If there is one thing that Albemarle’s $5.5 billion cash takeover crack at Liontown Resources tells us, then it is that asset portfolio future-proofing is well underway.
It is fundamentally the same reason why Newmont wants to acquire Newcrest Mining and BHP is pushing through its $9.6 billion bid for OZ Minerals – offsetting a lack of organic growth options while improving the quality and extending the life of asset portfolios.
Not every top-tier miner has the organic growth potential of Northern Star Resources (ASX: NST), which is working out how best to deliver value from its 20.7 million ounce ore reserve across its Kalgoorlie, Yandal and Pogo production centres.
Northern Star this week dipped its toes in the US debt markets for the first time with a $US600 million senior guaranteed notes issue, priced at an interest rate of 6.125 per cent. The notes add balance sheet flexibility to Northern Star’s organic growth pipeline, including a potential mill optimsiation at prized asset KCGM.
In other news:
- Isaac Stewart: could Australia’s safeguard mechanism stifle gas investment from Asia, more specifically Japan and Korea?
- Jupiter Mines shares soar 12 per cent on strong February quarterly, strategy update
- MinRes, at 76 per cent, extends Norwest takeover deadline to April 29
- Gold Road signs off on year of great achievement, significant investment in positive future
- NRW acquires Bunbury’s OFI Group, wins more contracts
- FBR to take its bricklaying robot technology to BuildTech Asia 2023 Singapore
For Albemarle, Liontown’s Kathleen Valley lithium project in the Goldfields would provide future spodumene concentrate for the US giant’s Kemerton hydroxide plant in WA’s South West, which will initially be fed by the Greenbushes mine (49 per cent owned by Albemarle).
As wonderful as Greenbushes has been and continues to be, Albemarle will be hoping its Kemerton hydroxide plant long outlives a mine that began lithium operations 30 years ago.
And as entrenched as Albemarle is in the high-margin production of battery minerals, it does not do exploration and is therefore reliant on third-party spodumene concentrate supplies – or buying the supply, which it has down with its half-share deal over Wodgina with Mineral Resources (ASX: MIN).
A takeover of Liontown (ASX: LTR) would further address Albemarle’s supply chain challenges, though not necessarily the skill set required to become WA’s first underground lithium miner – unlike mining plans at Kathleen Valley, the rest of the industry, including at Greenbushes, engages in simpler open pit mining.
The Goldfields region had been largely ignored for its lithium potential until Liontown came to the party.
So news this week, just a day after Albemarle’s bid interest was made public, that St George Mining (ASX: SGQ) had intersected some massive pegmatites at its Mt Alexander project attracted investor attention.
Mt Alexander, west of Leonora, is about 150km south of Kathleen Valley. St George has proven the presence at Mt Alexander of lithium, nickel and copper sulphides and platinum group elements – the question is just whether the quantities are sufficient for a viable mining operation.
St George is busy with a reverse circulation and diamond drill campaign at Mt Alexander to further investigate the potential of the pegmatites it is discovering. The explorer’s battery technology partners – Shanghai Jayson, SVOLT Energy and Sunwoda Electronic – will be pleased.
Shares in the John Prineas-led explorer jumped 8 per cent on high volume on the pegmatite interval news and ended the week with a spring in their step at 5.4¢.
ChemX Materials (ASX: CMX) is going down a different route to St George but – fundamentally – is also being lined up by bigger industry players to provide important feedstock.
The Mark Tory-run ChemX is focused on turning manganese ore from its Eyre Peninsula project in South Australia into high-purity, or battery grade, manganese that is needed for lithium-ion batteries. ChemX is confident it has enough manganese raw resources, with the focus on proving up the viability and scaleability of its manganese purification process.
A bit like St George’s early stage exploration success at Mt Alexander, ChemX’s fledgling steps to confirm its ability to be a reliable future supplier of battery materials are attracting attention from the right people.
News this week that ChemX had signed an MoU with lithium-ion battery technology leader C4V sent shares in the Perth junior up 13 per cent – the shares ended the week at 12.5¢.
C4V is involved in some of the world’s largest gigafactory developments, including Recharge Industries’ gigafactory in Geelong as well as iM3NY’s asset in the US. The US-based company is eyeing ChemX as a potential source for the quantities of high-purity manganese needed for the next generation of gigafactories.
