Chieftain Chatter
Season 5
Episode 178
How long, can this keep going on?...
The impost of 50% tariffs on copper imports into the US sent COMEX prices north of US$5.50 per pound, however, fortunately for Aussie producers the bulk of our
Markets have largely continued to ignore the potential impact of tariff and inflation concerns with sustained rises across the board, largely continuing ahead of yet another quarterly earnings reporting season in the US. Earnings reporting season takes on extra significance as corporate America guides to the impact of tariffs on their forecasts. Meanwhile, US CPI is starting to sneak up again with June CPI rising 0.3% for the month and 2.7% year on year which is the fastest level in 5 months while core inflation increased to 2.9%. This number would suggest future tariff pricing is being adjusted especially in goods like furniture, apparel, and even coffee. “More evident signs of passthrough from tariffs to goods inflation is the main story of the CPI report,” said TD Securities. As a result, the pundits have reduced the odds for September rate cut from over 60% to 50% while expectations of a recession have taken a dive following a survey of US economic forecasters suggesting chances of a recession in the next 12 months sit at 33% down from 45% in April.
Market leader Nvidia continues to soar to astonishing heights after passing through US$4 trillion in market capitalisation. To put this valuation into perspective, a few facts:
More than US$900 billion greater than Apple
Accounts for 3.6% of global GDP
Worth more than the entire German economy.
Is greater than the combined share markets of UK, France, and Germany
Almost double the size of the entire ASX
And it well and truly eclipsed the combined global market cap of the top 50 miners…
While on a tech bent Meta Chief Mark Zuckerburg announced they are rolling out several gigantic data centres to satisfy their AI ambitions with the first called Hyperion expected to supply 5 gigawatts of computer oomph to supply their AI lab.
To put this in perspective the scale of Hyperion would engulf most of Manhattan and will be located in Louisiana at a cost of around US$10 billion. The development will be staged bringing on 2 gigs initially by 2030 and then scale up accordingly to 5 gigs.
Another Meta 1GW data centre called Prometheus is expected to come online in 2026 and will make Meta one of the first big tech companies to control AI data centre of this size in the race for AI supremacy. The issue then becomes how do you power these energy hungry beasts which will use enough electricity to power millions of homes. The Trump administration has been unequivocally supportive of these rollouts and in a recent article, U.S. Secretary of Energy Chris Wright called for the U.S. to “lead the next major energy-intensive frontier: artificial intelligence.”
He noted that AI transforms electricity into the “most valuable output imaginable: intelligence,” and that the federal government would accelerate the production of energy derived from coal, nuclear, geothermal, and natural gas. The article suggests experts predict that data centres could account for 20% of America’s energy consumption by 2030, up from just 2.5% in 2022.
Quote of the week….
For all those men who say, “Why buy the cow when you can get the milk for free.” Here’s an update for you, Nowadays, 80% of women are against marriage. Why” Because women realise it’s not worth buying an entire pig, just to get a little sausage”?
Ouch…Isla Fisher post-divorce settlement.
On the lighter side….
School of hard rocks…
The battle for New World Copper (ASX:NWC) continues with Kinterra initially lifting their bid by point one of a cent to 6.3 cents per share and agreed to increase it to 6.4 cents should they receive greater than 30% acceptances. Meanwhile, the NWC board has assessed the Kinterra Takeover Offer and has determined that it may reasonably be expected to lead to a superior proposal compared to the $0.062 per share takeover offer from Central Asia Metals Plc (LON:CAML) keeping in mind CAML sits with a 12.1% stake in NWC while Kinterra holds 19.3% of the register. With the market currently trading above the bid price it was only a matter of time before CAML responded and hence the NWC board subsequently recommended a revised 6.5 cent cash bid from CAML which was quickly trumped (excuse the pun) by Kinterra improving its bid to 6.6 cents per share, or 6.7 cents if Kinterra’s interest exceeds 30% by 5pm on 24 July 2025. Could someone please deliver a knockout blow here!
Although Minerals 260 (ASX:MI6) are hovering around their recent capital raising price they haven’t been letting the grass grow under them drilling significant metres which is ongoing, and they have given an update on their forthcoming PFS which is due for release mid next year.
All the PFS workstreams are underway highlighting that met test work from Bullabulling shows the mineralisation is free milling and adjusting grind size will further improve recoveries. Previous and ongoing permitting work suggests no major approval impediments exist to securing the necessary
permits for development with FID expected in in 2027 and first production in 2028ish. MI6 released the results of 55 drill holes two weeks ago as part of their 130,000-metre infill and extensional program which continues in earnest.
Looking to cash in on the current copper price euphoria Encounter Resources (ASX:ENR) have commenced a MIMDAS geophysical survey at their Jessica copper project in the Territory in cahoots with South 32 (ASX:S32). You may well ask wtf is a MIMDAS survey and a fair question that is. In consultation with our resident Geologist Prof. Google, I discovered it’s an electrical survey that measures subsurface properties to detect and map mineral deposits or other geological features. It is an advanced technique that uses multiple electrical signals, including resistivity, IP (Induced Polarization), and MT (Magnetotelluric) data, to gain a more comprehensive understanding of the subsurface. S32 are earning a 60% interest by spending $15m with ENR free carried through to a scoping study and potentially winding up with a 25% interest as a result. The survey will commence in the next coupla months with diamond drilling to follow up in October.
Ballard Mining (ASX:BM1) made a solid debut on the ASX listing last Mundee at a healthy 40% to their 25-cent issue price at IPO after being spun out of lithium hopeful Delta Lithium (ASX:DLI). BM1 raised $30m and has put together a solid register with the top 20 controlling in excess of 80% and the 3 largest shareholders being Delta Lithium (ASX:DLI), Hancock and Minres (ASX:MIN). BM1 hosts a 1.1m ounce 3.3g/t gold resource at Mt Ida and funds will be utilised to complete 80,000 metres of infill and 50,000 metres of exploration at the Baldock and Ballard deposits. The plan is to have 3 RC and 1 diamond rigs on site in the next few weeks with a maiden reserve targeted for Baldock in the June quarter next year. Although there is a nearby mill suitable the plan seems to be a standalone operation with FID expected in late 2027 but a focus on growing the existing resource and establishing a solid mineable reserve number seeming like a logical path
Always a worrying time and what could possibly go wrong usually does but Lotus Resources (ASX:LOT) have gone from cold to hot commissioning at their Kayelekera Uranium mine in Malawi with first ore sourced from waste material being fed into the crushing circuit and SAG mill, with hot commissioning of the crushing, grinding, pre-leach and leach areas currently underway. The waste material will run through the plant to calibrate the performance, following this ore will be added along with the reagents to begin leaching the uranium. The elution, precipitation, drying and packaging circuit commissioning remains underway, ahead of first uranium production this quarter Their cash balance at end June was A$77.3m which represents a quarter on quarter decrease of $35.3m with no debt drawn keeping in mind LOT has a $76m in working capital facilities, alongside a $23.5m unsecured loan.
Some of the shine has come off Ora Banda’s (ASX:OBM) market cap following a weaker quarterly result at their Davyhurst operation producing 21,900 ounces for full year production of 92,400 ounces which was below the already downgraded guidance of 95,000 ounces (previously 100,000 to 110,000 ounces). AISC’s are expected to be higher than the $2,600 per ounce guided impacted by slower than expected ramp-up of the plant and some recent mining delays at the Riverina underground. The disappointing June quarter number was mainly due to a deferral of a 3,000 ounce stope into FY2026 however updated FY2026 guidance suggests a solid 55-60% production increase to 140,000 to 155,000 ounces at an AISC of $2,800 to $2,9000 which was higher than the market was anticipating. OBM are cranking up the exploration and resource development budget to $73m and doubling the meters drilled to extend mine live, and provide the next round of mining prospects (Waihi, Round Dam etc)
Following MP Materials (NYSE:MP) massive deal with the US Department of Defence (DoD) last week they have backed it up with a US$500m partnership with Apple (AAPL:NYSE) to produce recycled REE magnets with MP’s market soaring to just under US$10 billion
Under the agreement, MP will supply Apple with magnets produced at it’s scaled-up Fort Worth magnetics facility using recycled REE feedstock processed from MP’s Mountain Pass mine. The two companies will build a factory in Texas, with neodymium magnet manufacturing lines tailored for Apple products, the iPhone maker said Tuesday in a statement. The world’s dependence on China for rare-earth permanent magnets that are essential for consumer tech, cars, wind turbines and fighter aircrafts, has become a flash point in the Asian nation’s trade war with the US.
After the Trump administration imposed 145% tariffs on China, boasting that it had the upper hand, Beijing turned the tables by essentially shutting down exports of the critical component. “Rare earth materials are essential for making advanced technology, and this partnership will help strengthen the supply of these vital materials here in the United States,” Apple Chief Executive Officer Tim Cook said in the statement.
The market continued to reward WIA Gold (ASX:WIA) following further good news of a significant resource upgrade from their Kokoseb gold deposit in Namibia. The updated resource estimate consists of 89m tonnes @ 1.0g/t for 2.93m ounces (of which 1.8m ounces are indicated) with the constrained resource reported within an optimised pit shell using a conservative US$2,300 per ounce gold price. This represents a 37% or 800,000 ounce increase on the previous resource in April 2024 and importantly highlights a significant higher-grade component of 46m tonnes @ 1.4g/t for just over 2m ounces. This result should support a strong scoping study targeted for delivery later this year, followed by a DFS by mid next year. Argonaut suggested “the large jump in indicated ounces reported, which will be required to complete the DFS by mid CY26.We expect the Scoping Study to deliver a +10year 150kozpa operation, plus further upside should WIA be able to delineate an underground resource. Our internal estimates suggest a potential 300-400koz @ 3.5g/t underground mining inventory in current drilling”.
Figure 1: Isometric view of the updated Kokoseb MRE with US$2,300/oz optimised pit shell and block model
Although Genesis Minerals (ASX:GMD) reported strong annual production it came at a cost which is an industry wide thematic after reporting gold production of 214,311ounces versus guidance 190,000-210,000 ounces at an AISC of 2,398/ounce which just snuck into the upper end of guidance.
However, for the June quarter they produced 61,500 ounces at an AISC of $2,500 which still resulted in a strong cash and bullion position of $263m with GMD forecasting a net profit of $85 to 95m for the quarter resulting in a full year (FY2025) net profit of $210-$230m. The expansion of the Leonora mill was confirmed and already permitted to expand to 2.5mtpa and a potential expansion at Leonora is under consideration and hence guidance for FY2026 will be released in September.
Who’s shaking the tin…
Chariot Corporation Limited (ASX:CC9) - Placement - $0.05 - 1 for 2 Options
DY6 Metals (ASX:DY6) - $4.625m at 30 cents
Dalaroo Metals (ASX:DAL) - $1m at 2.5 cents (plus 1:3 option)
Hawsons Iron (ASX:HIO) - $1.2m at 1.7 cents
Many Peaks Minerals (ASX:MPK) - $13.5m at 72 cents
Andean Silver (ASX:ASL) - $30m at $1.20
Rare X (ASX:REE) - $1.76m at 2.2 cents (plus 1:2 option)
Sipa Resources (ASX:SRI) – $1.61m at 1.4 cents
Ordell Minerals (ASX:ORD) - $3m at 34 cents
Renegade Exploration (ASX:RNX) - $2.29m at $0.003 (plus 1:2 option)
Artemis Resources (ASX:ARV) – $4.75m at $0.004
Horizon Gold (ASX:HRN) - $12m at 48 cents
A zoom call with....
Ben Mackinnon CFO, Develop Global Ltd (ASX:DVP)
There is nothing like a lazy $180m in the ‘skyrocket’ to make a CFO feel a bit more comfortable about life and Ben was certainly upbeat on how the business was travelling. The company now has over 600 employees with a huge array of skills etc. This is a far cry from when Bill joined the company over 4 yrs ago and they had just 5 full time employees.
He was pleased with how commissioning was going at Woodlawn and impressed that is has already achieved like 80-85% of nominated plant through put with recoveries steadily improving but also noted that, unlike CIL plants where the ramp up (in most cases) is pretty quick, base metal plants take a bit of time to settle down etc and this will be the strong focus of the operations team over the next few months. The raising was all about accelerating the growth of both its key assets – Woodlawn and Sulphur Springs with the message that whilst they had a lot of interest in a potential 20% selldown of Woodlawn, the potential free cash generation of this operation made it more palatable to issue equity to fund its growth ambitions.
Growth options at Woodlawn include a potential plant expansion from 0.85mt to 1.35mtpa, increase the number of jumbo’s to accelerate development and production with a view that the mining rate can be sustained at 1mtpa. They are targeting a 15yr mine life and some 50km of underground drilling is planned and believe that like many other VMS deposits ... the more you drill, the more you find!
At Sulphur Springs, some $80m is planned in pre-production capex which includes commencing a decline to the base of the orebody and utilise a ‘bottom up’ mining method. The benefits of this will be revealed in the updated DFS due early in the Dec’ Q. The decline will also allow for dedicated underground drill drives and some 50km of resource extensional drilling is planned. Regionally, there is some 27km of highly prospective trend which has been sparsely drilled including Kangaroo Caves that already has a 3.6mt resource that was included in the original DFS.
The mining services business is trucking along with some $200m in revenue forecast for Bellevue Gold Mine in FY’26 and rather than spread themselves too thinly, have been quite selective about which jobs they will take on. It was hard not to come away pretty excited with all the growth options ahead of them and now with net cash of $120m and operations soon to be generating good free cash it feels like the positive momentum should continue.