The dust from the 2022 rendition of the Diggers & Dealers Mining Forum has settled.
Investors are back in front of their desks this morning after a week of relentless networking, socialising and sifting through buying opportunities among the more than 100 ASX-listed companies that presented their wares to 2600 delegates in Kalgoorlie.
Share prices across the exploration and small to mid-cap mining sectors have been sold off over the past few months so bargain hunting is now underway.
The themes of this year’s Diggers conference can be best summarised thus:
- Gold is on the up again, both in terms of the precious metal’s price and the share price prospects for producers of bullion;
- Battery metals sentiment will continue to grow from strength to strength. The challenge is for companies to capture the uptick in the prices of commodities such as rare earths elements, lithium and nickel;
- Costs inflation is proving a challenge, particularly for those preparing to kick off project developments;
- Exploration success is rarely delivered overnight, which is why disciplined and systematic approaches led by experienced teams are the way to go;
- Operating responsibly, both with regards to the environment and internal and external stakeholders, is a non-negotiable;
- Economic jitters around the world could create negative flow-on effect for local equities markets, and therefore keep a lid on share prices; and
- Free cash flow is king. Forget lovely looking AISC or C1 cost figures or underlying profit lines. Free cash is vital and will underwrite dividends.
With those themes in mind, there were rich pickings for investors to chance upon in and around the Goldfields Arts Centre last week. Here are a few to consider.
In the gold category, it is hard to go past Northern Star Resources (ASX: NST – last trade $8.23; 12-month range $6.00-11.59). The ASX’s second-largest gold producer and owner of Kalgoorlie’s historic Super Pit is starting to deliver on the benefits it promised when it first bought into the Super Pit and then took over smaller peer Saracen Mineral Holdings over the past two years.
The dividend-paying Northern Star has three world-scale production centres – two in WA’s Goldfields and one centred on the high-grade Pogo mine in Alaska – that give the Perth miner optionality and the ability to successfully juggle growth with shareholder returns.
Fellow dividend payer Gold Road Resources (ASX: GOR – last trade $1.45; 12-month range $1.05-1.83) delivered one of the most interesting presentations at Diggers. Its core asset – a 50 per cent stake in the Tier 1 gold mine Gruyere in the north-eastern Goldfields – is starting to fire and deliver on its promise of long-term 350,000 ounce-a-year production.
DIGGERS RECAP:
- Brace for change of tone on metal podium
- Consistent and predictable but what about exploration
- An ‘r’ makes all the golden difference and from pit to super underground
- Upbeat end as diggers and dealers head into interesting times
In a marketplace where investors prefer multi-assets stocks, Gold Road has picked up a portfolio of interests following its just-completed takeover of DGO Gold. Principal among those is a 14.4 per cent stake in De Grey Mining (ASX: DEG), which owns the massive Mallina gold project in the Pilbara.
Much chatter at Diggers was about Mallina’s development pathway. Gold Road now has a seat at the De Grey table.
In the short term, however, investors will focus on Gold Road’s push to monetise its 6.8 per cent stake in Dacian Gold (ASX: DCN), also acquired through DGO. Dacian has agreed to be taken over by Genesis Minerals (ASX: GMD) in a scrip-swap. Gold Road is yet to voice its intent but whatever the outcome, it looks like a value-add for the Gruyere discoverer’s shareholders.
Rox Resources (ASX: RXL – last trade 29¢; 12-month range 23-60¢) presented its Youanmi gold project to the Diggers audience. Located in the Murchison, Youanmi has a large, high-quality resource of 3.2 million ounces at 3.57gpt.
Rox has a big 12 months ahead of it as it completes studies into the best development pathway for Youanmi.
As much as investors’ focus has been on the next generation of producers, they have equally targeted where the next discovery is coming from.
BMG Resources (ASX: BMG – last trade 3.5¢; 12-month range 3-8.7¢) flies under the radar but is in the process of pulling together a string of impressive drilling results from its early stage Abercromby gold project near Wiluna. In particular, the Capital prospect is delivering big hits that provide direction – and encouragement – for subsequent drill campaigns.
Greatland Gold (LSE: GGP), discoverer of the massive Havieron copper-gold deposit, has ensured investors retain a focus on the Paterson Province in WA’s East Pilbara. Havieron’s development is underway in joint venture with Newcrest Mining (ASX: NCM).
Literally across the Havieron tenement boundary, one of the most exciting Paterson exploration plays is underway. Artemis Resources (ASX: ARV – last trade 3¢; 12-month range 2.4-11¢) is busy drilling at Paterson Central to work out whether Havieron’s mineralisation is mirrored across the tenement boundary.
Artemis has several priority drill targets on this untouched exploration ground and is gradually building an understanding of the tenement potential.
Exploration is hard work and Artemis matches the Paterson Central upside with the certainty of the Carlow Castle gold project, south-east of Karratha, where it is working on increasing the resource and delivering value from the Radio Hill processing plant.
As with Artemis, the share price of St George Mining (ASX: SGQ – last trade 3¢; 12-month range 2.9-8.5¢) is at the mercy of exploration success.
And like Artemis, St George has ensured it has a spread of high-potential exploration projects that will deliver regular newsflow.
At the heart of St George’s battery metals push is the Mt Alexander nickel-copper sulphide venture in WA’s Goldfields. St George has already made several high-grade discoveries, in which market leader IGO (ASX: IGO) has a 25 per cent interest.
The explorer, which counts Western Areas’ former boss Julian Hanna among its key strategists, is also drilling up in the Paterson in the hunt for copper deposits. Like Artemis, St George has so far resisted the lure of selling down its tenement position and therefore retains full upside.
Lykos Metals (ASX: LYK – last trade 17.5¢; 12-month range 13.5-45¢) listed on the ASX less than a year ago with a portfolio of exciting gold and battery metals exploration projects in the central European country of Bosnia-Herzegovina.
Since listing in October Lykos, whose Perth-based leadership team was at Diggers, has been advancing and prioritising the projects with a view to a sustained drill campaign and steady newflow.
One of the debutant presenters at Diggers this year was Core Lithium (ASX: CXO – last trade $1.285; 12-month range 30¢-$1.675), which is busy building its Finniss project on the outskirts of Darwin ahead of targeted first spodumene concentrate production by year’s end.
Core epitomises what investors are looking for – discovery of battery metals deposits that become an economic development case and can then be safely and on budget brought into revenue-generating production.
Core rounded off its Diggers week with news on Friday it had recruited former Rio Tinto senior executive Gareth Manderson as its new CEO. Mr Manderson’s most recent role at Rio was as general manager sustaining capital within the giant’s iron ore business.
Core will, of course, be hoping to deliver the sort of lithium dividends that Mineral Resources (ASX: MIN – last trade $57.65; 12-month range $36.95-66.88) has been achieving.
There is a lot of hype across the lithium sector, which is why it is often forgotten that the no-hype MinRes is the ASX’s largest lithium producer and only lithium hydroxide player. One of MinRes’ world-scale lithium mines, Mt Marion, is an hour’s drive south of Kalgoorlie.
When talk turns to best position for upticks in commodity prices, few match MinRes’ track record.
Being in production and delivering regular free cash flow and dividends to shareholders is no mean feat.
Like MinRes, Jupiter Mines (ASX: JMS – last trade 20¢; 12-month range 18-31¢) ticks those boxes and has ambitions to grow its footprint.
Jupiter’s Tshipi manganese mine in South Africa’s prolific Kalahari region is a world-scale asset with significant upside.
One of new Jupiter managing director Brad Rogers’ first trips since assuming the post last Monday was to Diggers on Tuesday. Next on his agenda is a trip to Tshipi.
In addition to manganese’s traditional role in stainless steel, it is increasingly being targeted for use in batteries. Not all manganese fits the bill but ChemX Materials (ASX: CMX – last trade 15.2¢; 12-month range 13-38¢) has confirmed manganese from its Jamieson Tank project on the Eyre Peninsula in South Australia could be well-suited for the EV market.
ChemX wants to become a supplier of critical materials needed for electrification and decarbonisation and is confident that, in addition to manganese, its proprietary HiPurATM high purity alumina technology can deliver value. A HiPurATM micro plant has already been set up in Perth as part of ChemX’s development efforts.
Rare earths have led conversations around the battery metals sector, not just because Australia has massive deposits of these non-rare elements but because of the opportunity to break China’s stranglehold on production. The key rare earths are needed in the production of the permanent magnets used in batteries.
Northern Minerals (ASX: NTU – last trade 4.1¢; 12-month range 3.5-7.2¢) owns the massive Browns Range deposit in WA’s Kimberley that contains a world-scale volume of the heavy rare earths dysprosium and terbium.
The Perth company, which generates a bit of revenue from pilot plant carbonate production, is finalising studies into a full-scale beneficiation plant to deliver value on offer for rare earths producers.
Like Northern Minerals, Australian Vanadium (ASX: AVL – last trade 4.4¢; 12-month range 2.1-11.5¢) is sitting on a world-scale deposit, in this case the namesake vanadium asset near Meekatharra in the Murchison.
Presenting at Diggers, Australian Vanadium provided insights into how market demand for its commodity was shifting from being dominated by the steel sector into an increasing role in the renewable energy sector, mirroring the repositioning of manganese.
Australian Vanadium is targeting a final investment decision for its project, which comes with a pre-production capital cost of $US435 million, in the fourth quarter of this year.
