Chieftain Chatter
Season 5
Episode 179
That’s one big dam…
Iron ore received a much needed boost following the Chinese government’s plan to build a 1.2 trillion yuan (US$165 billion) massive hydropower project in Tibet which should be a positive stimulus for the economy. The iron ore price received a much needed boost to US$104 per tonne which is its highest level since February. The project maybe a solution to soaking up some overcapacity left behind by their ailing property and construction markets, but one can hardly believe this will be the golden goose to have a sustained impact on the iron ore and other commodity prices. Apparently, the China Iron and Steel Association held a “love in” with the major steelmakers and government heads to agree to stop shitting in their own nests by curbing their hyper-competitive or involution activities which has demolished their margins. Without providing any detail the group is establishing a new system aimed at stabilising growth and pushing for elimination of outdated capacity in 10 key industries including steel, non-ferrous, petrochemicals and building materials.
Ironically, the mining and energy industry was excluded from the Australian government’s economic roundtable discussions which has invited speculation that Chalmers is considering robbing Peter to pay Paul and whack a “super tax” on big miners to fund other tax relief policy. You will recall KRudd’s (I really can’t stomach that prick!) attempt to introduce such a bounty on our big miners was thwarted by a significant lobbying campaign in 2010. Former Treasury Secretary Ken Henry believes Chalmers cannot deliver on his promised cuts without a significant contribution from the mining industry and hence his call for a “Fossil Fuel Export Tax” which could be worth up to $50 billion per year. Chalmers increased the current Petroleum Resource Rent Tax (PRRT) last year, but it failed to deliver the forecast revenue and thereby increasing the anxiety of the major minors as to why they would be excluded from such discussions. The miners are particularly concerned about the prospect of the diesel fuel rebate being wound back which is currently worth $1.4 billion annually.
Many compelling reasons for the copper price to continue it’s escalation and it continued last week with renewed demand from China following reports that the much mined “scrap copper” is fast becoming a rare commodity.
Chinese imports of refined copper jumped 15% in June from the previous month with 50% tariff on copper imports fast becoming reality as shipments of US scrap metal to China has plunged to a 21-year low and therefore reducing supplies of a key feedstock for many of the Asian nation’s smelters. The US has been China’s top source of scrap metal, with the raw material accounting for about one-third of their refined copper production. In addition, Chinese smelters are struggling with fees near zero to process ore due to overcapacity and setbacks at global mines. Copper traders remain wary that there’s still no detailed plan from the Trump administration for the implementation of the copper tariff that’s set to take effect in less than two weeks.
The total value of Crypto assets rocketed through US$4 trillion following Congress’s passing of the first federal legislation to regulate stablecoins and thus pave the way for crypto in everyday financial transactions. For the record stablecoins are those that actually hold their value unlike the volatility that exists in the likes of Bitcoin and other crypto’s however stablecoins are usually backed by the US dollar. Known as “The Genius Act” the use of stablecoins of which the most popular is Telfer and can be exchanged for thousands of other crypto currencies. Of course, Trump is fully conflicted with this bill having launched his own stablecoin in March called USD1 plus his other crypto projects which have raised eyebrows. “This comprehensive framework gives issuers, builders, and regulators the clear rules they have been asking for,” said Ji Hun Kim, CEO of trade group the Crypto Council for Innovation.
On the lighter side…
Not sure why this caught my attention but now I’m well versed on crypto I thought I’d turn my hand to AI (actually, I thought it was “A one” if I’m honest) Anyway, this is well known Influencer Mia Zelu who enjoys a lap of luxury flitting around the globe to major events. That’s all well n good however there’s just one catch! She’s not real but AI generated and has amassed 165,000 followers from 55 posts from her short stay at the crease…had me stumped! Apparently, anyone can create this with a few prompts to your favourite AI platform and may seem harmless be also potentially problematic as the AI field that lacks any regulation. i.e. posting fake images of real people in compromising positions!
Quote of the week…
“The stock market’s muted reaction to the latest volley of tariff headlines suggests investors may be growing numb to them,” said Chris Larkin at E*Trade.
School of hard rocks…
Emerald Resources (ASX:EMR) have announced resource upgrades from both Memot and Dingo Range gold projects with Memot delivering a 30% resource increase to:
31.4m tonnes @ 1.3g/t Au for 1.34m ounces.
This includes a higher-grade component of 1.03m ounces @ 1.9 g/t Au and drilling continuing with an additional 11,000 metres completed since which will be incorporated into another upgrade later this year.
Meanwhile, the Dingo Range (assume that’s in WA somewhere) resource has increased by 30 odd pussent to:
39.9m tonnes @ 1.1g/t Au for 1.36m ozzies
This also includes a higher grade component of 1.07m ounces @ 1.4g/t Au and likewise will have the bejesus drilled out of it for another resource statement later this year as will feasibility studies on both projects to advance to development with a realistic path towards 350,000 ounces of production per annum.
Capricorn Metals (ASX:CMM) have delivered a solid resource upgrade at Mt Gibson adding a further 500,000 ounces to take the global resource estimate to 4.5m ounces. The revised number includes a maiden contribution from the underground at Orion South and Highway deposits delivering:
6.84m tonnes @ 3.1g/t for 684,000 ounces (Orion South)
3.93m tonnes @ 0.9g/t for 110,000 ounces (Highway)
This gives CMM a combined global resource at Karlawinda and Mt Gibson of
247.8m tonnes at 0.85g/t Au for 6.8 million ounces
The quality of this maiden underground resource reinforces CMM’s commitment to a strategy of growing the resource, delivering ore reserves and doing the work to include these higher-grade underground zones into the mine plan and ultimately seeing MGGP become a long mine life open pit and underground operation. The open pit resource estimate uses a very conservative A$2,400 gold price.
While on CMM they decided to use their $4b market cap to make a complimentary acquisition of Warriedar Resources (ASX:WA8) via a binding Scheme Implementation Deed (SID, he’s active atm). Under the terms of the deal Sid has arranged CMM to acquire 100% of WA8 on the basis of 1 CMM share for every 62 WA8 shares implying a value of 15.5 cents or $188m which represents a 30% premium. As highlighted in the map below WA8’s flagship projects are Field's Find and Golden Range Projects, located about 100km north of CMM's Mt Gibson Project. Golden Range hosts an existing JORC resource of 31m tonnes at 2.3 g/t AuEq for 2.3m ounces AuEq of which 1.38m ounces is gold and the balance is antinomy. The acquisition is handy add on to the Mt Gibson resource with a significant under explored landholding (788km2) to exploit. All WA8’s resources sit on granted mining leases and comes with an 800,000 tpa CIL plant which last operated in 2019. Other infrastructure includes internal sealed haulage roads, airstrip, grid power connection options, water supply and a 124-person camp.
With a bit of spark back into the lithium price it was heartening to see some associated stocks gain some traction on the back of good news with Wildcat Resources (ASX:WC8) releasing met drill results from Tabba Tabba. The Leia Pegmatite results included.
87m @ 1.32% Li₂O from 91m
33m @ 1.32% Li₂O from 204m
36m @ 1.14% Li2O from 134m
19.5m @ 1.47% Li₂O from 12m
While results from diamond drilling at the Luke Pegmatite returned:
48m @ 0.94% Li₂O from 188m
Many of the intercepts included some encouraging high-grade sections up to 2% Li₂O and multiple holes ended in mineralisation, indicating potential for resource extension.
RC drilling has been undertaken up-plunge of Leia at near surface pegmatite targets with results to follow meanwhile, they are continuing work on the PFS, DFS, and regional exploration and still have $55m cash on hand at the end of June.
Perseus Mining (ASX:PRU) are well into a resource definition drilling program at their Nyanzaga Gold Project (NGP) in Tanzania having drilled some 35km’s since December down to a 20mx40m spacing. They have released some broad high-grade intercepts including
51m at 4.4g/t Au from 269m
36m at 6.3g/t Au from 292m
62m at 2.4g/t Au from 432m
63m at 6.5g/t Au from 435m
69 m @ 3.94 g/t Au from 335
54 m @ 9.69 g/t gold from 577m
Drill holes have been designed to infill existing drilling, collect additional information including metallurgical and geotechnical data and most importantly evaluate potential strike and depth extensions to the mineralisation.
The current Nyanzaga Resources are 3.75m oz’s @ 1.3g/t Au and reserves of 2.34m oz’s @ 1.4g/t Au however this drilling highlights the real potential for resource and reserve growth and hence mine life beyond the existing stage 1 of 11 years... The Nyanzaga development has pre-production capex of around $900m for a 5mtpa operation expected to average 200,000 oz’s pa at an attractive US$1,900/oz AISC with first gold expected in early 2027.
Whenever there is talk of corporate activity in the gold sector Regis Resources (ASX:RRL) appear to be one of the first to throw their hat into the ring. Again, it has come to pass that RRL are seriously looking at acquiring the outstanding 70% of Tropicana they don’t already own from Anglo Gold Ashanti. You will recall they acquired 30% of Tropicana back in 2021 for $900m which seemed like a big ticket at the time, but the gold price has put paid to that debate. RRL is now in the enviable position of having in excess of $500m on hand and no debt to exploit acquisition opportunities. Meanwhile, RRL produced 87,400 ounces for the quarter at an AISC of $2,812 leading to annual production of 373,000 ounces which fell into the upper end of guidance at $2,531 AISC. FY2026 guidance sits at 350,000 to 380, 000 ounces at an AISC of between $2,610 to $2,990 with growth capex forecast to be $180m to $195m with most of the spend at Duketon.
Brightstar Resources (ASX:BTR) have continued their regional consolidation plans with the acquisition of Aurumin (ASX:AUN) whereby AUN shareholders will receive 1 BTR share every 4 AUN shares or about 12 cents a share for AUN holders.
The deal represents a value of around of $62 per resource ounce based on AUN’s 950,000 oz @ 1.5g/t Au inventory. The complementary nature of combining their respective tenements in the Sandstone region seems very logical to add value to both groups of shareholders. The consolidated greater Sandstone Project would have a combined total resource base around 2.4m ounces @ 1.5g/t Au on granted mining leases, emerging as a significant, near-term open pit gold development opportunity. BTR took the opportunity to raise an additional $50m in the process to fast track their exploration and production ambitions.
Mine contractor Perenti (ASX:PRN) gave the market a timely boost with the announcement that their FY2025 free cashflow had exceeded their $150m guidance coming in at $280m. Although the figure does include the one-off sale of PPE for $75m and $17m in inventory as part of the conclusion of the Barminco contract in Botswana it’s still an impressive outcome with normalised FCF of around $190m exceeding most analyst expectations. In addition, PRN also announced that capex for FY2025 would come in at $230m which is around 10% lower than guided. In the process PRN reaffirmed FY2025 guidance of $325m to $345m EBITDA. The cash generation should lead to debt reduction and ultimately drive positive share price movements as net debt is replaced by market cap.
Who’s shaking the tin…
Brightstar Resources (ASX:BTR) - $50mat 48 cents
IperionX(ASX:IPX) - $70m at $5.00
Northern Stawell Minerals (ASX:NSM) - $1.5m at 3 cents
Arizona Lithium (ASX:AZL) - $900k at $0.0082 cents
Meteoric Resources (ASX:MEI) - $42.5m at 14 cents
West Coast Silver (ASX:WCE) - $6m at 11 cents
Strike Energy (ASX:STX) - $85m at 12 cents
Sun Silver (ASX:SS1) - $30m at 92 cents
American Rare Earths (ASX:ARR) - $15m at 32 cents
Bryah Resources (ASX:BYH) - $170k at $0.006 (to feed the chooks)
Power Minerals (ASX:PNN) - $2.6m at 5 cents (plus 1:2 option)
Lake Resources (ASX:LKE) - $2.1m at 3.23 cents
Octava Minerals (ASX:OCT) - $1.5m at 3 cents (plus 1:2 option)
Larvotto Resources (ASX:LRV) – $60m at 68 cents
St George Mining (ASX:SGQ) - $5m at 3.8 cents
Vanadium Resources (ASX:VR8) - $1.2m at 3.3 cents (plus 1:2 option)
Asara Resources (ASX:AS1) - $20m at 5 cents
Australian Strategic Materials (ASX:ASM) - $8m at 56.5 cents
Heavy Minerals (ASX:HVY) - $200k at 31 cents
Norfolk Metals (ASX:NFL) - $3.5m at $0.125
A meeting with…
The Forgotten (Rob) Waugh, Non-Exec Chairman of Caprice Resources (ASX:CRS)
We have always liked Rob – genuine straight shooter with minimal BS who tell is how it is. He did a terrific job at Musgrave Minerals (ASX:MGV) adding lots of value before RMS tapped him on the shoulder and just looking at RMS’s last qtrly, Cue, the asset they acquired from MGV generated a lazy $291m in free cash in FY’25 and some $144m in free cash in the 4th Q processing 149kt @ 8.19 g/t Au. So, we were always interested where Rob might pop up and hence our interest was piqued when we became NE Chairman of CRS in April’25. CRS’s key project is the Island Gold project which is located some 10km to the north from the old MGV Break of day deposit (1moz) and south of RMS’s Mainland deposit and WGXs Comet 1moz deposit. Initial drill results in Feb’25 returned some excellent results including 28m @ 6.4 g/t Au from 114m, 27m @ 3 g/t Au from 48m and 15m @ 4.6 g/t Au from 112m. This was enough to send the stock ‘Spanish’ almost tripling on the day with almost 50% of register turning over in a day. Mineralisation is hosted in Banded Iron Formations with mineralisation occurring when cross cutting structures controlling high grade gold lodes intersects the BIF. Since then, the stock has settled down to range trade between 5c to 6.5c and in early June they raised $7m at 5.2c to give them a clear runway for drilling. We had a small nibble at this placement. The labs were a bit slow with results taking more than six weeks, so it was a relief to see some Phase two results come out this week. Better results included 11m @ 17 g/t Au from 170m, 10m @ 11.7 g/t Au from 175m and mineralisation remains open at depth. The interesting take from speaking with Rob was that the real ‘Break of Day’ look alike targets have not been tested yet and occur to the west of the current drilling program. An air core rig is slated to start testing this target in August/September. The stock added 22% on the day of the results on good volume and has since found a base around these prices. It now has a market capitalisation of ~$40m with cash of $7m which doesn’t seem too onerous considering some other valuations going on in the red-hot gold sector. With Diggers and Dealers almost upon us I reckon it is one story that should get a bit of traction – but maybe that’s because I’m long (shares) already!!