Chieftain Chatter
Season 5
Episode 184
Jackson Hole...
The annual “love in” of Federal Reserve members and hangers on at Jackson Hole instantly ignited markets when Federal Reserve Chairman Jerome Powell indicated that “the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance.” This also instantly increased the odds of a September rate cut from 70% to 90% and further comments from Powell supported this case. In what was is likely to be his final appearance at the annual event (in Don’s eyes anyway) he also warned that although tariffs still pose an inflation risk he remains more concerned about the labour market saying “While the labour market appears to be in balance, it is a curious kind of balance that results from a marked slowing in both the supply of and demand for workers,” This could indeed be interpreted as the time is nigh for some action but does not commit to rate reductions beyond September as inflation remains sticky. However, it seems the Fed members are largely at odds with each other on the way forward and look about as hung as the Tasmanian parliament with some members supportive of multiple cuts in the short term and others in favour of keeping rates on hold and let the full impact of tariffs play out.
Further evidence on Friday that the US economy is not done with yet was the release of 2nd quarter GDP numbers showing the economy expanded at 3.3 % which was above expectations. Business investment leads the way growing at 5.7% with investment in transportation equipment plus the largest uplift in intellectual property products in four years. According to a couple of Citibank guru’s the “revisions do not change the story that underlying demand is slowing outside of a few specific parts of the economy” …. “We expect underlying growth will slow further as the labour market weakens and tariff costs increasingly weigh on activity.”
Chinese rare earths producers went gang busters early last week following government plans to further tighten their grip on supply in the wake of US trade wars. They are basically prohibiting non-state-owned enterprises from mining rare earths and thus only allowing government controlled entities to mine, smelt or separate raw materials. This will give the authorities a stranglehold on tracking supply. Companies will be required to submit production to the Ministry of Industry and Information Technology. For context China supplies 70% of the worlds rare earths and thus looking to put a further squeeze on the US after imposing an export ban on a variety of critical metals in their tit for tat battle with Trump’s Tariff implementation. The Trump response although not surprising was probably some of his better work endeavouring to highlight the so-called position of strength the US holds over China referring to Boeing aero parts as the key to his argument. The following quotable quotes say it all:
“We have much bigger and better cards than they do,” he said Monday. “If I played those cards, that would destroy China. I’m not going to play those cards.”
“We’re heavy into the world of magnets now, only from a national security standpoint,” Trump said.
“But we have a powerful thing. It’s airplane parts and many Boeing jets.”
He went onto waffle that China has 200 jets that can’t get off the ground because he froze the export of Boeing parts into China:
“I sent them all of the parts so their planes can fly,” he said.
“I could have held them back. I didn’t do that because of the relationship I have. And they’re flying.”
“Great relationship”
Either way despite all the rhetoric it seems the flow of critical rare earths are making their way into the US from China with imports hitting an all time high in July.
Quote of the week….
“You don’t know what the hell you’re going to get…. One of the problems is people getting clarity about what is a good deal – it’s 50 per cent off what?”
Domino’s Pizza Exec Chair Jack Cowin (83) on customer confusion for the array of discounts on offer after posting their first loss in 20 years.
On the lighter side….
School of hard rocks…
That genius at Genusplus Group (ASX:GNP) Dave Riches and his team have delivered a shoot the lights out full year result for FY2025 delivering:
Revenue $751m up 36%
Normalised EBITDA $67.4m, up 49%
NPAT of $35.4m up 84%
Importantly their recurring revenue was at $378m and growing and finished the year with $113m in cash (up $36m) post $27.7m of acquisition settlements. Looking forward GNP is expecting the momentum to continue if FY2026 forecasting 20 to 25% EBITDA growth supported by an orderbook of $2 billion and tendering of $2.4 billion. GNP managed to achieve significant growth across all business units (Infrastructure, Energy & Engineering and Services) and have established themselves as a significant credible player in the transition of energy networks and decarbonisation across the country.
It must be extremely frustrating for Richard Hyde and his team at West Africa Resources (ASX:WAF) after successfully operating in country as a corporate citizen only to have the government stick their hand out for additional project equity.
The Burkina Government have requested an additional 35% equity in the subsidiary company that owns the Kiaka Gold Project on top of the 15% free carried interest they already own.
Although no further details have been provided the announcement states the government would acquire the stake for “valuable paid consideration” whatever that is. With investor sentiment already in edge in the bulk of West Africa this will only serve to dent the countries prospects of future investment and prosperity. WAF already employs a significant number of Burkina Faso (90% workforce), pays 27.5% corporate tax, 8% royalty plus a 1% community fund…fair suck of the sauce bottle FFS!
Recently listed Ballard Mining (ASX:BM1) have hit the ground running announcing they have completed 71 infill drill holes for 10,456 metre of drilling at Baldock with better results including:
4m @ 32g/t gold from 232m
7m @ 16.8g/t gold from 267m
13m @ 3.4g/t gold from 20m
7m @ 6.3g/t gold from 94m
6m @ 7g/t gold from 78m
8m @ 3.9g/t gold from 24m
This completes about 40% of the infill program with the target of achieving a 400,000 to 500,000 ounce reserve and early results seem to support this outcome.
They also received results from an extensional hole outside the current resource which returned:
14m at 11.3 g/t Au from 14m
On the exploration front they have tested three targets on the Ballard Fault with results pending while their DFS is targeted for mid next year.
Black Canyon (ASX:BCA) continued their stellar run with further high-grade results from their Wandanya Manganese project in WA with thick intersections including:
7m @ 40.1% Mn from surface including 4m @ 46.9% from 3m
6m @ 37.9% Mn from 6m including 3m @ 46.3% Mn from 9m
6m @ 35.6% Mn from 10m including 3m @ 48% Mn from 12m
10m @ 27.7% Mn from 4m including 3m @ 39.6% Mn from 10m
8m @ 32.3% Mn from 7m including 5m @ 40.1% Mn from 9m
12m @ 31.9% Mn from 5m including 7m @ 39.3% Mn from 9m
These shallow results continue to underpin this significant discovery which already has a resource of 314m tonnes @ 10.5% Mn and remains open to the north and east.
If you want a set of steak knives these results also included iron ore intercepts of:
13m @ 59.3% Fe from 1m
12m @ 59.3% Fe from 4m
11m @ 56.4% Fe from 2m
BCA will immediately begin the Phase 3 drill program consisting of 150 odd holes for 3,500 metres and is expected to take 3 weeks to complete with assay results expected to be received through October and November.
Solstice Minerals (ASX:SLS) released results from phase 3 RC program at their Bluetooth Gold Project in WA with better results:
32m @ 1.68gpt Au from 48m
16m @ 1.49gpt Au from 41m
12m @ 1.29gpt Au from 58m
8m @ 1.36gpt Au from 88m
The last hole ended in fresh rock and therefore opening the potential for further mineralisation. Bluetooth is located close to haul roads in this active and infrastructure-rich part of the Eastern Goldfields, where Solstice controls over 1,600km2 of highly prospective geology.
SLS’s CEO & MD, Dr Vernon J Castelden commented, “Bluetooth keeps delivering significant intercepts, with the latest drilling defining more broad zones of shallowly dipping, near-surface oxide gold mineralisation. Importantly, we are also seeing signs of mineralisation extending into the underlying fresh rock profile bla bla bla, so the next phase of work will continue to build on these oxide results and include further drilling to track zones of quartz veining into underlying fresh-rock positions.” They subsequently followed up with some results from Edjudina but I couldn’t be bothered reading them.
Antipa Minerals (AZY-ASX) released another round of drill results from their Phase 1 program at it’s 100%owned Minyari Gold Project, near the Telfer gold mine in WA's Paterson Province. The latest results come from the Fiama prospect included:
33m @ 15.8g/t Au & 0.28% Cu from 96m
23m @ 7.1g/t Au from 125m
22m at 1.0 g/t Au, 0.13% Cu from 140m
51m at 0.5 g/t Au, 0.10% Cu from 51m
These results extend the gold-copper mineralisation from 220m to 315m vertically and 420m along strike and remains open. They also confirmed a new discovery at Rizzo after intersecting 16m @ 0.6g/t Au pointing towards further resource growth. This completes the Phase 1 drilling with 306 holes for 36,059 metres drilled as they look to further grow the existing 2.3m ounce @ 1.5 g/t resource and test exploration targets. Phase 2 of the program will consist of 25,000 to 35,000 metres focussing untested targets in the vicinity and resource development drilling which will be fed into the PFS due mid next year.
WA based property developer Cedar Woods (ASX:CWP) produced a cracking NPAT of $48.1m which exceeded their earnings guidance and underpinned a solid 19 cent fully franked dividend. Forward pre-sales of $660m would suggest their forecast of 10% earnings growth in 2026 may well be on the conservative side. CWP has a solid balance sheet that remains conservatively geared leaving available liquidity of $144m and CWP stated they will continue to actively pursue acquisitions. Market conditions remain buoyant supported by strong population growth, favourable economic conditions in most states, housing policy incentives, easing interest rates and low rental vacancies. The pipeline of future developments stands at 9,400 dwellings, lots and offices and this should continue to grow.
Rare earths producer Lynas (ASX:LYC) reported a solid revenue number of $556m for an EBITDA of $101m which was down 27% on last year’s result. Due to a high D&A and tax charge NPAT came in at a disappointing $8m which was well down on most analyst expectations and as a result no dividend was declared. LYC reported a free cash outflow of $302m for FY2025, with capex in the period including the Kalgoorlie plant and expansion of the Mt Weld mine and the LAMP in Malaysia consuming their cash. As a result LYC utilised their $13 billion market cap to launch a fully underwritten pro-rata placement to raise $750m plus a $75m SPP, all at a discounted price of $13.25 to add scale, downstream capacity and expanding into the metal and magnet supply chain most likely via partnerships or JV.
Who’s shaking the tin…
Cannindah Resources (ASX:CAE) - $4.5m at 1.5 cents (plus 1:2 option)
Savannah Goldfields (ASX:SVG) -$12m at 1.5 cents (plus 1:1 option)
Bayan Mining and Minerals (ASX:BMM) - $3.27m at 20 cents
Nimy Resources (ASX:NIM) - $1.72m at 6 cents (plus 1:2 option)
Provaris Energy (ASX:PV1) - $1m at 1.9 cents
Pure Hydrogen (ASX:PH2) - $1m at 8.5 cents (plus 1:2 option)
Savannah Goldfields (ASX:SVG) - $15m at 1.5 cents
Victory Metals (ASX:VTM) - $11.5m at $1.35
Cyprium Metals (ASX:CYM) - $80m at 2.8 cents
Core Lithium (ASX:CXO) - $50m at 10.5 cents
Forrestania Resources (ASX:FRS) – $8.61m at 20.5 cents
Gladiator Resources (ASX:GLA) – $1m at 1.8 cents
Godolphin Resources (ASX:GRL) - $1.35m at 1.2 cents
Invictus Energy (ASX:IVZ) – $37.8m at 9.5 cents
Lachlan Star (ASX:LSA) - $2.16m at 5 cents
Terra Metals (ASX:TM1) – $15m at 7 cents
Buru Energy (ASX:BRU) - $2m at 2 cents (plus 1:2 option)
Sunshine Metals (ASX:SHN) - $3m at 1.2 cents
Blue Energy (ASX:BLU) – $3.2m at $0.005
Lynas Corporation (ASX:LYC) - $750m at $13.25
A meeting with....
Andrew Reid, MD of Brazilian Critical Minerals (ASX:BCM)
Rare earths or as my Irish comrade is fond of saying ‘rarely mined earths’ has suddenly got a pulse, mainly because the US govt announced a floor pricing of US110/kg of NdPr for the Mountain Pass project in the US. It used to amaze me to see all these feasibility studies come out using a price that was double the current spot price when it was languishing in the US$50/kg range and the companies would talk fanciful NPV’s of >$1bn but with a capex of $0.5bn and a price assumption of US$110/kg. The MD’s would then talk about Chinese manipulation of prices and how theirs is the best projects, shit caning the others not realising it wasn’t doing much for their credibility. The book on successful rare earths companies is pretty small - like 1 page and that would be Lynas Corp (LYC) – but they almost went to the wall without the Japanese stumping up a truck load of $$ whilst the destroyers of capital is quite long with serial offenders Hasting Minerals, Arafura etc. Then the Brazilian wave of ionic clays came through and it was like ... forget those hard rock jokers… our clay projects are so much better etc... So, with this scepticism in mind, we met with BCM during the week. BCM is proposing an in-situ recovery mining of rare earths in Brazil... apparently some 30-40% of the worlds rare earths are currently mined using the technology but in China, Myanmar etc so no one has really heard about them. BCM has a large resource of 943mt @ 716ppm TREO with an unusually high proportion of magnet rare earth oxide (MREO) including Nd,Pr, Dy and Tb which represent over 25% of the basket. The process seems almost too simple to be true... putting in poly pipe into the across the undulating ground, adding a magnesium sulphate solution to leach the rare earths and then collecting the pregnant liquor solution at the base. It works because of the geology – weathering less than 20m depth and an impermeable bed rock etc.
BCM released a scoping study showing capex of just US$55m with operating cost of US$6.20/kg with annual production of 8.7kt of MREC, 4.8kt of TREO and 1.8kt of MREO to deliver a NPV8 of US$498m based on a LOM pricing of US$74/kg for NdPr average. We were sufficiently intrigued to do a bit more digging and had a chat with Mr Trent at Euroz who fortuitously had just released a research note and was full bottle on the project and company. They are aiming to complete a feasibility study in early CY’26 and targeting possible production by late CY’27. He has a spec buy rating with a 6cps price target compared to current price of 2.5cps giving it a current market capitalisation of ~$50m. Thus, it was one of the those meeting where you go in with pre-conceived ideas but come out with a more open mind and I couldn’t help myself but had a little nibble in the market...