BHP Turn Heads with Big Swing for Anglo American

Equinox wrap up Greenstone stake while Newmont flies

April 26, 2024

G’day GC #

The Pre-Start

  • BHP has approached Anglo American with an all-scrip takeover, offering 0.7097 BHP shares per Anglo share. A deal would involve divesting stakes in listed Amplats (79%-owned) and Kumba Iron Ore (63%) (BHP, The Australian, AFR, Bloomberg). BHP stock dropped 4% while Anglo jumped 14%.

  • Chalice popped up as a substantial holder (6% stake) in West Arunta-explorer Encounter Resources (CHN, AFR) This one has truly left us scratching our heads. A $7.6m investment isn’t trivial for a developer.

  • Newmont stock jumped 14% after a strong quarter of production, churning out 1.7Moz, though FCF went negative due to working capital build (NEM). Classic gold miner - gold price up and still lose money… stock jumps 14%.

  • Capricorn Metals added another $17m to the balance sheet, with $10m being spent on the Mt Gibson village. Gold production down 4koz qoq due to weather interruptions resulting in the processing of low-grade stockpiles (CMM). Unhedged currently, but 107koz hedged at $2,327/oz to be delivered from FY25 through to DecQ'26 (approx. 29% of production).

  • Metals X reported a 16% drop in tin production (qoq) due to delays in accessing high-grade ore and sub-optimal recoveries. Cash increased $24m to $167m (MLX)

  • Copper production increased to 589t in March for Hillgrove Resources. Even after raising $10m during the quarter (used for mine development and ramp-up), cash on hand slid $3m (HGO). Hillgrove has $7m left in the kitty, so a positive cash flow quarter is a must going forward.

  • WA1 hit 7m at 10% TREO at West Arunta, in addition to further niobium extensions to the east (WA1)

  • Sayona have ended March with $99m, down $59m from Dec 31st . 40kt of 5.4% spodumene concentrate was produced, up 18% on the quarter, though unit costs headed in the wrong direction, up 9% (SYA)

  • American Rare Earths received NBIO proposal from a Nasdaq-listed SPAC, with the targeted outcome of listing Wyoming Rare Inc. in America, similar in strategy to MP Materials (ARR)

High Grade It

  • MinRes is seeking a partner for its onshore gas processing plant in WA, while it awaits a state government decision on gas exports (The Australian)

  • MinRes maintained its confidence in selling 49% of the yet-to-be-finished Onslow haul road (AFR)

  • The world’s biggest energy traders, including Vitol, Gunvor & Mercuria, are returning to metals markets for growth (Mining.com)

  • Lynas had further cost blowouts at their Kalgoorlie facility, now totalling $800m in capex (MiningNews.net)

  • Consensus earnings for metals producers are being revised up following the rally across a raft of metals (AFR)

Comparative performance of Banks vs ASX100 Resources stocks

Comparative performance of Banks vs ASX100 Resources stocks

  • China’s nickel exports are expected to continue to surge higher following bans on Russian nickel (Bloomberg)

  • First Quantum’s CEO has said it may be able to remove 121kt of copper concentrate from Cobre Panama after elections in May (Mining.com)

  • Codelco defended its proposed lithium production tie-up with SQM, stating the deal is both transparent and beneficial to Chile (Bloomberg)

  • Ghana Mine Workers are demanding the termination of Future Global Resources’ mining lease at the Bogoso-Prestea gold mine, as the company lacks the finances to operate the mine (Bloomberg)

  • The World Bank has warned that commodity prices could keep inflation high, hampering Central Banks efforts to cut rates (FT)

Wheelin’ n Dealin’

  • BHP’s potential deal for Anglo will leave no shortage of dealmaking. The Big Australian has spent years moving away from certain commodities and jurisdictions, and we find it unlikely they’d hold onto diamonds (De Beers) or South African manganese assets. This deal is foremost about the copper for BHP. Not to mention, will we see the likes of Glencore throw their hat in the ring?

  • Equinox has bought out Orion’s 40%-stake for $995m in cash and scrip as it readies Greenstone for first gold (Mining.com)

  • The Silver Lake-Red 5 merger is progressing, with the implementation date currently set for June 19th (SLR)

  • Zhaojin Capital’s takeover offer for West African gold miner Tietto Minerals has become unconditional, allowing accepting shareholders to receive 68c/share (TIE)

  • Lynas boss Amanda Lacaze didn’t rule out an MP Materials merger when asked, after Gina Rinehart claimed stakes in both groups (AFR)

  • Emerald Resources now holds 99.6% of Bullseye and has proceeded to compulsory acquisition (EMR)

Rattlin’ the Tin

  • Ionic Rare Earths raised $5.5m in a placement. Investors were incentivised with 3-for-4 options attached (IXR)

  • Rox Resources has raised $7.6m for its Youanmi gold project (RXL)

  • Santana Minerals completed its raising of $31m (SMI)

Word on the Decline

  • WA1… Gina… Twiggy. Is this something we should be thinking about?

In the Weeds

  • The West faces an increasing challenge in balancing a transition to EVs whilst not handing over auto-manufacturing reliance to China. EVs are on target to make up half of all auto sales this year in China, versus just one in nine in the US (AFR)

  • Renewable energy sources generated a third of Australia’s utility-supplied electricity in Q1 2024, a record share for solar & wind farms (Reuters)

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Devil’s in the Detail

Lynas has finally revealed, on the 3rd last page of its quarterly, that contractors have indeed been demobilised, many months after it was rumoured to have happened and discussed on Money of Mine. In addition, there’s been a further hike in the capex bill, now 60% higher than initial plans (with 30% of added capacity). The company will be much relieved that an extension at their Malaysian facility was granted.

On a different note, we’re intrigued by recent trading in Azure Minerals (closing Wednesday at $3.31), with the market now seemingly in agreement that, at best, the proposed $3.70 scheme takeover gets delayed, from its current implementation date in less than 2 weeks (obviously pending outstanding approvals)

Disclaimer

All information in this newsletter is for education and entertainment purposes only and is of general nature only. The hosts of Money of Mine are not financial professionals. Money of Mine are not aware of your personal financial circumstances. Before making any investment decision, you should consult a licensed financial, legal or tax professional, along with considering any relevant Product Disclosure Statement. Money of Mine does not operate under an Australian financial services licence and relies on the exemption available under the Corporations Act 2001 (Cth) in respect of any information or advice given. Money of Mine strives to ensure the accuracy and currency of the information contained in this newsletter but we do not make any representation or warranty that it is accurate, reliable or up to date. Any views expressed by the hosts of Money of Mine are their opinion only and may contain forward looking statements that may not eventuate. Money of Mine will not accept any liability whatsoever for any direct, indirect, consequential or other loss arising from any use of information in this newsletter.

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