech reflecting on the history with lots of names, companies, and characters of a bygone era. Fortunately, the bar closed at around 9.30pm enabling all the olds to slink off into the night, whilst the youngest found some houses and/or a boat or two to continue.  Day 2 we had some 1 on 1 superbly organised by Christine – I think she only did about 400... but we did listen to Snowline Gold – a TSX listed company with a resource of 7.3moz @ 1.4 g/t Au and intersections such as 553m @ 2.5 g/t Au from surface!. Initial pit optimisations show a LOM strip ratio of 0.9:1 and in the first 4-5yrs the strip ratio is 0.08:1 i.e. all bloody ore!! At 9mtpa scenario it could produce 690koz pa for the first 4-5yrs. The only downside… timeline to production is anywhere from 6-10yrs depending on permitting as it’s in the Yukon. Stevie P was on fire (pardon the pun) and excited by the regional potential which is about to get some holes into it. Dave McGeorge from SRG was like Pidgeon McGrath... outside off for 10 overs in a row. Jeff Q from PRU was at pains to explain that it has built this $4.5bn company all on African production and the importance of having a diverse geographical location because Africa is always changing continent – makes sense to me. Dave Southam was his normal pot stirring self - conveniently forgetting he also has a large house down south next to Timonthy’s.

The final morning always throws up a few gems... Nina from DXB explained simply what they are trying to do and if she can do a US licensing deal the upside looks enormous, FWD looks like they are in an earnings cycle upgrade with Sea ripple coming good and Justin T from TCG literally just landed from the Switzerland of Africa aka the Ivory Coast and clearly that resource will grow. For the contrarian investor, WC8 continue to de risk its Tabba Tabba Li project with a PFS due mid-year and a sensible discussion re financing. The VEEM charter boat which does a lazy 42 knots whisked us back to Perth in no time and it was unfortunately back to reality. A terrific three days and congrats to the whole EH team on what really is ‘the best goddam conference I have ever been too’.  

Harriet Meagan