Gina Swoops for Ellison's Energy Assets in $1.1B Deal

BHP walks back comments that it's "moved on" from Anglo, Whitehaven positions itself for Kestrel

October 31, 2024

The Pre-Start

  • BHP clarified media speculation regarding a potential Anglo takeover, in order to avoid ruling it out of lodging another bid due to UK takeover laws (BHP)

  • MinRes maintained guidance across its assets, with higher costs this half-year. CSI did 68Mt while Onslow produced 1.9Mwmt (Oct annualised run-rate was 10.6Mt) with the haul road fully operational. Lithium shipped tonnes fell to 178kdmt while the unit sales price dropped 35%. Headcount was reduced by 570 (MIN) Info on Hancock deal below, which saw a 15% bounce. Nothing on net debt as at 30 Sep

  • Wesfarmers chairman’s address discussed the depressed lithium market, claiming WesCEF to be operating strongly though losing cash (WES)

  • Westgold produced ~77koz at $2,422/oz AISC (only 2 months of KRR assets), reiterated guidance (2H weighted), generating net mine cashflow of $29m & finishing the Q with $103m cash, bullion & investments after some large KRR merger costs & working cap outflows (WGX)

  • Champion Iron produced 3.2Mwmt, delivering EBITDA of $75m & declaring a 10c dividend. Its DRPF project is advancing with commissioning in H2 25. Seasonal sustaining capex & a dividend payment meant cash decreased (CIA)

  • IGO advised a revised budget & timeline for the CGP3 project at Greenbushes had been approved, total capex estimated of ~$880m (remaining cost to complete ~$270m). First ore to plant expected Q2 FY26 (IGO

  • Emerald’s Okvau produced 28koz at US$991/oz AISC, generating pre-tax op cash flows of ~$58m and closing the Q with ~$181m cash & bullion (EMR)

  • Jupiter produced 1.21Mt (up 33%) with costs of US$2.33/dmtu, 7% better. Weak demand saw Mn prices decline, averaging US$4.24 (JMS)

  • Peninsula said discussions were ongoing regarding a working capital facility, as it closed with US$78 while production draws near (PEN)

  • Firefinch shareholders passed a resolution authorising an $11.5m payment to Leo Lithium as its contribution to the Mali gov’t settlement (LLL)

  • Talga reported that the Swedish Supreme Court has dismissed appeals against its graphite mine, leaving its permit in place to operate (TLG)

  • TerraCom issued a fully franked 1c dividend after ROM coal production of 2.5Mt & sales of 1.8Mt (1.1Mt attributable). It closed with cash at bank of $17m & $58m in restricted cash (TER)

  • Whitehaven copped a 41% vote against share rights to MD Paul Flynn and 19% against the re-election of the chairman Mark Vaile at its AGM (WHC) and avoided a 2nd remuneration strike with 87% voting for the resolution

  • Toubani delivered a DFS for its Koboda gold project in Mali, highlights including average production 162kozpa over initial 9-yr mine life at US$1,004/oz AISC, US$216m capex and post-tax NPV8 of US$635m (@US$2,200/oz gold) (TRE)

  • Strickland reported more assay results at the Medenovac prospect as its Rogozna project in Serbia (STK)

  • Paradice increased their stake in Lotus to ~7.9% (LOT)

  • Colin McIntyre will retire from Pantoro’s board at its upcoming AGM (PNR) He originally joined as part of the merger with Tulla in 2023

  • Core Lithium appointed Alicia Sherwood as a NED to its board (CXO)

High Grade It

  • Pilbara and Lynas both report production cuts to weather the respective lithium and rare earths price falls

  • BHP chair Ken Mackenzie said elections, and protectionism are making the world volatile (West), while protestors disrupted yesterday’s AGM

  • Liontown burned through $230m but Tony Ottaviano has no plans for care and maintenance “for at least six months” (West)

  • BHP slammed QLD as an unattractive investment destination while seeking a dialogue with the new LNP government (Australian)

  • BHP is grooming “internal candidates” for chairman, CEO succession (AFR)

  • WA Premier Roger Cook vowed there’ll be no new mining tax or royalty increase on his watch (West)

  • China’s 2 biggest lithium producers remain in the red 9 months into the year as the battery-metal downturn continues squeezing the industry (Bloomberg)

  • Pilbara Minerals fears lithium industry carnage after the price slump as it halts its own operations (Australian)

  • BHP will need to spend US$4b on operational decarbonisation between now & 2030 if it wants to achieve its 30% GHG reduction target (MiningNews)

  • Trafigura will make provisions of US$1.1b after an internal review discovered fraud by individuals in its Mongolian petroleum supply business (Reuters)

  • Rich lister Tim Roberts exited his half stake of MinRes’ private airline in early October (West)

  • After a record export era for the commodity markets that fuelled WA’s economy, headwinds buffeting most sectors are growing (BN)

  • Investors’ “FOMO” on gold’s rally has sparked record demand, even as high prices push central banks to scale back their purchases (FT)

  • BHP said it expects industrial action to grow as economic uncertainty swirls (Australian)

Wheelin’ n Dealin’

  • MinRes negotiated with Hancock to sell 100% of its Exploration Permits 368 & 426 (containing Lockyer Deep & Erregulla Oil), while entering 2 JVs over MINs’ remaining onshore Perth & Carnarvon Basin acreage. Upfront consideration totals $804m with a further $327m subject to resource thresholds (MIN)

  • BHP was forced to walk back from comments about having “moved on” from Anglo to prevent its hands being tied by the UK takeover panel (Bloomberg)

  • Pressure builds on a Mineral Resources breakup, with eyes on Wesfarmers, who’re rumoured to be looking at the lithium assets (Australian)

  • Whitehaven is thought to be positioning itself to line up for the $US3b+ Kestrel mine process when it comes up on offer, according to Dataroom (Australian)

  • EMR Capital is believed to close to hiring an adviser to decide what to do with its stake in copper miner 29Metals, as reported in the Australian

  • Pantoro entered into a binding agreement to sells its Halls Creek project to Kimberley Minerals Group for $8m, paid in tranches over next 24 months (PNR)

  • Aurum released its bidder’s statement for the off-market takeover bid for Mako Gold (AUE)

  • Rex Minerals is officially off the ASX boards following the completion of its acquisition by MACH Metals (RXM)

Rattlin’ the Tin

  • Asante Gold Corp announced a C$525m financing package to fully fund its growth plans at Bibiani & Chirano (ASE.CSE)

  • Bowen Coking Coal is struggling to raise the $70m it sought (Australian)

  • Gold explorer Burrendong kicks off Christmas IPO campaign (AFR’s Street Talk)

  • Meeka Metals is in trading halt pending a capital raising (MEK)

  • Great Boulder announced a $6.3m to fund Side Well (GBR)

Word on the Decline

  • While Firefinch is no longer listed on the ASX boards, its shareholders are still fiercely active behind the scenes

  • Yesterday the retail shareholder collective had a victory at the AGM, getting “their guy” on the Board

  • Plus, Aluminium Alan, has shared with us a fresh market update as the bauxite/alumina tightness has furthered:

A major disruption to GAC’s bauxite export facility in Guinea has sent shockwaves through the global bauxite industry and pushed prices to record highs, up a further 9% this week. And with no end in sight, supply looks set to remain tight, given the absence of alternative global bauxite supply being able to respond quickly to the tightness. Alumina markets are feeling the bauxite heat, with idled Chinese refining capacity unable to respond to record high domestic alumina prices, given the chronic bauxite shortage

CM Group

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In the Weeds

  • Dialling in the MinRes quarterly call today will probably be worthwhile. Don’t expect Ellison to speak on quarterly calls, but we do expect questions relating to him. It’s at 8am AWST (Webcast)

  • Good time for a slice of Yellow Cake? (Rock & Turner)

  • What companies do well is not necessarily how they make money (Capital Gains)

  • The House of Hancock (Penguin) Not the newest book, but a great view how Gina operates

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Today’s Top Tweet

Some food for thought on Liontown’s quarterly yesterday

Devil’s in the Detail

Do we really think Gold Road will achieve its CY24 guidance at Gruyere?

The company reiterated its annual production and cost guidance in yesterday’s quarterly, anticipated to land at lower end of 145 - 152.5koz (GOR attributable).

But to even achieve the lower end of guidance, they would need to produce at least another 47koz (GOR attributable) next quarter. For context, this would be an almost 50% uplift in oz produced for the Q vs. average oz produced in previous CY24 quarters (which have ranged from ~31-34koz).

The company cites “ongoing removal of waste from the Stage 4 pit will allow full access to the ore body during the quarter. Dec Q 2024 production will benefit from planned mined ore tonnages in excess of ore processing requirements and higher head grades”.

Hopefully these factors will be enough to drive a strong push to close out the year and meet guidance, but one to keep an eye on…

Separately, BHP’s AGM address had some interesting tidbits, including some commentary around recent wave of protectionism threatening expansion of global trade and capital flows.

BHP AGM

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