Freeport Calls for Copper Consolidation

Tianqi want fair go at incentives, the US is "15-years behind China" on nuclear

June 18, 2024

The Pre-Start

  • AlphaHPA updated the market on First Project Stage 2, with all long-lead equipment issued and multiple new sales orders received (A4N)

  • West African gold developer Predictive Discovery announced a slew of board & management changes, including ex-CEO of recently acquired OreCorp, Henk Diederichs as COO (PDI)

  • Toro Energy released an updated scoping study for the Lake Maitland uranium project in “not allowed to mine uranium” Western Australia (unless your Deep Yellow with Mulga Rock). Same old… capex is up slightly and NPV is higher because uranium price is higher (TOE)

  • Ausbil has been buying some Sandfire on market, creeping up to 7.7% of the copper producer (SFR)

  • Sayona Exec Director Paul Crawford sold c. $150,000 of his SYA holding on market (SYA)

High Grade It

  • Santos acquired enough carbon credits for its new $5.7b Barossa LNG development to meet new emission reduction targets (The Australian)

  • Copper consolidation into a handful of majors, similar to the oil and gas sector, has the potential to lift output, according to Freeport’s CEO (FT)

Freeport’s multiple vs peers

Freeport’s multiple vs peers

  • Copper added to four straight weeks of declines after economic data from China highlighted continued weak spots (Bloomberg)

  • Andrew Forrest is on the charm offensive as FMG prepares to host Chinese Premier Li Qiang at Hazelmere to show off green tech (West)

  • Tianqi chief executive Frank Ha said the company deserves access to the billions on Australian government incentives (AFR)

  • Kyrgyzstan has relaunched uranium mining to boost the economy (Energynews)

  • The WA Government said Raleigh Finlayson’s mission to remove kilometres of railway for a new gold mine “has merit” (West)

  • Orano are potentially going to lose the right to mine uranium at the Imouraren mine in Niger, with Russia potentially gaining control (Newscentral). France have relied on Niger for up to 15% of their uranium, which provides 65% of their power. The Imouraren mine contains 471mlbs of U3O8 in reserves.

  • China’s aluminium production hit a record last month as smelters brought back idled capacity after prices hit two-year highs (Bloomberg)

  • Gold Valley signed a binding term sheet with Macarthur Minerals for the right to mine Macarthur’s Ularring hematite project (West)

  • Oil slipped after its biggest weekly advance since early April (Bloomberg)

  • Miners in British Columbia see government regulation, costs of capital, and inflation as the biggest threat in the next year (MiningNews)

  • The U.S. is as many as 15 years behind China on developing high-tech nuclear power as Beijing's state-backed technology approach and extensive financing give it the edge, an ITIF report said (Bloomberg)

  • The stars appear to be aligning for an Australian nickel sector recovery, according to Dryblower (MiningNews)

  • Snowline Gold dropped their maiden MRE for their Valley Gold Project, 7.31Moz at 1.4g/t (JMN)

    Shell 1 will go +2.2g/t Au with ~1:1 strip ratio (h/t @Pete__Panda)

Wheelin’ n Dealin’

  • Sarama announced a non-binding MoU with Cosmo Gold and Adelong Gold to acquire 80% rights to the Cosmo Newbery Project in the Eastern Goldfields of WA (SRR)

  • An institutional investor pressed sell on a $1.1b stake in Andrew Forrest’s Fortescue, with JP Morgan seeking buyers (AFR)

  • We know the deal was last week but it’s not too late for a Deterra meme, is it? Nah, the transaction call was yesterday.

Word on the Decline

  • We heard that AVZ Minerals has Poynton Stavrianou working on pulling together some funding for the delisted lithium player.

  • What happened to the US$20 million facility from Locke Capital that was previously teed up by Stavrianou? The mind-boggling +6 month exclusivity period with Locke was set to end 31 May…

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

  • Dan Gertler, a sanctioned mining billionaire, is set to receive hundreds of millions as part of a controversial US plan to lift restrictions on the tycoon if he sells his remaining DRC mining interests (FT)

  • Ferg’s expanded thoughts on the Hong Kong-listed oil and gas services companies dropped last night (Substack)

  • Super-Spiked, an energy-focused podcast, did a great, short episode on “Returns AND Growth with Long-Term Buybacks” (Super-Spiked)

  • A Strictly Boardroom special - “What would you tell your younger self?’ 10 lessons on not losing your shirt in resource investing (MiningNews)

Were you forwarded this email from someone else?

Today’s Top Tweet

Devil’s in the Detail

Tony Sage chaired European Lithium released the results of their General Meeting yesterday with an awful lot of approvals to issue options and shares to related parties, which prompted us to take a closer look at the Notice of Meeting.

Back in April, the Company announced a 1:1 offer to all holders of EUROA options to apply for new options exercisable at $0.08 on or before 14 Nov 25. Directors Tony Sage, Malcolm Day (of adultshop.com fame) and Michael Carter intend to apply for their full allocation under the Options Offer, being an aggregate of 21.75m new options. To the extent the options offer isn’t fully subscribed by option-holders, these directors (plus director Mykhailo Shernov) also agreed to underwrite the options offer in equal portions up to c. 41.7m new options each.

If you’re still following, the kicker is resolution 8:

The options offer recently closed, with the 4 directors taking up an aggregate of c. 52.3m options not subscribed for (or c. 13.1m options each).

So resolution 8(a) tells us that if the company executed the underwriting agreement (which they obviously have) and Sage exercises his 13.1m underwritten options, he gets 7.5m shares for free. Why would you exercise (currently out of the money) 8cps options though?

Because our back of the envelope maths suggests the cost of exercising the options (including the issue price of $0.005) + receiving the free 7.5m shares gives you a weighted average strike price of c. 5.4cps. EUR shares are currently trading at 5.2cps. Essentially Mr Sage has almost 18 months to exercise his options at a huge effective discount to the strike price.

Corporate wizardry at its finest.

Catch up on our latest episode

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.

Reply

or to participate.