The end of the month of September as well as the eponymous quarter has coincided with the yearly dump of annual reports onto the ASX platform as companies sign off on the year to 30 June 2023 ahead of preparing for the first official reports of achievements in this financial year.
Talk to anyone engaged in the sharemarket caper and they will highlight that we are going through a tough trot – investor interest is patchy and generally down amid some dark clouds on the macro-economic horizon, which means your typical exploration company, early stage miner or concept developer is not getting the support once on offer.
Lithium prices have come off the boil, operating costs across gold remain high and there is a lack of exploration excitement – a discussion that has been bubbling for a while – which has sapped the market of the ‘wow’ factor that can sometimes engulf entire sectors.
Look no further than the well-regarded, long-running Australian Nickel Conference, which kicks off in Perth next week but has cut its program from two days back to the traditional one-day affair. After all, when was the last time you heard of a nickel discovery?
Yet it was easy to overlook, amid the plethora of FY23 sign-offs that flooded the market up to last night, the fact many companies did actually have a cracking year in terms of milestone achievements or setting themselves up for future success.
Look no further than Core Lithium (ASX: CXO), which soared almost 20 per cent yesterday when it announced a “first full-year profit as a lithium producer”.
It is easy to dismiss Core’s $10.8 million maiden net profit as modest only when you consider the hype around some lithium players. But do not forget that Core’s Finniss project, near Darwin, remains in ramp-up phase, having only produced first spodumene concentrate in February.
“Delivering a maiden profit in the first year is a significant achievement and a testament to the strategy to move quickly to production in a strong pricing environment,” Core chief executive Gareth Manderson said alongside releasing the company’s annual report.
“Core generated operating cash flows of $90.8 million, remains debt free and had a cash balance of $153 million at year end. This does not include the sales receipts recognised after the reporting date nor the $111.4 million raised in the recently completed (capital raising).
“Core’s balance sheet and the strategic capital allocation for operations improvement, development and exploration programs will provide the foundations for the company to realise its growth ambitions in the financial year ahead.”
Over on the west coast, VRX Silica (ASX: VRX) remains optimistic about receiving the environmental approvals it needs to kick off development of the Arrowsmith North project north of Perth.
It has been a long and at times arduous journey for VRX, which put an upbeat note in its annual report to remind shareholders of the progress made.
“VRX has continued to make solid progress in the advancement of its silica sand projects,” managing director Bruce Maluish said.
“VRX holds the most advanced silica sand projects of any ASX-listed company. The total Mineral Resource within all of the company’s silica sand projects was upgraded during the year to 1,381 million tonnes, underpinning a long-term opportunity for silica sand export and downstream value-adding in WA.
“Demand for silica sand from VRX’s projects … is sizeable as global supply side constraints continue to worsen. With the completion of VRX’s recent capital raising initiative, the company is well funded to progress through the present approvals phase into development at Arrowsmith North.”
St George Mining (ASX: SGQ) remains best-known as a successful nickel explorer even though most of FY23 was dedicated to assessing the lithium potential of its flagship Mt Alexander project, which is located in Australia’s hottest lithium province – WA’s Goldfields.
In addition, the company has been busy building out its portfolio of highly prospective exploration assets in key mineral regions of WA.
Mt Alexander is surrounded by Delta Lithium’s (ASX: DLI) Mt Ida project, which has attracted the attention of Mineral Resources (ASX: MIN), and the Mt Bevan project being jointly explored by Legacy Iron Ore (ASX: LCY) and Hancock Prospecting. Rio Tinto (ASX: RIO) has secured a significant tenement position around the corner while to the north of Mt Alexander is Liontown Resources’ (ASX: LTR) Kathleen Valley development.
“FY23 was a transformational year for St George as we expanded the company’s portfolio of clean energy metals projects and welcomed globally significant lithium-ion battery players as major shareholders,” executive chairman John Prineas told shareholders.
“We have created a strong platform of growth for the company, with highly prospective projects in sought-after provinces across WA and the strong support of our new strategic investors.
“The strategy remains unchanged – to pursue sustained value for all shareholders by identifying high-leverage, greenfields exploration opportunities in Tier 1 destinations like WA and applying disciplined, modern exploration methods to advance the potential for significant discoveries.
“We know that exploration requires patience but are heartened by the progress made during the year.”
Few companies are better positioned than Gold Road Resources (ASX: GOR) to appreciate the challenge of making a major discovery and then turning it into a profitable, free cash flow-producing opportunity.
The discoverer of the world-class Gruyere gold deposit in the north-eastern Goldfields, Gold Road has been using the cash generated from the mine (developed in a 50-50 JV with South Africa’s Gold Fields) to discover the next step-change in value generation.
Long the largest shareholder in De Grey Mining (ASX: DEG), Gold Road said this week it would follow its money and participate in De Grey’s latest capital raising – a two-tranche $300 million placement – to maintain its 19.9 per cent shareholding.
De Grey has discovered the best gold discovery in WA since Gruyere – the Hemi deposit in the Pilbara – and this week announced the outcome of updated studies into a $1.3 billion mine development.
Gold Road is certainly along for the Hemi ride and will be watching closely De Grey’s pre-FID progress and efforts to optimise funding arrangements for the mine development.
After all, not every company can travel to the US like Mineral Resources (ASX: MIN) did during the week, tap the bond markets for $US850 million ($1.3 billion) and then, buoyed by investor interest, scale up the senior unsecured notes issue to $US1.1 billion.
Then again, few companies have optionality in their project pipeline to match MinRes’ iron ore and lithium opportunities, which should be another reminder for investors as they ponder what happened in FY23.
