Ellison Says He's Not Leaving

Sandfire's numbers meet the mark, Resolute's net cash jumps despite interuptions

October 29, 2024

The Pre-Start

  • MINs issued a response to an ASX aware letter, declaring a reasonable person wouldn’t expect the pre-IPO sales contracts, the fact that the MD self-reported tax matters to the ATO or that MINs was investigating the matter to have a material impact on the stock price (MIN)

  • Sandfire produced 38kt CuEq, in line with expectations, as net debt improved by US$51m to US$345m. Motheo completed a planned shutdown as C1 costs improved to US$1.42/lb, while MATSA’s C1 jumped to US$1.88/lb (SFR)

  • Ramelius reported group production of ~62koz at AISC of $1,965/oz for the Q, guidance reiterated with Mt Magnet production second half weighted. Cash & gold flat at ~$439m after SPR investment, with updated Eridanus MRE, Mt Magnet mill expansion study & Rebecca-Roe PFS due Dec ‘24 Q (RMS)

  • Resolute poured ~85koz at US$1,452/oz AISC, slightly below expectation due to extreme rainfall events at Mako & lower grades, with net cash building by ~US$49m to ~US$146m for the Q. CY24 guidance expected to be at or below lower end and AISC at upper end (RSG)

  • Coronado delivered ROM production of 6.3Mt & sales of 3.9Mt. Net debt lifted to US$94m as mining costs jumped 29% to US$117/t, with guidance weakened in Sept (CRN)

  • Burgundy recovered 1.24m carats, as cash rose to US$72m, after paying US$23m in debt. Net debt sits at US$23m, excluding US$73m in inventory (BDM)

  • Capricorn approved the expansion of Karlawinda, targeting annual gold production of 150koz and AISC ~$1,700/oz, driven by increased processing capacity to 6.5Mtpa for $120m capex, targeted completion Q4 FY26 (CMM)

  • De Grey shared infill drill results from Brolga on a 20m x 40m pattern, with an updated Hemi MRE due next month (DEG) “At the current spot gold price of approximately A$4,140/oz the payback period reduces to 12 months”

  • Hastings closed the quarter with ~$10m cash, with 33% of Yangibana’s capex spent to date (HAS) with only a $50m mcap & ~$193m Wyloo con notes maturing in Oct’ 25, we don’t have much hope the $318m balance will get funded..

  • Firefly released an updated resource for its Green Bay copper-gold project in Canada of ~59Mt at 2.0% CuEq (FFM)

  • Chalice closed with $98m in cash & investments, with PFS delivery the focus (CHN)

  • Meeka closed with $6m, receiving a further $24m post quarter end, while all approvals have been received & construction has commenced (MEK)

  • Element 25 increased the Butcherbird M&I Resource to 130Mt @ 10.23% Mn following an infill drilling program (E25)

  • Orion Minerals made new appointments to help complete the Prieska Cu-Zn feasibility study + optimisation works to be incorporated, now due Q1 CY25 (ORN)

  • S&P Global upgraded its credit rating for Perenti from BB (positive) to BB+(stable) (PRN)

  • Regal increased their holding in Chrysos Corp, now holding ~13.8% (C79)

  • Collins St have upped their stake in Barton Gold, now holding ~12.9% (BGD)

High Grade It

  • MinRes MD Chris Ellison told big investors he has no intention of standing down & will try to ride out the storm (Australian) while the company said it’ll deliver findings of its investigation into allegations against its founder by Monday (AFR)

  • “Inconsistencies” in Ellison investigation will haunt the MinRes’ board (AFR) as the board hinted its probe began before Ellison’s explosive tax bombshell (West)

  • Paladin sparked a sell-off in uranium stocks on Monday after warning of operational challenges at its flagship Langer Heinrich mine (Australian)

  • A worker has been killed at Rio Simandou iron ore project in Guinea, marking the 5th death at the mining giant’s global operations this year (AFR)

  • IGO sees its dividend from Greenbushes, Australia’s most profitable lithium mine, scrapped (West)

  • BHP shares lift ~2% on $48b Samarco disaster settlement (CB)

  • Resources jobs are at a record high in WA despite battery metals carnage and gold reclaiming lithium’s crown (West)

  • Oil price drops 6% on hopes of Middle East de-escalation (OilPrice)

  • Albanese is facing multimillion-dollar campaigns run by mining, business, building and industry groups, which attack union-backed IR laws and warn of damaging economic impacts (Australian)

  • WA’s Aboriginal affairs minister refused an S18 application for a proposed iron ore mine at the centre of a spat between its backer & traditional owners (BN)

  • Mineral Resources chair James McClements fronts investors amid Chris Ellison crisis (Australian)

  • A cocktail of frothy stock valuations & deteriorating earnings has left the ASX vulnerable to a sell-off, but analysts say a turnaround in the mining sector could yet justify the near-record level (AFR)

  • The weight of sanctions bears down on Russia’s mining sector, with technology bans and labour shortages adding serious pressure (MiningNews)

  • Gina Rinehart’s Atlas Iron reported NPAT of $439m in FY24, paying a dividend of $179m to Hancock (BN) FID on its Ridley magnetite project has been deferred “due to approvals uncertainty and uncertainty regarding groundwater”.

Wheelin’ n Dealin’

  • It’s 2 weeks until Anglo American collects binding offers for its QLD coal assets, with bidders in the dark, Street Talk has reported (AFR)

  • Gold Fields has officially completed its acquisition of Osisko Mining following receipt of all regulatory and shareholder approvals (GFI.JSE)

  • Aura Minerals will acquire Bluestones Resources, paying a 40% VWAP premium (C$0.50/share), for a total EV of up to US$74m (ORA.T)

  • Koch signed a deal with a US lithium venture to provide DLE tech including an “industry-first guarantee” of recovering >95% from brine (Bloomberg)

  • Siren Gold received a revised NBIO from Federation Mining which the board resolved to reject (SNG) Shareholders voted to approve the $22m (mostly scrip) acquisition of Reefton by Rua Gold at yesterday’s special meeting (RUA.T) we think it’s a disgrace to not allow visitors to attend contentious shareholder votes

  • The board of Helix issued a response to Acta’s proportional off-market takeover offer, advising shareholders to “take no action” (HLX)

  • Aurumin is in halt pending an announcement on a potential Sandstone JV (AUN) discussion of which appears in page 9 of BTR’s announcement

  • Cyprium Metals has initiated a strategic review of the company’s copper projects in the Murchison region of WA (CYM)

  • Indiana Resources received the second instalment (US$25m) of its US$90m settlement agreement with the gov’t of Tanzania (IDA)

Rattlin’ the Tin

  • Westgold increased its debt facility from $100m to $300m, which may be used for “general corporate purposes” (WGX) Interestingly, the additional $200m facility is available until 30 June 2025, suggesting something is likely in the pipeline

  • Bellevue has completed the restructuring of its debt, leaving $100m of outstanding debt payable in CY27 & net cash of $9m (BGL)

  • Black Cat received firm commitments for $80m via a 2-tranche raise at 52c (BC8)

  • Legacy Iron Ore shared a prospectus as part of its $24m raising (LCY)

  • Mithril received firm commitments to raise $12.5m via a placement to expand their drill program at its Copalquin gold silver project to 40km (MTH)

  • Cannindah completed a $5m raising (CAE)

  • Australian Pacific Coal completed the retail component of their entitlement offer, raising ~$3.5m (AQC)

  • Great Boulder is in trading halt pending a proposed capital raising (GBR)

  • TSX-listed Golden Horse will raise up to $18m via an ASX IPO, with Emerald taking an allocation, funding it to drill its Southern Cross projects (GHML.T)

  • Goldrich Mining announced a C$20m placement to restart operations at Chandalar gold district, Alaska (GRMC.otc)

Word on the Decline

  • Apparently one of the parties that sees opportunity is the face of the MinRes bloodbath is Wesfarmers who have brushed up their file on their lithium assets.

  • We heard a few weeks ago that Wesfarmers was interested in more lithium, not less.

  • They might be spoilt for choice if looking at West Australian spod between Mt Cattlin, MinRes’ three projects (if they prove to become for-sale) and if they want to be creative, a project-level stake in Kathleen Valley could be do-able too

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

  • Dryblower: How Chris Ellison could make an easy $100m

  • China tightens its hold on minerals needed to make computer chips (NY Times)

  • Millennial mining heirs bet the family business on Argentine copper (Bloomberg)

  • MinRes’ Chris Ellison goes MIA in France (AFR’s Rear Window)

  • Bill Gates speaks about climate change and nuclear power generation at Bloomberg New Economy in Brazil (Bloomberg)

  • The Secret Laws of Mining Economics (Strictly Boardroom)

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Today’s Top Tweet

Rivalry aside, we don’t think BHP’s super fund investors are ready to look past JSJ’s Juukan Gorge CV blemish.

Would Peter Coleman throw his hat in the mix as Arcadium gets swallowed up? Who else comes to mind?

Devil’s in the Detail

You may have noticed in Vault Minerals’ quarterly yesterday that their average realised gold price for the Q was a mere $3,162/oz, while most of their peers achieved in the mid/high-$3,000’s.

This is largely a result of their hedge book of ~267koz at an average price of $2,795/oz (as at 30 June 2024) for delivery between Sep ‘24 - Sep ‘26. This represents ~40% of their production for the next few halves.

VAU chart

Vault’s gold hedge book

With the Aussie spot gold price sitting at +$4,100/oz and with +$500m cash & bullion at 30 Sep, should Vault bite the bullet and clear the decks on their hedge book (or at least partially), similarly to their peers Regis and Capricorn?

If Vault were completely unhedged today, back of the envelope maths suggests the extra ~$1,000/oz margin could represent ~$100m additional FCF per quarter based on the midpoint of FY25 production guidance (410kozpa). Food for thought.

The release of Vault’s capital management framework is imminent and it’ll be interesting to see what the team outlines.

Plus, did Brightstar think we wouldn’t spot this pre-pay on page 9 of today’s announcement?

BTR pre-pey

We read everything

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What does the Future Hold for MinRes? (57 min)

All information in this newsletter is for education and entertainment purposes only and is of general nature only. The Money of Mine team 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. Information relating to our Privacy Policy is available online here.

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