On the surface, there is not a lot of common ground in a $5 billion gold takeover and a $400 million government rare earths debt line.
But what last week’s news from Northern Star Resources (ASX: NST) and Iluka Resources (ASX: ILU) illustrated was the building blocks of the next generation of mining operations in Western Australia.
For Northern Star, already the largest primary listed ASX gold producer, the agreed acquisition of De Grey Mining (ASX: DEG) will add the massive undeveloped Hemi gold project in the Pilbara to a portfolio dominated by the KCGM operation in Kalgoorlie.
Hemi, 85km south of Port Hedland, has a mineral resource of 11.2 million ounces and ore reserves of six million ounces.
“The acquisition of De Grey is strongly aligned with Northern Star’s strategy and contributes to our purpose of generating superior returns for shareholders,” Northern Star managing director Stuart Tonkin said.
“Hemi will deliver a low-cost, long-life and large-scale gold mine in the Tier 1 jurisdiction of WA, enhancing the quality of Northern Star’s asset portfolio to generate cash earnings.”
Hemi is one of three world-class gold discoveries made in Australia this century – the other two being Tropicana (now an AngloGold Ashanti-Regis Resources mine) and Gruyere, a mining JV between Gold Fields and Gold Road Resources (ASX: GOR).
A lot of water has to flow under this deal bridge before Northern Star is handed the keys to Hemi. Structured as a scheme of arrangement, De Grey shareholders are expected to vote on the scrip-swap takeover around April.
A lot of focus, in the meantime, will be on what De Grey’s 17.8 per cent shareholder, Gold Road, does.
For Northern Star, Hemi is the next-generation mine that should deliver half a million ounces annually for more than a decade and cement the company’s position as one of the world’s premier gold producers.
For Western Australia, Hemi is among the next-generation resource projects that will create long-term jobs and economic growth.
The same is true of Iluka’s under-construction Eneabba rare earths refinery, 270km north of Perth.
Designed as a long-life infrastructure asset that will be open to third parties on commercial terms, Eneabba is being touted as the centre piece of an Australian rare earths supply chain that can crack China’s dominance of these elements.
Friday’s news by Iluka that it had agreed terms with the Federal Government for a $400 million financial top-up to help fund Eneabba means construction activities will resume at full pace.
While Iluka shareholders remain nervous about the financial case underpinning Eneabba, owners of Northern Minerals stock were much more positive.
Northern Minerals (ASX: NTU) owns the Browns Range heavy rare earths project in the East Kimberley, on the WA-Northern Territory border.
Browns Range contains a globally significant deposit of dysprosium and terbium, two heavy rare earths needed to make the permanent magnets used in electric vehicles, wind turbines and specialist defence applications.
Northern Minerals is in the process of upgrading the Browns Range mineral resource figure, which will be fed into a definitive feasibility study due early next year.
The development plans for Browns Range are focused on a commercial scale mining and processing operation that produces a xenotime concentrate full of DyTb. The concentrate will then be trucked to Iluka’s Eneabba refinery for further value-adding.
Northern Minerals hopes to be in production by late 2027, which is why Friday’s Iluka funding update was so important – and welcomed.
“Aligned with Iluka’s declaration that the refinery will be a strategic infrastructure asset, Northern Minerals believes in the strategic and financial value of an Australia-based, reliable and long-life supply chain of some of the key rare earths required for a cleaner and greener world,” Northern Minerals managing director Shane Hartwig said.
“It is why Northern Minerals entered into a strategic partnership with Iluka in 2022, which will see heavy rare earths concentrate containing dysprosium and terbium transported from Browns Range to Iluka’s Eneabba refinery for processing.”
It takes time to put in place the building blocks for the next generation of mines.
Just ask Rox Resources (ASX: RXL).
New managing director Phill Wilding has brought forward a major step-up drill program at its 100 per cent-owned Youanmi gold project, south-east of Mt Magnet in WA’s Mid West.
The 25,000m diamond and 10,000m reverse circulation drill program is targeting the conversion of resources from inferred to indicated as well as overall resource growth.
The results from the program will be fed into Youanmi’s definitive feasibility study, which is on track for completion in the second half of next year.
“We’ll keep the drill bit spinning into the New Year to further test exciting targets identified in the highly successful 2024 program, of particular note are Katheleen/Youanmi North and Pollard,” Mr Wilding said.
“The high-grade targets under the Kathleen/Youanmi North pit are surrounded by underexplored ground where we see strong potential to add further early access ounces to the mine plan.”
The Youanmi project has been around for a while and is getting a much-needed fresh lease on life under Rox’s new management.
A clearly articulated and disciplined strategy, alongside some patience, is key to developing a company making project.
St George Mining executive chairman John Prineas is drawing on all his patience as the Perth company finalises the funding required to acquire the Araxá niobium-rare earths project in Brazil.
Araxá is likely to transform St George in the same way Youanmi’s development will define Rox.
Weak rare earths prices are not helping St George so it is taking Mr Prineas longer than hoped to square Araxá away.
Announcing an intermediate $3 million raising last week, Mr Prineas reminded shareholders of the main prize.
“We are excited to be progressing arrangements for the proposed acquisition of the Araxá project in Brazil,” he said.
“We expect to close that acquisition in Q1 2025, with further news on final arrangements expected soon.”
