MarketOpen(ed) MAKE YOUR NEWS COUNT MAKE YOUR NEWS COUNT ISSUE 21 2023 ISSUE25 25:: Oct 21 OCT 2023
Canadian Capture
How Australia got the jump on Canada’s lithium
Liontown set to Roar Funding package unveiled
Market Open Radar:Latin Lovers Investors showing love for Latin Resources Plus more
A The Lizard King
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I like being on a sinking ship alone and rat-free, thank you very much! - LK
lbermarle jumping out of its Liontown bid reminded me of what happens whenever I buy so much as a single share of a company. However, in my case, it’s more about people realising what the dregs of society are into rather than the involvement of a powerful mining magnate. Well, I like being on a sinking ship alone and ratfree, thank you very much. Maybe I’ll jump into day trading orange juice, and it’s done better than any metal this year, so far. But what is it with companies buying a chunk of land and getting a big share price jump? Presumably, someone was happy to get rid of it on the other end, but it seems punters like seeing dirt move hands. We all like to impress on a first date, but in this case, it seems like it’s just making the market aware that the company knows what lithium is. Speaking of dates, scientists found some female frogs play dead to avoid unwanted attention from their suitors. I find this concept a bit on the harsh side for the croaky fellers, but probably preferable to my experience of getting told of their disgust to my face. I could always generate an AI bride, but the thought of getting dumped by a digital creation would just be too sad to bear. I’ve doubted the whole AI thing, but it is pretty fun to play around with, though I dread to think what prompts are getting put in behind closed doors and away from the pesky blocks that prevent me from really unleashing on the group chat. I still have no intention of weighing in on anything serious, but I find it grimly amusing to see people try and determine which side of a deeply complicated issue is the good and which is the evil. I personally blame a glut of adults whose only life reading has been Harry Potter. Not that I’m exactly George Orwell when it comes to political writings, but I recommend trying noncommitted centrism, where you can smugly insinuate an enlightened, neutral mind without having to back anything up. October 21, 2023
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The ASX capturing of Canada BY Tom Duggan While Australian miners plead for more investment to support the industry, a more remarkable dearth of cash for lithium-rich Canadians has yielded significant wealth for ASX listers.
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he now-scuttled Albermarle deal was how you might expect a multinational transaction: a smaller Australian company gobbled by a North American behemoth and an unmatchable pool of capital. But the subsequent Albemarle retreat revealed the economic might of Australian companies boldly starting a bidding war for a lucrative piece of home dirt. Meanwhile, Canada has reinforced the fort, implementing stricter foreign investment regulations. But its China-focused protectionism has overlooked an ensuing stampede from its Commonwealth allies, snapping up large areas of potential territory with nothing more than a small office in Ontario. Why wouldn’t Aussies flock to Canada? They have similar minerals and stuff. Okay, sure, Canada’s got four species of bears, two of which are mega-deadly grizzly
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and polar bears. But, down in Oz, we’ve got a whole gang of killer reptiles and drop bears. The flock has spent nearly $82 billion buying up Canadian assets, significantly less going the other way. Meanwhile, Canada’s mining production has fallen significantly over the last decade, resulting in the country losing its top position in zinc and nickel production. While the government has taken steps to address the issue, more measures are needed to regain its global standing. According to the Mining Association of Canada CEO Pierre Gratton, the stakes have never been higher. “This year’s report demonstrates that, with the right supports, our industry will be better able to provide the sustainably produced products essential to businesses and the public, both domestically and for our allies across the globe,” Mr Gratton said.
Even with easier access to capital in London and New York, Canada’s mining sector has lost its stalwart leaders to big foreign companies. At the PDAC Convention, two federal ministers discussed the industry while British-Australian giant Rio Tinto sat in the presumed seat of a Canadian. And it is not just the multinationals. While the TSX and TSX-V claim more mining companies than any other exchange, their small-cap sector, the bedrock of the mining industry, needs more domestic investment. Co-founder and chairman emeritus of mining royalty company Franco-Nevada recently told The Globe and Mail that Canada had hollowed out one of its key industries. “The largest stock market in the world for minerals companies is the Toronto Stock Exchange, but none of the big guys are on
it because we let them go,” Mr Lassonde said. “They can come over to Canada and buy our companies for peanuts. Their valuations are much better because they have great support.” Since the turn of the new millennium, junior explorers have accounted for more than 70 per cent of Australian discoveries – and the totality of those made in 2019. These are the discoveries that can turn minnows into multinationals. Still, the largest Canadian institutions don’t touch the smaller-level deals that make them happen, all while continuing to capture a larger and larger share of broker-dealers. The top ten firms hold over half of global Equity Capital Markets. Broker-dealers fell by a quarter worldwide in the last decade, mainly affecting TSX Venture Exchange. Canada incentivises critical minerals strategy. To regain industry leadership, reassess foreign investments at a smaller market level. October 21, 2023
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Liontown set to roar after securing $1.2bn in mine-making funding
By Amanda Ellis and Lauren Hale
Liontown Resources (ASX:LTR) has bounced back from its failed takeover by lithium giant Albemarle, unveiling a $1.2 billion funding package to build its flagship Kathleen Valley lithium mine in Western Australia.
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he lithium project is eagerly awaited by world markets keen to move its downstream into electric vehicle batteries. Alternative debt funding Announcing the package after market close on Thursday, Liontown revealed it had secured a $760 million debt funding package from a syndicate of investors. The investors included Export Finance Australia, the Clean Energy Finance Corporation, domestic commercial banks, and government credit agencies. The package will replace the $300m debt facility Liontown has with motor vehicle giant manufacturer Ford Motor Company (NYSE:F). Liontown said the longterm funding had attractive commercial terms, factored in potential cost overruns, and allowed for working capital facilities. It estimates a cost of $951 million to start producing at Kathleen Valley, while other estimates have put the capital cost in the $1 billion mark. Institutional funding in the bag The company shared news on Friday of firm
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commitments for an institutional placement of about $365 million for some 302 million new fully paid ordinary shares. In addition, Liontown plans to make a non-underwritten conditional placement of 6 million shares to Chairman Tim Goyder, alongside a shareholder raising of up to $45 million. All proceeds from the company’s equity raising and debt financing will be put towards refinancing the Ford and completing the construction and ramp-up of Liontown’s Kathleen Valley lithium project. The funds are tipped to provide the company with a prudent liquidity buffer that will allow it to maintain a robust balance sheet. Liontown Managing Director and CEO Tony Ottaviano was proud of the placement. “I am immensely proud that this funding has attracted such positive domestic and international investment and equity market support, which, in turn, demonstrates a strong vote of confidence in the Kathleen Valley project and the Liontown team,” he said. ‘Funded to first production’
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Ottaviano said the funding package meant the company has the cash to build the mine and start production at the Goldfields site. He told the market the company had attracted high-calibre lenders, which spoke to the global importance of its project. “The execution of this credit approved term sheet and the launch of the equity raise are critical achievements in de-risking the development of the Kathleen Valley Project,” he said. “These initiatives ensure we are funded to first production and beyond.” Capital market raise Liontown hopes to raise $420.8 million from equity markets and investors in its unveiled funding package. It has firm commitments for $365 million and from institutional investors, pricing its new shares at $1.80 each. It hopes to settle the place on Tuesday and allot the shares on Wednesday, with help from joint lead managers UBS Securities and Bell Potter Securities. The company hopes to raise $45 million from eligible shareholders at a $1.80-a-share purchase price or a 2% discount to the 5-day volume-weight-
ed closing price of the company’s shares, whichever price is lower. Liontown revealed all its board planned to respond to the offer by taking up their full entitlements. If shareholders agree at an upcoming annual meeting on November 30, a non-underwritten placement of 6 million shares will be made to the company’s chairman, Tim Goyder, to raise approximately $10.8 million. A failed takeover Liontown’s $6.6 billion selloff to the world’s biggest lithium company Albemarle (NYSE:ALB) failed earlier this week, with the US company citing “complexities associated with executing the transaction” as the cause. In recent months, Liontown added second-generation mining magnate Gina Reinhart’s Hancock Prospecting investment vehicle to its share registry. Hancock has critiqued the company’s plan to start mining in the Goldfields, adding complexity to the planned sale of domestic lithium to a US company. Critical minerals efforts Like the US, Australia has its own critical minerals strategy to build long-term supply chains for critical
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Cazaly’s turn for lithium at James Bay Cazaly Resources (ASX:CAZ) has commenced exploring the Sundown prospect project in Canada’s James Bay region, which is known for its abundant mineral deposits. This project is a massive undertaking, covering over 260kms of land and containing more than 200 documented pegmatites. Cazaly’s plan involves collecting rock-chip samples from highpriority target areas with potential pegmatite mineralisation, some of which have exposures of up to 1.5km in length. The company’s managing director, Tara French, expressed her excitement about exploring the Gladman Suite pegmatites and conducting the project’s first lithium assays.
d)Shorts Balkan spot spodumene at Gorge
Nimy’s massive discovery at Mons
Spartan’s gold discovery at Dalgaranga
Balkan Mining and Minerals (ASX:BMM) has intersected visible spodumene pegmatites from its first drill hole at the Gorge project. After recent fieldwork established priority targets for drilling, the Nelson target has been found to host spodumene at around 5% to 15% within a depth of 7.6 meters. The company said the lithium-bearing outcrops are a breakthrough, demonstrating a sizeable potential scale of mineralisation to be determined by further drilling.
Nimy Resources (ASX:NIM) has confirmed massive nickel and copper sulphides at the Mons Project. Initial assays from the first hole into Block 2 returned encouraging results of 5m @0.735 Ni, 0.53% Cu, 0.06% Co and 0.55 g/t 2PGE from 102m. The exciting results have spurred a quick redirection of the diamond rig for more drilling. Nimy’s Executive Director, Luke Hampson, said the results have lifted confidence.
Spartan Resources (ASX:SPR) has found more gold north of the Never Never deposit, part of its Dalgaranga Gold Project. The initial RC hole drilled to test the new “Patient Wolf” gold prospect returned outstanding assay results of 10.00m @ 19.84g/t gold from 96.00m, incl. 4.00m @ 40.15g/t. The drilling program has been increased by 7000m to 32,000m, with 6 rigs turning to get the company’s MRE out before the end of the year.
Argenica receives preclinical grant
Cygnus strike early Auclair success
Celsius find more copper at Sagay
Argenica Therapeutics (ASX:AGN) has received funding from the Stan Perron Charitable Foundation for pre-clinical studies of its lead drug candidate ARG-007. The trial will test for effectiveness in the reduction of brain injury after stroke and therapeutic hypothermia. HIE is a severe condition caused by oxygen deprivation and limited blood flow,
Cygnus Metals (ASX:CY5) has had early success after intersecting multiple visual spodumene-bearing pegmatites during their first-ever drill campaign at Auclair. The thick intersections came measured 13.9 meters over a 1.9km strike which has returned sampling grades to 6.5% Li20, exceptional results which have built Cygnus’ confidence that it is exploring a large, high-grade system.
Celsius Resources (ASX:CLA) diamond drilling has confirmed more shallow copper mineralisation at its Sagay Copper-Gold project in the Philippines. Drilling focused on high-grade copper, with 8 out of the 12 holes returning significant mineralisation. Celsius managing director Peter Hume said the results confirmed the location of the copper mineralisation starting from less
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MarketOpen(ed) RADAR Salinas fever makes investors Latin lovers By Amanda Ellis Western Australia’s Latin Resources is gaining attention for its aggressive drill campaign at the Salinas project in Brazil. The lithium project, now district-scale size at Colina, shows promising results from lab assays. With its mineral resource update imminent, the company is a contender for the big time. Latin Resources (ASX:LRS, FRA:XL5) has projects in South America and Australia and aims to develop sustainable materials for environmentally friendly products across the globe. The $698 million company, whose securities went into a trading halt on Thursday, has gained 165% in the past 12 months, making it the biggest lithium gainer on the Australian Securities Exchange in the past year. A scoping study for the projects puts its net present value (NPV8%) at US$2.5 billion ($4 billion), with an internal rate of return of 132%. A big project While the company has lithium and graphite assets globally, its tenements in Brazil’s Minas Gerais region near neighbour Sigma (NASDAQ:SGML) attract the most attention. Earlier this year, Latin Resources upgraded its Colina deposit near Salinas to an impressive district scale of 45.2 million tonnes at 1.32% Li2O. The company has a thick-peg-
matite swarm at Colina that measures two kilometres by 1km, leaving plenty of upside for the Latin team embarking on 65,000 metres of drilling. Latin’s team, which includes experienced senior geologist, Latin Resources Vice-President of Operations in the Americas Anthony Greenaway, hopes to use the latest results for its highly anticipated updated mineral resource estimate for Colina before the end of the year. The Salinas-Colina project team plans to keep its drill rigs spinning throughout 2024, focusing efforts on Colina and Fog’s Block. The scope The preliminary economic assessment for the Salinas-Colins project will extract concentrate varieties from raw materials in Colina using the more economical dense media separation technique. Its first product, SC5.5, will have a grading of 5.5% Li2O, while the second product, SC3, will have 3% Li2O. It aims to produce an average of 405 kilotonnes of SC5.5 and
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Latin Resources MD Christopher Gale
123ktpa of SC3 yearly. According to the PEA, all-in sustaining costs would be US$536/ tonne, anticipating a US$253 million capital expenditure for Phase 1 and US$55 million for Phase 2. Assuming conservative prices of US$1,699 per ton for SC5.5 and US$927 per ton, the investment would pay off in seven months. Some bullish estimates predict a long-term price of US$2,500 per ton for SC5.5, while sellers of SC6 received about US$3,120 per ton for 6% Li2O concentrate in late September. Next steps Latin Resources is expected to update its mineral resources for the Salinas-Colina project by the end of the year. Once done, the company will start working on its definitive feasibility study (DFS). This study is critical because it will ensure the company can meet its expected final investment decision in 2024. Assuming the DFS is successful, the company plans to start
mine construction in 2025 and have its first production in 2026. Advantages The Salinas-Colina lithium project has promising potential in size, cost, mine life, and profitability under the leadership of a highly experienced and diverse project team. It could only take seven months to start making a profit after production begins. Given its significant resources and estimated value, the company is well-positioned to benefit from the growing demand for lithium. The management team has extensive experience in mining and exploration, financing, and the corporate sector. Challenges Latin Resources offers a highrisk, high-reward investment in the future of the lithium industry. However, the flagship Salinas-Colina project is in its early stages and is not guaranteed to become a mine. The company hasn’t generated revenue yet, so profits are uncertain. The securities are expected to return to trade on Tuesday.
Aimorés, Minas Gerais - 330MW hydro power facility
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