Chieftain Chatter
Season 5
Episode 181
Heard it all before...
As valuations of tech stocks in the US continue to soar to new heights it’s only logical that some wealth managers come out with an arse covering warning to clients advising them to take a bit off the table as they expect the market to correct sharply in the near term. The economic fallout of Trumps ever moving policy is largely to blame, with a combination of slowing consumer spending, diminished economic growth, rising unemployment and inflation concerns expected to lead up to a 15% pullback for the S&P 500. According to Morgan Stanley strategist Mike Wilson a correction of around 10% could be felt this quarter as Trumps’ policies put more pressure on consumers and corporate balance sheets. Historically, August and September have been the S&P 500’s worst performing months. There’s always an alternate view out there with many pointing towards any pullback as a mere blip in the road with Evercore’s Julian Emanuel seeing volatility ahead and warns of a 15% drop but commented “Stay invested strategically in a core thematic portfolio of AI enablers, adopters and adapters.” Meanwhile Antipodean Capital continue to warn of an impending recession following the weaker than expected Non-Farm Payroll employment numbers out of the US in June with only 73,000 jobs added when a 115,000 increase was expected. Subsequently you can expect the “recession expectation” meter to elevate north of 50% and GDP forecasts to retreat and yet stocks are still being priced at boom time valuations. Obviously, the commissioner of the Bureau of Labor Statistics had to go on the back of the poor employment numbers, so Don promised to fix that.
Further evidence of a slowing US economy was supported by the release of ISM (Institute for Supply Management) which showed the US services sector essentially stagnated in July while the employment index contracted to pandemic levels. This latest round of negative data has some Federal Reserve Committee members calling for a rate cut before the damage is done. This view was support by San Francisco member Mary Daly suggesting "I was willing to wait another cycle, but I can't wait forever,". While this doesn’t necessarily confirm a September adjustment, they will be closely monitoring the next round of critical data (primarily employment and inflation) ahead of Septembers meeting before making a decision. Daly went on to say "I think the more likely thing is that we might have to do more than two (rate cuts)...we also should be prepared in my judgment to do more if the labor market looks to be entering that period of weakness and we still haven't seen spillovers to inflation."
According to the most recent “short selling” data and following the release by Boss Energy (ASX:BOE) they will not meet nameplate production the shorters have come out in force with BOE posting the largest increase in the most shorted stocks on the ASX.
It’s a brutal game and the hedge funds are quick to capitalise on others misfortune with the likes of Bellevue Gold (ASX:BGL), Pilbara Minerals (ASX:PLS), and Liontown Resources (ASX:LTR) all posting significant increase in their shorted positions in recent times.
Both LTR and PLS have the largest short interest free float positions while the largest short interest as a percentage of free float by sector, weighted by market cap are:
Energy 4.42%
Materials 3.19%
Utilities 2.41%
Total Australian short interest value A$36.2b vs. A$37b last week; Australia S&P/ASX 200 market cap A$3.08trillion.
Quote of the week….
“The same year, Forrest painted London’s black cabs green, replete with the jingle that “hydrogen can save us.” Four years later he can’t even light his own farts with the stuff.”
AFR’s Joe Aston on Andrew Forrest’s soured green dream!
On the lighter side….
School of hard rocks…
Wannabe takeover target Bellevue Gold (ASX:BGL) revealed they had achieved net zero emissions from mining in the first half. Anyway, moving on…
There is no doubt Lindian Resources (ASX:LIN) have a cracking rare earths deposit that ticks a lot of boxes with regard to grade, contaminants, strip ratio with low capex and operating costs. Hence, this has attracted the attention of one of the major players in Iluka Resources (ASX:ILU) to come to the table. LIN announced it has agreed to a binding loan and offtake agreement with ILU for it’s rare earth monazite concentrate from their Kangankunde project in blissful Malawi. Under the deal ILU will provide with a US$20m secured facility over 5 years in return for 6,000 tonnes per annum of that stuff for 15 years. ILU have also been granted first right of refusal on stage 2 of LIN’s production for a further 25,000 tonnes pa conditional upon ILU providing a further 50% of debt funding for stage 2. ILU’s Eneabba Rare Earths Refinery is currently under construction and due for commissioning in 2027 and 6,000 tpa represents about 10% of Eneabba's 55,000 tpa cracking and leaching capacity.
Like many, Caprice Resources (ASX:CRS) timed the release of their latest round of drilling for Diggers and a surging gold price with some solid numbers from their WA based Island Gold project. Drilling at Vadrian’s has extended high-grade gold mineralisation at the Evening Star discovery by at least 350m of strike and remains open with latest results including:
10m @ 10.9 g/t gold from 123m
9m @ 14.8 g/t gold from 154m
5m @ 18.3 g/t gold from 180m
8m @ 4.2 g/t gold from 125m
Vadrian’s remains open in all directions with grade appearing to improve at depth. New lodes were also intercepted at prospects called Condenser and West Star with results analogous to the initial hits at Vadrian with deeper holes to follow up. A 20,000 metre program will kick off in September focussed on extending the high-grade zones and delineating a resource.
The rise in in fortunes of Aussie shipbuilder Austal (ASX:ASB) continued in earnest last week following a significant upgrade to FY2025 earnings guidance. ASB now expects EBIT of greater than $100m up from $80m + and comes off the back of the finalisation of the accounting treatment related to Austal’s manufacturing facility for submarine modules (MMF3) contract with General Dynamics Electric Boat’s announced last September which has resulted in an EBIT contribution for FY2025. ASB also announced it had finalised terms with the government on their Strategic Shipbuilding Agreement (SSA) with ASB becoming the prime contractor for Landing Craft Medium, with 18 vessels worth between $1b and $1.3b commencing FY 2026 and completing 2032. ASB will also become the prime contractor on 8 Landing Craft Heavy vessels and expected to be under contract by the end of calendar 2025. ASB CEO Paddy Gregg said: “The government’s approval of the SSA is a defining moment for Austal. It will establish Austal Defence Australia as the Commonwealth of Australia’s strategic shipbuilder for Tier 2 vessels in Western Australia and reflects both Austal’s excellent defence shipbuilding record and the capabilities that Austal possesses to help the Australian Government to achieve its defence objectives.” Who doesn’t love a big boat picture…
Greatland Resources (ASX:GGP) continue to not only feel heat from the market following their recent downgrade but now ASIC are apparently probing as to why they will not meet their May prospectus production forecast.
GGP recently IPO’d at $6.60 and made a solid debut on listing but have subsequently fallen back into the $5 range so it’s not surprising the regulator is asking a few questions of the company and their advisors as to why the miss. GGP has an impressive register including.
Wyloo and vendor Newmont who hosed half their $440m stake post listing. Their Diggers presentation gave us a history lesson on Telfers foundations with French prospector Jean Paul Turcaud (wee wee) discovering it in 1970 before Newmont commenced production in 1977 from a 12.8g/t open pit. At the recent “Good News Only” Forum in Kalgoorlie there was little mention of the recent blip with GGP choosing to highlight the development of their 7m ounce Havieron project and the progress of their 2.8km decline.
Gorilla Gold (ASX:GG8) were one of the first cabs off the rank at Diggers with an updated resource from their recent drilling at the Mulwarrie gold project which lies a mere 10 clicks from Ora Banda’s (ASX:OBM) Davyhurst mill. The resource came in at:
3m tonnes @ 3.6g/t Au for 350,000 ounces
Fair to say this has considerably exceeded most expectations and a significant increase on their starting 80,000 ounces and it now remains to be seen how much of this can be converted to a higher classification with a third of the resource falling into the indicated category.
GG8 also noted there are plenty of extensional results that were not included in the resource so we can expect another update in the near future with the company targeting a 100% increase in this number. GG8 continues to drill hard with 5 rigs now at Lakeview and their maiden resource expected before the years out and they still had $25m in the bank at the end of June.
Wildcat Resources (ASX:WC8) released results from a new discovery at Bolt Cutter Central which lies about 10 k’s from their flagship Tabba Tabba lithium deposit. The market will give a rats rissole about such results one day after returning:
20.0m @ 1.7% Li2O from 43m
13.0m @ 1.4% Li2O from 39m
13.0m @ 1.3% Li2O from 40m
10.0m @ 1.2% Li2O from 3m
Early days for this potential new high-grade discovery with multiple pegmatites identified over a 1.5km area and hence additional drilling is being planned. Meanwhile neighbourly relations seem to have fallen apart with Sayona Mining (ASX:SYA) announcing that WC8’s recent PFS plans to build infrastructure associated with the Tabba Tabba Project on an adjacent exploration lease held by Northern Star (ASX:NST) for which SYA holds the lithium exploration rights.WC8 has applied for a Miscellaneous License which, if granted, allows it to build certain infrastructure pieces for a future mine however SYA has lodged an objection to the application and the outcome now lies with the Warden’s Court, which may favour WC8’s development if SYA is seen to have not progressed exploration. Surely, the three parties can catch up over a steak sandwich and come to an amenable compromise.
Aurum Resources (ASX:AUE) released a chunky 50% resource upgrade from their Boundiali Gold Project in Côte d'Ivoire which now stands at 2.4m ounces at 1g/t Au bringing their total inventory to 3.28m ounces when you add the in the Napie Project. The indicated portion has increased significantly to 600,000 ounces while the high grade sits at 720,000 ounces at 1.9 g/t Au. Their 100,000-metre drill program remains ongoing and will support another resource upgrade later in the year while the PFS at Boundiali has commenced is also due for release this calendar year.
AUE is well funded with $47m in cash and are planning to drill another 100,000 metres in 2026, keeping in mind they are not at the beck and call of drilling companies as they own their rigs outright.
Vault Minerals (ASX:VAU) has released depth extensions from King of the Hills following recent drilling campaign that could result in additional tonnes below the current underground resource boundary. Better results included.
0.5m @ 404g/t,
0.3m @ 149g/t
3.1m @ 18.6g/t.
2.8m @ 10.9g/t.
Drilling at Darlot also continues to extend mineralisation beyond the current resource at both the Pipeline and Chappell areas with better results including:
2.1m @ 69.2g/t,
2.2m @ 36.8g/t
1.3m @ 52.6g/t.
VAU has also completed a further 72 holes at Sugar Zone. Better results included 1.3m @ 282g/t and 1.5m @ 45g/t, highlighting the potential to extend the Sugar South lodes. Their stage 1 plant upgrade from 5.3mtpa to 6mtpa is progressing well and remains on track for completion by 4QFY2026. VAU is debt free and has a cash position of $686m and their hedge book is largely unwinding in FY2026 which will essentially leave them unhedged at year end.
Who’s shaking the tin…
Corazon Mining (ASX:CZN) - $2m at $0.002
TG Metals (ASX:TG6) - $2.6m at 13 cents
Loyal Metals (ASX:LLM) - $2m at 18 cents
Traka Resources (ASX:TKL) - $2.5m at $0.0007 (plus 1:4 option)
Antilles Gold (ASX:AAU) – $650k at $0.005
Key Petroleum (ASX:KEY) – $152k at 4.2 cents
Ballymore Resources (ASX:BMR) - $4.5m at 15 cents (plus 1:4 option)
Hot Chilli (ASX:HCH) - $14m at 60 cents
Silex Systems (ASX:SLX) – $130m at $3.90
BMG Resources (ASX:BMG) - $600k at $0.008
Liontown Resources (ASX:LTR) - $266m at 73 cents
Energy Transition Minerals (ASX:ETM) - $10m at
Santana Minerals (ASX:SMI) – $58m at 58 cents
PC Gold (ASX:PC2) - $5m at 25 cents
Akora Resources (ASX:AKO)- $830k at 8.5 cents
Altair Minerals (ASX:ALR)- $3.2m at $0.004
Infini Resources (ASX:I88)- $3m at 20.5 cents (plus 1:4 option)
Macro Metals (ASX:M4M)- $2m at $0.007
Perpetual Resources (ASX:PEC)- $1.6m at 2.2 cents (plus 1:2 option)
Variscan Mines (ASX:VAR) – $2.5m at $0.005 (plus 1:2 option)
A few days at....
Diggers and Dealers 2025
It’s not often (like never) that you tell your wife you are actually looking forward to escaping the Perth winter for the balmy climes of Kalgoorlie. After 150mm on the weekend before, it was time to saddle up and board Monday’s early flight. Whilst it wasn’t Bali, the fact there was no rain, and actual sunshine gave everyone a spring in their step. In a shock to the system, we started to head towards our normal Yelverton accommodation only to be told that we had been shunted to the Railway Quality Inn (very disappointing). Appropriately named with the Prospector waking us nice and early.
In a change of format, the guest speakers was a panel which was pretty interesting and preaching to many of the converted… the government renewables push to net zero is an absolute joke. It was then followed by a couple of uranium producers both of whom had downgraded long term production outlooks underscoring the difficulty in turning on these plants. The newly merged RMS/SPR was very well attended, and I reckon every company should have an M&A score sheet like RMS do... outstanding track record of the team and well-deserved winners of the Digger of the year again! Mr Spartan, aka Lawson delivered a rousing speech about the exploration potential of the Mt Magnet area and the potential for Hill 50 look a likes... (1.5km vertical extent)... being an old bastard, it bought back memories of Cooky when he was at Hill 50 gold (circa 1998) and managed to draw I think 7 potential Hill 50 lodes in the long section !! Speaking of Cooky, a big congrats on winning the Geoff Stokes award and at least one bright spot after his beloved Shinboners have endured 4 yrs of hell. I felt a bit sorry for the AVL CEO as mass exodus of the auditorium post the RMS/SPR preso. It was then off to lunch and all I can say is the Penfolds 2006 Bin 389 is drinking beautifully!!! I felt a little out of place being surrounded by all these titans of industry including the three amigos, almost like the three tenors but arguably, worth collectively more… but it was as good as ever.
We flitted between the booths and the preso’s for the remainder of the day before quenching our thirst around 5pm at the York. Themes to emerge for us: there is going to be a shit load of drilling over the next year with some massive exploration budgets, Agnico Eagle as the world’s most valuable gold company is spending US$525m and has 126 rigs operating in FY’26… Wowee... locally companies like RMS, OBM, WGX, PNR are all spending north of >$50m. A bit more talk around Lithium rather than the absolute hatred of last year and rare earths interest was increasing.
A quick bite at the Exchange with the combined Argo’s and Euroz desks allowed us to pop into Gold Bar to listen to Hep and Cooky belt out some tunes...
Day 2 was upon us in no time and some interesting preso’s. LYC was basking in the recent govt announcement of help for the industry and the fact that its capex phase ($1.5bn over the past 5yrs) is almost over. Alex Rovira from BTR confessed he had caught the ‘Kalgoorlie cold’ which can happen after 28 beers… WA1 made a compelling argument on why end users want some supply ex Brazil and Greatland Gold were on the front foot re the potential of Telfer to add many years of life. Charles from Gorilla Gold was still in his reflective gear post a site visit where some Italian loafers were seen pounding between drill holes. C’mon Bull you are better than that!!!