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BHP Settles Samarco Disaster for US$15.9B

BHP Settles Samarco Disaster for US$15.9B

MinRes board puts a timeline on update, No TLEA divvie for IGO this Q

October 28, 2024

The Pre-Start

BHP & JV partner Vale reached an agreement with Brazil for a final value of US$31.7b (100% basis), with US$7.9b spent already, US$18b to be spent over 20 years & additional performance obligations for an estimated US$5.8b (BHP)
MinRes said it’ll shortly issue a response to ASX queries, while the board plans to issue a conclusive statement by Nov 4, addressing corporate governance concerns as well as factual inconsistencies in the media (MIN)
Paladin closed the Q with US$55m in cash, & US$178m in drawn debt, after producing 0.64Mlb U₃O₈while 3 new sales contracts were added over the Q (PDN) It still awaits ICA clearance in Canada over the Fission deal
Adriatic mined 63kt & milled 21kt as ramp up continues, while underground development metres lifted 13%. Cash closed at US$24m, with a further undrawn US$25m which expires on Dec 31, when its first debt repayments are due (ADT)
IGO shared that TLEA declared no dividend due to weak lithium prices, contributing to net cash retreating by $210m to $258m. Underlying free cash was $4m, while Kwinana disclosure was pulled (IGO)
Vault Minerals reported group production of ~98koz at AISC of $2,231/oz (guidance reiterated), generating underlying FCF of $35m for the Q with cash & bullion increasing to $523m and no debt. Exploration drive at KOTH has commenced + 6Mtpa plant expansion studies well advanced (VAU)
29M’s Capricorn Copper was impacted by bushfires in the area, with damage contained to pipelines, limiting its ability to pump to certain locations (29M)
Develop said the plant upgrade at Woodlawn is 33% complete, with the mine on track for first metal in mid-CY25. It finished with $30m, with the $20m FID payment made in shares & cash (50/50) in early October (DVP)
Capricorn’s Karlawinda produced ~26koz at AISC of $1,647/oz (reiterating guidance) with KGP expansion study due next Q, while development activities progressed at Mt Gibson with an updated R&R expected next Q. Cash & gold increased by $24m for the Q to $145m end of Q (CMM)
Asian Battery Metals released a hit of 8.8m @ 6.08% Cu, 3.19% Ni, 1.63g/t E3,
0.11% Co (CuEq 12.57%) from 107m, from its Oval project in Mongolia (AZ9) The stock opened up >100%
Auric’s JV partner BML Ventures signed a tolling agreement with Focus Minerals to process ore Three Mile Hill, with a min 40kt & max 120kt (FML)
Patriot provided an update on 2024 summer-fall activities at Shaakichiuwaanaan, with the 127.7km drill program almost complete, +65km drill assays pending and updated MRE expected Mar/Apr 2025 (PMT)
Strike announced that it’s received EPBC approval for the development of the upstream infrastructure for West Erregulla (STX)
Southern Cross Gold shared a narrow high-grade hit of 1.7m @ 250.8g/t Au, 1.7% Sb from 208m (SXG)
Carnarvon finished with $177m cash, with FEED studies expected to be completed in Q4 CY24 (CVN)
Southern Palladium shared a PFS for Bengwenyama (70% owned), generating an NPV₈ of US$1.06b & 28% IRR, with AISC of US$800/6E oz over 29 years (SPD)
BlackRock has emerged as a substantial holder of Regis, holding a 5% stake (RRL)

High Grade It

BHP and Vale signed a settlement with Brazil over the deadly Mariana dam collapse in 2015 (Bloomberg)
Samarco disaster ‘should never have happened’: BHP chief Mike Henry (Australian)
AustralianSuper has sold shares of Mineral Resources, following the tax evasion scandal linked to Chris Ellison, and is assessing the future of its residual stake (AFR)
Gina Rinehart’s Atlas Iron posts $439m profit but continues to be frustrated by slow approvals for its planned mine projects (BN)
Orano will be suspending operations at its Arlit uranium mine in Niger from the end of October (WNN)
Mineral Resources is facing a major animal cruelty investigation as pressure mounts (Australian)
EMR Capital’s Ravenswood Gold clocked up a record breaking Sep Q, producing 54.5koz gold (IQ) Not a bad time to sell a gold mine!
BHP chairman Ken MacKenzie plans to retire from the board in 2025, kicking off a succession race at the world’s biggest mining company (AFR)
US copper imports accelerate in wake of CME squeeze (Mining.com)
Rio signs up Aussie tech company Fleet Space to use their satellite exploration methods to map Argentina brines (MiningNews)
Aurizon suspends Sanjeev Gupta’s iron ore rail service while it chases unpaid bills (AFR)
De Beers mulls further production cuts as diamond arm sees no demand recovery (MiningNews)
Fortescue’s Hutchinson breaks his silence, stating his support of workplace diversity, as Rio inks gay pride deal (AFR)
Mali’s military government has threatened to take back Barrick’s Loulo mine concession when the current permit expires in 2026 over an economic benefit dispute (Bloomberg)
U.S. nuclear regulators kicked off a long-winding process to consider Constellation Energy's unprecedented plans to restart its retired Three Mile Island nuclear power plant (Reuters)
US and European hydrogen stock prices collapse as prospects deflate (FT)

Wheelin’ n Dealin’

AustralianSuper-backed Federation Mining lobbed a bid for Siren Gold, capped at $24m, offering Siren a 17.5% stake in the combined entity plus a cash injection via a $4.5m placement (AFR) General meeting to approve the Rua Gold deal was due to occur 3pm today, Siren in trading halt this morning
Creditors have approved Podium Nickel’s DOCA proposal for EV Nickel, binding docs have been executed (POD)
Emmerson Resources, CuFe and Tennant Minerals announced the formation of a strategic alliance to collaborate on their copper, gold and critical metals development opportunities in the Tennant Creek region of NT (ERM)

Rattlin’ the Tin

Bowen Coking Coal’s entitlement offer has raised $6.2m for the company (BCB) Now in a trading halt in relation to the outcome of the shortfall bookbuild: “The capital raising is critical to the Company’s continued financial viability and without it the Company will be in genuine financial difficulties”
Larvotto entered into a binding underwriting agreement with a range of brokers to ensure ~$4.5m cash will be received from certain ASX listed, currently in-the-money, LRV options (LRV)

Word on the Decline

Late last week we heard Word on the Decline that MinRes’ Mt Marion is under pressure and its operations could be next to transition to care and maintenance in short order
With JV partner, Ganfeng, ramping up Goulamina, will that displace demand for Marion’s ~4.1% spod con?
Ganfeng has 50% rights to Mt Marion. In 2023, MinRes just sold their share to Ganfeng for processing, but we believe have since stopped doing that and are back to marketing their 50% share to multiple customers
Let’s see how things evolve

Do you have some Word on the Decline? Reply to this email or shoot a message to [email protected] directly. We will always take your privacy seriously.

In the Weeds

How Chris Ellison’s secrets came to light (AFR)
Fresh blood at MinRes could be the circuit-breaker the company needs (Australian) Dataroom mentions Nev Power, Andrew Cole & Sandeep Biswas as mining execs that could take the helm of MinRes - we don’t think any of those 3 would be putting their hand up
BHP outsmarts the Brazilians – but at what price? (AFR op-ed)
Ruminating on asset allocation (Howard Marks Memo)
A musing from Perennial’s Sam Berridge on “putting money in the ground” (LinkedIn)
Investor backing for UK start-up shows bet on lithium recovery (FT)
Mohamed El-Erian on the rising price of gold (YouTube)
PGMs, Tin, "Corner of the FT" update, Miners, China (Le Shrub)
Thoughts on BRICS, palladium, Argentina, and the Middle East (OldEconomy)