Chieftain Chatter
Order restored... for the moment…
As the shenanigans continue from the White House various trade deals are emerging favourably and the impact on markets is starting to dissipate somewhat. Ultimately, during this 90-day standstill between the US and China both parties are suitably motivated to achieve a mutually beneficial outcome. Markets should welcome a resolution with all counter parties and then we can focus on the real impact the levies imposed will have on growth, inflation and thus give the Fed some breathing space to focus on the next round of rate cuts. Keeping in mind Congress has to digest how to pay for the next round of Trump promised tax cuts in July and negotiating the debt ceiling. Following all of this perhaps we can start to get some colour on Trumps pro-growth deregulation policies to restore confidence back into markets and if he can bring peace to the middle-east at the same time we may be happy for him to accept ownership of the US$400m luxury plane gifted from Qatar.
With minimal or no alternatives for steelmaking via coking coal Macquarie have continued to loosen their sustainability policy in favour of investment and lending for development of metallurgical coal projects. Their policy back pedal was highlighted in their recent annual report giving them license for equity investment and lending from their hefty balance sheet for met. coal companies. Macquarie are the first of big Aussie banks to quit the Net Zero Banking Alliance (NZBA), although major investment banks around the globe have followed suit including JPMorgan, Goldman Sachs, and Citigroup. The NZBA is a global member-led group that supports financial institutions on their climate mitigation plans. “Macquarie continues to have no appetite for financing … transactions where the underlying purpose relates to the purchase, operation, development or expansion of thermal coal activities,” the report said.
JPMorgan went out on a limb while the gold price was tumbling reconfirming their bullish stance on the gold price calling it to US$6,000 per ounce by the end of Trump’s current term in 2029 a mere 80% uplift from current levels. Their latest forecasts are suggesting a small re-allocation of assets could underpin such a meteoric rise suggesting bullion would average $3,675 an ounce by the fourth quarter of this year, on its way to reaching $4,000 by the second quarter of 2026. With 0.5% of foreign-held US assets reallocated to gold, which would result in 18% annual returns and eventually send prices to US$6,000. “While hypothetical, this scenario illustrates why we remain structurally bullish on gold and think prices have further to run,” the analysts wrote. The gold price has doubled in the last 3 years driven by geopolitical tensions and economic uncertainty with the Trump Presidency only adding fuel to the fire and denting investors’ confidence in the greenback.
Hard to see how this uranium market won’t have a significant re-rate in the not too distant future with many predicting the illiquid spot price will sail through US$100 per pound and well beyond. A recent spark in the price back over US$70 per pound has peaked some interest in ASX listed uranium stocks despite still being the most heavily shorted sector on the Aussie market. In another vote of confidence for the sector the Sprott Physical Uranium Trust (SPUT) raised another US$25.55m to cover the Trusts operating expenses for the next year rather than sell some of the 48 million pounds they’ve accumulated since launching in 2021. SPUT CEO John Ciampaglia boldly stated, “I would like to take the opportunity to strongly reiterate that SPUT has the tools, including this private placement, to deliver on its intention not to sell any of them its physical uranium that the SPUT holds on behalf of thousands of investors.” In one of his first acts in office, President Trump declared a “national energy emergency,” saying that America had inadequate supplies of electricity to meet the country’s growing needs, particularly for data centres that run artificial intelligence systems. While most of Trump’s actions have focused on boosting fossil fuels like coal, oil and natural gas, administration officials have also supported nuclear power. “Our goal is to bring in tens of billions of dollars during this administration in private capital to get reactors built, and I’m highly confident we will achieve that goal,” Chris Wright, the energy secretary, said at a hearing before a House appropriations subcommittee last week. Additionally, the Trump administration is expected to accelerate executive orders to speed up approvals and ultimately construction of new nuclear power plants to meet the electricity deficit. Under the plan the target is to expand the existing capability from around 100 gigawatts to 400 GW’s by 2050 keeping in mind 1 GW will supply around 1 million households. The US has fallen behind the likes of China and Russia who have constructed 87% of reactors since 2017.
Quote of the week….
Far right political activist Laura Loomer said she loved Trump and would “take a bullet for him. But I have to call a spade a spade. We cannot accept a $400m ‘gift’ from jihadists in suits.”
On the lighter side….
School of hard rocks…
Delta Lithium (ASX:DLI) confirmed the spin-out of their Mt Ida gold assets via IPO to be known as Ballard Mining and will be listing in mid-July. Ballard intends to raise between $25m to $30m at 25 cents per share with DLI shareholders receiving an in-specie distribution of one Ballard share for every 11.25 DLI shares held. DLI will retain approximately 46% of Ballard assuming the full $30m raised in the IPO leaving 340m shares on issue fully diluted. The board will be chaired former DeGrey Mining (ASX:DEG) Chairman Simon Lill who will be joined by Stuart Mathews, Paul Brennan (MD) and Tim Manners (Finance Director) with James Croser being DLI’s representative on the board. Keeping in mind Mt Ida hosts a resource of 10.3m tonnes at 3.3g/t Au for 1.1m ounces on granted mining lease. The funds raised will be used to further advance the project including:
Infill drilling at Baldoc
Drill regional targets
DFS to FID next year
The feud between the Malian government and Barrick Gold continues to hot up with reports suggesting a Mali judge will order the re-opening of Barrick’s Loulo-Gounkoto gold mine under provisional new management while their issues are resolved.
Barrick and the government have been in dispute since 2023 with operations suspended in January 2025 over the implementation of the new mining code that increases taxes and gives Mali’s government a greater share in the gold mine.
Operations were halted after the government seized around 3 metric tons of gold worth $317 million at last week’s price, accusing the company of not fulfilling it’s tax obligations. The government had been blocking Barrick’s gold exports since early November.
Given the government has a 20% stake in the mine, this is significant revenue back into to the embattled Govt. coffers and a logical outcome needs to be agreed in the short term for all concerned.
Encounter Resources (ASX:ENR) have released their maiden independent resource from their Aileron West Arunta Niobium project in WA.
The inferred resource came in at:
19.2 million tonnes @ 1.74% Nb2O5 (1% Nb2O5 cut-off) or
67.6 million tonnes @ 0.88% Nb2O5 (using 0.25% Nb2O5 cut-off)
The high-grade resource remains open along strike and depth and the resource is within 150m of surface. ENR have commenced an RC program aimed to further define and extend the resource and the company believes the potential for near term resource growth is very real.
This resource is always going to be compared to WA Resources (ASX:WA1) Luni deposit which has a global resource of 200m tonnes at 1% with a high-grade component of 53m tonnes at 2.1%. Any valuation comparison metrics highlight the gap between the two companies should narrow in ENR’s favour.
Hot off the heels of ENR’s maiden resource WA Resources (ASX:WA1) released a raft of infill results as part of their resource definition program at their Luni niobium project.
Confidence in their resource was enhanced by some of the best results achieved to date including:
6m @ 2.6% Nb2O5 from 78m
6m @ 2.1% Nb2O5 from 41m
60m @ 3.2% Nb2O5 from 60m,
31m @ 4.6% Nb2O5 from 47m
29m @ 4% Nb2O5 from 54m
These assays will form the basis of the updated resource classification which is due out later this quarter and thus will include an Indicated component over the early-stage development areas of the deposit.
Following their successful $220m capital raising Minerals 260 (ASX:MI6) have launched an 80,000 metre drill program at Bullabulling to further prove up the existing 60m tonne @ 1.2g/t Au 2.3m ounce resource. Infill drilling will account for approximately 40% of the program over 40m x40m spacings with extensional drilling taking up the balance on 160m x 160m spacings in between the two existing Bacchus and Kraken pits. Bought form Norton gold (Zijin Mining Group) for A$156.5m and 83,333,333 MI6 shares the advanced project sits on an existing mining license that should only require state approval which is a significant advantage over having to go through an arduous federal approvals process. A dated PFS from 2013 highlighted a 7.5mtpa plant producing 185,000 ounces for 5 years was gonna cost in the order of $325m although that figure could well have a 5 in front of it today.
Elixir Energy (ASX:EXR) have released their 3 phase Strategic Plan under the new reign of CEO & MD Stuart Nicholls with the first objective being to secure the long-term tenure of their highly prospective Taroom Trough acreage in Queensland.
Following this they will look to deliver 2P reserves with a target of first production late 2027. The Taroom Trough has the advantage of:
Scale 2.6Tcf of 2C gas resource.
Close to infrastructure and market.
Strategically positioned around Shell, Santos and Omega
High quality gas with low-cost base
Shell has already shot 500km2 of 3D seismic and drilled multiple appraisal wells which have been successfully flow tested.
Shell may be reaching Reserve status through their appraisal and recent optimisation and appears to be preparing for development, evidenced by the amount of gear they are bringing to the area plus shooting a new full block >800km² of 3D seismic.
EXR is looking to collaborate on early production opportunities to achieve initial cash flow and has $10.6m in cash to see Phase 1 of the plan through.
West African Resources (ASX:WAF) provided a further construction update for the development of their Kiaka Gold project in Burkina Faso. They have now commenced mining activities and are already shifting 800,000bcm of material resulting in 184,000 tonnes of ore on the ROM pad ahead of commissioning. The processing facility construction is at an advanced stage with the primary crusher commissioned and the first batch of ore (20,000 tonnes) run through the circuit with first gold on target for the third quarter of calendar 2025. Construction of the wet plant is complete, and commissioning is underway with the plant expected to deliver an average of 234,000 ounces per annum for 20 years of mine life however throughput could be increased to around 10mtpa. The large tailings dam is also nearing completion with the fully lined TSF well timed for first tailings storage. Also, the grid power connection remains on schedule for Q3CY2025, with diesel genset back-up power also being installed for commissioning. WAF has an estimated $118m left to complete the build in the third quarter from the total pre-production capex of nearly$700m. WAF ended Q1CY25 with Cash and Bullion of A$397m, with the Kiaka Debt facility $390m (drawn) and other suppliers loans totalling a total debt position of about $432m.
Katanning gold hopeful Ausgold (ASX:AUC) have released results from several regional prospects (Zinger, Stanley Hill, Moulyinning, and McDougalls) within the Katanning Gold Project (KGP) area.
Zinger:
10m @ 4.75g/t Au from 23m
51m @ 0.37g/t Au from 17m
38m @ 0.47g/t Au from 68m
Mineralisation was observed over a 5km strike length with oxide gold shows of greater than 1g/t over a strike of 2km’s.
Stanley:
11m @ 0.42g/t Au from 36m
6m @ 0.66g/t Au from 37m
5m @ 0.65g/t Au from 115m
11 RC holes were drilled for 1,218m targeting supergene mineralisation over a 5km strike length.
Moulyinning.
6m @ 0.51g/t Au from 18m
10m @ 0.24g/t Au from 94m.
McDougalls
17m @ 0.22g/t Au from 30m
5m @ 0.41g/t Au from 82m.
These results all sit within 40km of their main project resource area and thus a nice add on of potential satellite deposits to be fed into the potential KGP processing facility.
Gold mine in Katanning? … I’d like to see that!
Who’s shaking the tin…
VHM (ASX:VHM) - $8.25m at 25 cents
Vertex Minerals (ASX:VTX) - $7.5m at 21 cents (plus 1:3 option)
Rare X (ASX:REE) - $2m at 2.2 cents (plus 1:2 option)
Legacy Minerals (ASX:LGM) - $5.6m at 18 cents (plus 1:2 option)
Trinex Minerals (ASX:TX3) - $1m at $0.0025
Marquee Resources (ASX:MQR) - $596,165 at $0.0075
White Cliff Minerals (ASX:WCN) - $11.3m at 2.6c
Uvre (ASX:UVA) - $4m at 8 cents
Empire Energy (ASX:EEG) - $28m at 16 cents (plus 1:2 option)
Medallion Minerals (ASX:MM8) - $27.5m at 21 cents
A coffee with…
Alex Dorsch, CEO of Chalice Mining (ASX:CHN)
Chalice has been a fascinating case study of the very fashionable ‘Lasonde curve’ where it’s discovery in 2020 and subsequent resource drill out saw the share price rise 50x from around 20c to a peak of $10.00/sh. It defined a massive resource of 17moz of Pd-Pt-Au, 960kt of Ni, 540kt of Cu and 96kt of Co. It was a market darling with fortunes made backed by the irrepressible Tim Goyder. Unfortunately, when they decked the scoping study in August ’23 the capital cost hurdle of $1.6bn for a 15mtpa plus another $2.3bn for a 30mtpa and using an assumed palladium price of US$2,000/oz compared to the spot price of ~US$1,200/oz at the time saw a dramatic market downward reaction with the stock plunging to sub $2/sh. The complexity of the scoping study with a hydromet plant and the various products produced saw CHN revisit its assumptions. Recently, they had a metallurgical breakthrough which simplifies the flowsheet as a standard flotation and CIL – they are doing away with the hydroment plant (saving $260m) etc plus a potential new iron byproduct. The revenue split is essentially 50% Pd, 20% Ni, 20% Cu and 10% Au/Pt/Co so very sensitive to the Palladium price which has been in the toilet for a while. The current price is deep into the cost curve with some 30-40% of current operations unprofitable and over 85% of Pd sourced from Russia and South Africa. Demand is driven by catalytic convertors in cars and especially hybrids so increased hybrid production should see increased demand. Alex believes there is about 500-600koz of production that could cease over the next year with Sibayne Stillwater mine producing well above the spot price. The scoping study numbers had CHN producing at an ASIC of US$170-240/oz net of by product credits. Post the scoping study, CHN announced a MOU with Mitsubishi Corporation to work together on the PFS and maybe form a strategic partnership etc. So, the current state of play is CHN is targeting a PFS to be completed in Q3. This will be a smaller starter project of say ~4mtpa for the first 4-5yrs followed by an expansion to ~12-15mtpa post this. Capex is likely to be <$1bn but still a significant project delivering ~225koz of PGE, 7kt of Cu, and 8kt of Ni in concentrate. We expect the PFS will show a lot more robust project at Pd consensus prices which is probably long term around US$1,200-1,400/oz. We note that ‘The Bear’ at Argo’s has a valuation and price target of $2.60/sh and assumes an AISC of US$350-400/oz. CHN has been a very good trading stock in the past year, bouncing of the $1.00/sh mark four times with strong correlation with the Pd price. It was a good meeting, and we came away pretty enthused – CHN has more than enough cash $70m to complete the PFS and with a market capitalisation of $430m and potential NPV’s of >$1bn and IRR of >25% it looks cheap. In the background there must be some corporates lurking as these large scale projects in Tier 1 jurisdictions are hard to come by. So, having gone through the trough in the Lassonde curve we reckon over the next year it should climb back up once it decks the studies and comes out with some financing options.