Chieftain Chatter
Season 5
Episode 175
Peace Offering…
In what can best be described as a waving of the white flag, Iran’s retaliatory response to the US attacks on their nuclear enrichment facilities was very much a signal of a willingness to de-escalate hostilities.
A pre- warned attack on a US Air Base in Qatar was largely intercepted with the number of missiles fired matching that of the US attack. Iran also highlighted that Qatar was “our friendly and brotherly country” and that Iran “poses no danger” to Qatar.
Of more significance is Israel’s (and Iran’s) adherence to the cease fire and will Trump accept the tit for tat war games as an end to the conflict. However, it’s still yet to be known how effective the US strikes on Iran’s nuclear facilities actually were with little evidence other than taking Don’s word.
Meanwhile, the US market continued its upward spiral as soon as the sniff of a ceasefire echoed through the various media sources. This comes despite another deterioration in consumer confidence in the US which slid from 98.4 to 93 with uncertainty surrounding the future of the labour market denting sentiment. Fed Chairman Powell highlighted that recent inflation numbers were encouraging and hence prospects of a rate cut emerged again where he suggested they could move to a neutral setting (3%) if inflation remains at bay and the labour market continues to weaken. The interest rate market is suggesting under a 20% chance of a cut in July but is pricing in a 25-basis point cut at the September meeting and similar in December. One can only feel vulnerable as the July 9 tariff deadline draws closer and one would expect the Fed will take a wait and see approach on the inflationary impact of tariffs. The Fed also released plans to reduce the leverage ratio that impacts the amount of liquidity the major banks must hold in reserves. Under the new proposition the rate will reduce from 5% to a range of 3.5% to 4.5% depending on their credit rating and is believed will reduce bank level capital by US$210 billion. There has been some objection to the plan citing the increased risk of a potential major bank failure with a Democrat Senator recently commenting that the current leverage ratio was a “critical safeguard” that promotes financial stability and warned that the economy already faces risks from Trump’s trade war…. fair point.
The more negative articles you read on the outlook for the lithium price the closer we are to the worm turning and the price lifting out of the shitter. According to a Bloomberg New Energy Finance (BNEF) article Lithium carbonate will be in surplus until 2032, at only 70% plant capacity utilisation. The article also highlights Trumps support of the fossil fuel industry and rolling back support for renewables as a significant factor that has “negatively impacted EV sales and stationary storage deployment”. You have the perfect storm of supply glut, negative policy resulting in a languishing EV demand and commodity price. In the process BNEF has lowered demand forecasts for nickel and cobalt for similar reasons as lithium with the adoption of lithium-iron phosphate in batteries which requires no nickel or cobalt. The capacity utilisation of nickel and cobalt refineries is currently at around 40% and they conclude lithium hydroxide will be in surplus until 2034, nickel sulphate until 2027, and cobalt sulphate until at least 2035. With regard to the lithium market, we can expect that a swing into deficit mode is likely to be a short one given this amount of utilisation available and raw product waiting on the sidelines.
In a further catalyst for uranium stocks the Sprott Physical Uranium Trust (SPUT) received unprecedented demand for their capital raising last week resulting in them upsizing the raise from US$100m to US$200m and at a premium to their prevailing share price. SPUT will as a result enter the spot market and purchase a further 2.5m pounds of yellow cake. Although this does not have a significant impact on the physical uranium price it’s surely a signal to nuclear utilities to hasten their uranium fuel purchasing activities via the term contact market. Uranium bull Andrew Hines from Shaw’s recently concluded “Term contract price ceilings have pushed up into the US$140-150/lb range, which is indicative of where fuel buyers are concerned prices may head. We think those concerns are well placed. At the WNFM conference it was clear that utilities now recognise the challenge in securing fuel, and the impact of aggressive Chinese buying will be profound”. We expect the uranium price to strengthen through 2025 as utilities give in to pent up demand and return to the market. We repeat our forecast for prices to head above US$100/lb this year, and for the spot uranium price to reach ~US$150/lb by the end of 2026. SPUT may now have accelerated that outlook”
Quote of the week…
"You know what, we basically have two countries that have been fighting so long and so hard that they don't know what the f*** they're doing," he told reporters at the White House.
On the lighter side…
School of hard rocks…
Predictive Discovery (ASX:PDI) have released a positive Bankan DFS for standalone gold production via a 4.5mtpa CIL plant which will cost in the order of $724m (plus $50m contingency) which is up a bit from the PFS. The project will produce 250,000 ounces per annum for over 12 years at an AISC of $1,650 per ounce. Over this life the average grade will be1.86g/t with the open pit averaging 1.4g/t and 3.65g/t for the underground. The key changes from the 2024 PFS include a few technicalities which result in a smaller open pit at North East Bankan which results in a reduced strip ratio of 1.9:1 (from 4.6:1) and the plant capacity reducing from 5.5mtpa to 4.5mtpa. From a permitting perspective they are in the final stages of their application which they expect to receive imminently resulting in works commencing this calendar year (however, it is Africa) and first production is planned for mid-2028.
SRG Globals (ASX:SRG) upward trending share price has been supported by the announcement of $850m of new contracts with existing customers across the full gamut of their diversified blue chip client base. The contracts secured in Water, Energy, Oil and Gas, Industrial, Resources, Health, Education, Defence, Data Centres and Communications is a strong endorsement for the diversified earnings stream of repeat customers. The market is now suggesting SRG will achieve the higher end of their $125m to $128m earnings target and a $3.4 billion order book should underpin further growth. Many of the new contracts are multi term deals and consistent with SRG’s well promoted recurring earnings streams. David Macgeorge, SRG Global Managing Director, commented: “We continue to secure a number of significant contracts across Australia and New Zealand in a broad range of sectors with blue-chip repeat clients. These contract awards are a further demonstration of our market-leading capabilities as a truly diversified infrastructure services company and positions the Company well to continue to deliver long-term sustainable growth.”
AIC Mines (ASX:A1M) tapped the market for a timely $55m at 30 cents to fund their plant expansion at their Eloise Copper Mine in Qld. The total capex to expand the operation to 1.1mtpa will be in the order of $115m including $77.6m for the processing plant and $36.7m for non-plant infrastructure. They also outlined the capital required for the Jerhico link drive and stage 1 of the underground development in their quest to become a 20,000 tonne per annum copper producer in FY2027. Eloise currently sits with a resource of 5.9m tonnes @ 2.5% Cu & 0.6g/t Au while the Jerhico resource is 6.1mt @ 1.8% Cu and 0.4 g/t Au. With regard to funding over and above the $55m raised in equity they have $61.5m prepayment facility and an offtake agreement with Trafigura which requires A1M to deliver of 400,000 tonnes of concentrate from the Jericho with no hedging requirements. A1M are forecasting Eloise will deliver in excess of $60m free cashflow over the 18month timeframe of the expansion works while their current cash sits at $27m.
Greatland Resources (GGP) commenced trading on the ASX on Tuesdee delivering a healthy 10% uplift for those investors who took up stock at $6.60 in the IPO. GGP have hit the ground running since acquiring the Telfer gold mine from Newmont (ASX:NEM) and is on track to achieve guidance this quarter expecting to produce 83,000 ounces at $2,168 AISC. As often is the case when acquiring assets off majors, operational efficiencies can be achieved and in this case mine life potential added beyond the existing 2-year life. Meanwhile, their development proposition at Havieron has a solid future with fundamentals including:
300,000 ounces pa @ $1,400 AISC LOM
15-year mine life via 4.25mtpa throughput
$300m Capex
Pressure is building on the government of Panama to re-open First Quantum’s (TSX:FM) Cobre copper mine following thousands of workers mounting a protest requesting the President José Raúl Mulino to start negotiations with First Quantum for the reopening of the giant mine.
Panama legislators had ratified the new contract between the executive and First Quantum, but reconsidered their decision after massive protests almost paralysed the country. Cobre Panama, Central America’s largest open-pit copper mine, produced 330,863 tonnes of copper in 2023 before the government ordered to shut it down. It would have become a 100 million tonnes a year operation in 2024, placing it near the top of the world’s copper throughput ranking. In April, a joint venture between First Quantum Minerals and the Panamanian government was presented as a practical solution to the dispute that has kept the Cobre Panama copper mine shut since November 2023.
Emerald Resources (ASX:EMR) has forecast a softer 21,000 ounces of quarterly production for the 4th quarter of 2025, which is well below the 25,000to 30,000-ounce guidance. The updated guidance is still due cutback activities limiting access to higher grade ore in the Okvau pit however normal activities resumed in June producing in excess of 10,000 ounces suggesting an annual rate of 120,000 ounces (maths gold star!). AISC’s are forecast to be around $1,876 Aussie rubels per ounce. Importantly for the remainer of calendar year quarterly production guidance remains on track for 25,000 to 30,000 ounces at an AISC of $1,400 to $1,560 per ounce. However, FY2026 production is expected to be in the range of 105,000 to 125,000 ounces which will be updated as the Okavau underground expansion evolves. The company confirmed they are on track to become a 300,000-ounce pa producer with the expansion plus development of their second Cambodian operation next year (Memot) plus the Dingo Range development in WA.
Westgold Resources (ASX:WGX) reported a maiden resource for the Fletcher Zone at their Beta Hunt project in WA. Stage 1 drilling tested a kilometre of the 2km’s of known strike at Fletcher delivering:
31m tonnes at 2.3g/t for 2.3m ounces.
This number blows their Stage 1 exploration target of up to 1.2m ounces out of the water and also exceeds their global exploration target of 2.1m ounces and stage 1 remains open at depth plus another 1km of strike. The global resource at Beta Hunt now stands at 4.97m ounces @ 2.51g/t and underpins a potential expansion of the Higginsville mill which according to Argonaut could expand from 1.6mtpa to 2.6mtpa for around $120m with a decision in line from mid FY2026. In the meantime, infill drilling of stage 1 has commenced with a maiden reserve due in the 2026 FY and in addition stage 2 drilling will commence in the FY2026 year.
Lotus Resources (LOT) reports that that cold commissioning at their Kayelkeera Uranium mine in Malawi is well underway with hot commissioning planned for next quarter. Not exactly sure what cold n hot commissioning is but can only assume they will be producing the shit shortly.
They also highlighted that initial feed will be from stockpiles with first ore mined and delivered in Q4 of this calendar year and their owner operator model for mining should deliver operating costs of under the DFS US$34.50 per pound. Lotus Managing Director Greg Bittar commented: “We are pleased to have commenced cold commissioning of the Kayelekera processing plant, already completing this for several key plant areas including pre-leach, leaching and resinin-pulp circuit. The commencement of this critical restart stage positions Lotus well for Q3 2025 restart of production at Kayelekera.
The quest for quality development ready copper projects has been well illustrated in the battle for control of New World Copper (ASX:NWC) which has taken quite a few twists and turns over the last week or so. Speaking of wars there’s nothing like a good bidding war following Canada’s Kinterra Capital GP Corp pipping Central Asia Metals (CAML) bid for the reigns at NWC. Kinterra is offering 5.7 cents per share following CAML’s improved 5.5 cent offer with both suitors now having substantial holdings (Kinterra 12%, CAML 5%). CAML has also committed to provide A$10.0m in funding via a placement of new shares which is conditional on no competing proposal being received in the next 14 days. But wait there’s more CAML went and purchased another 7% at 6.2 cents and subsequently increased their cash offer too that price…over to Konterra to fold in or play the Biggus Discuss game. NWC’s Antler Copper project in Arizona ticks a lot of boxes with the potential to produce 30,000 tpa of CuEq for over 12 years with and NPV of US$500m and a pre-production capex of US$300m. With most of its infrastructure on public land and key approvals already well progressed, the previously operating underground mine could be approved by early next year and in production as soon as 2027, within the term of pro-mining US President Donald Trump.
Who’s shaking the tin…
Coupla weeks’ worth…
Alligator Energy (ASX:AGE) - $17.25m at 3.1 cents
AIC Mines (ASX:A1M) – $55m at 30 cents
Riedel Resources (ASX:RIE) – $1m at 2.5 cents
Galan Lithium (ASX:GLN) – $20m at 11 cents
Cygnus Metals (ASX:CY5) – $18.3m at 8.6 cents
Odyssey Gold (ASX:ODY) - $4m at 1.8 cents (plus 1:2 option)
South Hartz Potash (ASX:SHP) - $1.83m at $0.003
Meeka Minerals (ASX:MEK) - $60m at 15 cents
North Stawell Minerals (ASX:NSM) – $1m at 3 cents
Krakatoa Resources (ASX:KTA) – $1.3m at 1.05 cents
Turaco Gold (ASX:TCG) – $60m at 44 cents
Lakes Blue Energy (ASX:LKO) – $6.5m at 75 cents
Investigator Resources (ASX:IVR) - $4.3m at 3 cents (plus 2:5 option)
Blaze Minerals (ASX:BLZ) - $2.422m at $0.002
EV Resources (ASX:EVR) – $650k at $0.003
Tali Resources (ASX:TR2) IPO - $7.5m at 20 cents
Prominence Energy Ltd (ASX:PRM) - $1.75m at $0.0035 (plus 1:3 option)
Great Boulder Resources (ASX:GBR) - $12.5m at 6.1 cents
Lightning Minerals (ASX:L1M) - $2m at 5 cents
New Murchison Gold (ASX:NMG) - $15m at 1.7 cents
Ballard Mining (ASX:BM1) - $30m at 25 cents
GBM Resources (ASX:GBZ) - $13m at $0.006
Sunrise Energy Metals (ASX:SRL) - $6m at 30 cents (plus 1:1 option)
Boab Minerals (ASX:BML) – $6m at 16 cents
MTM Critical Metals (ASX:MTM) - $50m at 55 cents
Bannerman Energy Limited (ASX:BMN) - $85m at $3.20
Develop Global (ASX:DVP) - $180m at $4.50
QPM Energy (ASX:QPM) - $10m at 3.1 cents
Ragusa Minerals (ASX:RAS) - $ 427k at 1.2 cents
A little trip with…
Emyria Ltd (ASX:EMD)
Ever open-minded about opportunities to make a quid, we met up with the management of listed MDMA dealer Emyria (EMD.ASX). Which is a terribly facetious way of describing a company that is endeavoring to cure people with enduring mental health conditions. So, from here on in, I shall attempt to be more reverential.
EMD are one of the first to market globally in setting up commercial clinics to treat patients with various mental health conditions with MDMA. The company has announced excellent results with patients whose conditions had previously proved resistant to traditional drug and behavioral therapies. Amazingly, these outcomes are realised after only a few doses, which are delivered at specialist clinics. More importantly, EMD’s treatment course for PTSD recently received vital 3rd party verification, with Medibank providing full funding for eligible customers receiving treatment at EMD’s Perth based Empax clinic.
I don’t think we need to dwell on the potential market size for mental health solutions, I could literally reach out and touch several strong patient candidates from my current seat! On a more serious note, the management quoted some quite alarming statistics on the number of first responders in Australia who are currently sidelined with metal health issues. So, with treatments costing $20k-$30k a pop, the potential economics for EMD are compelling.
Encouragingly, the management and board own shares and have bought on the market and taken part in capital raises in a meaningful way along the journey. On the negative side, capital structure is not ideal and EMD appear to have been on that horribly familiar micro-cap journey of being viewed as trading as cum raise often than not, committing all the standard sins along the way. However, the company has just completed a capital raise and now has approx. $4m cash in the bank, which should be more than enough to get to the point of real proof of concept.
The current market cap of EMD is approx. $15m. There are plenty of worse stories trading any multiples of this. Looks like a decent punt to me.