- The Director's Special
- Posts
- Rio Doubles Down on Lithium
Rio Doubles Down on Lithium
S32 has had a win on Worsley development while Resolute's CEO takes a leave of absence
The Pre-Start
Rio Tinto will invest $2.5b to expand Rincon lithium to 60ktpa of LCE. Expected mine life is 40 years, with expansion commencing in 2025 & first production expected in 2028, followed by a 3-year ramp-up (RIO)
Evolution acknowledged class action proceedings had been filed against it in relation to allegations of failure to comply with disclosure obligations and misleading and deceptive conduct (EVN)
South32 shared a positive update on Worsley, advising that the minister agreed with the appeals recommendations. State approval expected this month (S32)
Emerald increased the resource at its growth project Memot to 1.03Moz @ 1.65g/t Au (68% in indicated). 85%+ recoveries are anticipated while development is targeted for 2025 (EMR)
Resolute announced CEO Terry Holohan will take a leave of absence until Jan 31, with Chris Eger becoming acting CEO. The final US$30m payment to Mali will be made by end of Dec (RSG)
Aura Energy has provided an updated target of producing ~3Mlbs U3O8 per annum, delivering post-tax NPV8 $544m and IRR 45% from its Tiris uranium project in Mauritania (AEE) and launched a cap raise…
Magnetic Resources reported gold assay results from diamond drill holes at LJN4 (MAU)
Lunnon Metals reported further infill and extensional RC gold drill results from its Lady Herial prospect (LM8)
Kingsgate shared drilling results from 23 holes at the Chatree S-E complex (KCN)
Encounter shared assays from Green, intercepting 115m @ 1.3% Nb2O5 from 93m to end-of-hole (ENR)
Barton Gold completed a $5m gold sale as part of their Central Gawler mill cleanout and preservation program (BGD)
Auric Mining announced further gold sales from stage two mining from its Jeffreys Find gold mine (AWJ)
Vertex have powered up their newly installed gravity gold plant at Reward, first gold due next month (VTX)
Rob Cole has retired from his position as Chair and NED of Iluka due to health reasons (ILU)
High Grade It
Fortescue’s Game of Thrones moment (AFR) Focusing on failures at Iron Bridge
Rio Tinto will spend nearly $4bn on a new lithium mine in Argentina (Rincon), showing its faith in the battery metal (Australian)
Coalition claims nuclear plan $263b cheaper than renewables rollout (AFR)
Base metals & iron ore advanced ahead of the conclusion of a key policy meeting in China, where leaders are expected to map out next year’s economic priorities (Bloomberg)
Trump promises speedy permits for investments over $1B: “We’re going to drill, baby, drill” (MiningNews)
South32 claims win over EPA’s Worsley Alumina restrictions (West)
Oaktree has dumped its entire $70m stake in Perenti just over a year since it landed on its register (AFR)
Mexico to review bill to ban open pit mining (Mining.com)
Japanese trading giant Mitsui has eyed Queensland silica sands, with Diatreme inking an agreement (Australian)
The state government has approved Woodside’s bid to extend the life of its North West Shelf plant for a further 50 years (BN)
Lithium boss Dale Henderson goes Christmas shopping with $1.1m splurge on Pilbara shares (West)
Chile copper output grows, with Chuqui and Escondida back to highs (MiningNews)
Rio to trial blending renewable diesel with traditional fuel at is Pilbara iron ore operations as an interim measure to reduce its carbon footprint (BN)
Endeavour Mining released a PFS on their Assafou gold project in Cote d'Ivoire, hailing it as a “potential tier one mine” (MiningNews)
France’s nuclear generation rose to its highest level in almost five years as the fleet of reactors helped offset a slump in wind power output (Bloomberg)
Wheelin’ n Dealin’
Agnico Eagle is acquiring O3 Mining in a friendly cash deal which values O3 at C$204m (C$1.67/sh or a 58% premium to last) (AEM.T) O3’s primary asset is Marban Alliance property located near Val d'Or, in the Abitibi region of Quebec
Dataroom wrote on the prospect of NST selling Carosue Dam to RMS on the back of its DEG acquisition, & following the Rebecca-Roe PFS (Australian) still, no one is thinking Mount Monger?
Exxaro is said to have discussed acquiring Tshipi manganese mine (Bloomberg) Tshipi is a JV between ASX-listed Jupiter Mines and Ntsimbintle Mining
Javelin Minerals completed their acquisition of the Eureka gold project from Delta Lithium, also appointing current CFO & Co Sec of Delta, Peter Gilford, to the board as a NED (JAV)
Loyal Lithium executed a definite agreement for the consolidation of the Hidden Lake lithium project (previously 60/40 JV between LLI / PMT), with PMT to become a 6.8% shareholder of LLI and PMT’s Blair Way to join as NED (LLI)
Rattlin’ the Tin
Osisko Metals announced the closing of a $107m bought-deal (OM.T)
Aura Energy is in a trading halt pending a capital raising (AEE)
Vulcan Energy secured EIB board approval to participate in the company’s debt financing process for its Phase One project, while also completing its €100m placement (VUL)
Cyprium received firm commitments to raise $13.5m via a two-tranche placement (CYM)
Warreidar completed a $9.6m placement to fund drilling activities at its Golden Range project (WA8)
Emmerson Resources completed a $5m placement to fund exploration at its Tennant Creek and NSW projects (ERM)
EQ Resources raised $4.9m, with Oaktree cornerstoning 20% of the placement (EQR)
Word on the Decline
So Cyprium’s board knocks back an offer from Appian. They disclose the bid and raise capital the next week…
And of the $13.5 million raised, $5.3 million is going to the largest shareholder so they can increase their holding from 12% to 19%… And $3 million is going to the directors…
Leaving a mere $5.2 million (or only 38% of the raise) to go to other existing or new shareholders… righto…
Anyone else sitting here thinking Cyprium’s board starts to engage with Appian after January’s EGM approves the Tranche 2 shares?
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
Australia needs a dose of Javier Milei’s Argentine capitalism (AFR)
Battlelines firmed for next campaign in Australian “climate wars” (MiningNews)
Economics, not regulation, the main reason behind delay in BC's mines, study shows (NM)
Phil King, John Hempton hit as Trump rally burns short sellers (AFR)
Today’s Top Tweet
Do yourself a favour and read Daniel’s entire tweet if you want the most measured summation of the state of the lithium market. The kid is 22yo and has produced thinking better than any sell-side market commentary you’ve read…
Devil’s in the Detail
Do we reckon Ramelius’ Rebecca-Roe feasibility study is super compelling?
On an absolute basis and at these gold prices, it could be, but on a relative basis compared to other undeveloped gold projects? We’re not so sure…
This and Meeka’s expanded Murchison feasibility study both came out yesterday and we thought it would be an interesting exercise to do a high level comparo of each of their study outcomes using a A$3,500/oz gold price.
The study stats
On an NPV basis they actually fair pretty similarly (noting Meeka is using a higher discount rate).
But the crux of it in our view is the capital intensity i.e. for every $ of pre-production capex I spend, how much NPV $ (i.e. return) can I generate? The difference here is pretty stark: 1.5x (Rebecca-Roe) vs 6.6x (Murchison).
They’ve set aside $190m for a 3Mtpa plant at Rebecca-Roe as part of the pre-production capex, so anything they can do to minimise this (buying / transporting an existing plant?) would help the metrics here. The Meeka mill (admittedly a refurb / recommissioned plant vs brand new) will be a fraction of the size operating at ~600ktpa, although it will be processing ore (~3g/t Au) that is ~2x the grade of Rebecca-Roe (~1.4g/t Au).
Ramelius’ group production & AISC outlook for the next 10 years is where it gets interesting. The group AISC goes from the mid-$1000’s/oz we’ve been used to seeing at Ramelius to an average of ~$2,200/oz between FY28 and FY31 (~50% increase!).
Which brings us back to the question of capital allocation. We’d be interested to see how the maths compares on Ramelius going all in on their Spartan “strategic investment” vs the Rebecca-Roe proposition outlined in this week’s study.
But that’s enough maths for a +30 degree pre-Chrissie summer day.
Ramelius’ group production & AISC outlook
Catch up on our latest episode
🟢Spotify | 🟣 Apple Podcasts | 🟥 Youtube
An Unfiltered Conversation with Jennifer Hewett (1 hr 3 min)
Jennifer Hewett is a national affairs writer for the AFR, with a wealth of experience across energy, economics and politics.
This fascinating conversation covered everything from the role our energy policy will play not just in the coming election, but in coming decade, whether mining’s significance is appreciated across Australia, if Australia will get caught in the crosshairs of US-China trade wars, whether we can learn from industrial policy overseas and a whole lot more.
Reply