Where 2020 was all about gold, palladium and iron ore, 2021 has been dominated by the EV thematic.
Battery metals prices posted strong year-to-date gains across the board.
According to Benchmark Mineral Intelligence, the lithium index was up 240% year-to-date to the start of December, and still rising.
Spodumene – the hard rock lithium feedstock sold by WA’s miners – was up from $US480/t to $US1.525/t over the same period.
In December, cobalt prices in Europe broke through the $30/lb mark for the first time since the end of 2018, while Benchmark’s graphite index was up a more respectable 17.4% year-to-date.
The base metals suite also performed strongly, with nickel, copper, and tin hitting record highs at various points throughout the year.
Lead and zinc touched 3- and 14-year highs, respectively.
Uranium teased the believers, once again. Will 2022 be yellowcake’s year?
It was also an IPO extravaganza, with ~100 new explorers and miners hitting the bourse in 2021.
Compare that with the flaccid turnout in 2020 (24 resources IPOs) and 2019 (9 resources IPOs).
What were our winners looking for?
In 2018 and 2019 there were just 11 and 44 resources stocks finishing with gains of 100 per cent or above, respectively. In 2020 we had a massive 201. Hard to beat.
So far in 2021 the number of resources stocks gaining over 100% is 120, with five of those gaining over 1000%.
There are winners everywhere, but the standout sector in 2021 was lithium, followed by gold, copper and uranium.
2021’s Top 50 resources performers (as of Fri, Dec 17)
A top 10 outlier, for all the wrong reasons.
From a low of 4.2c on August 27, shares in the barely profitable, highly indebted Chinese rare earths/car leasing business hit a record $2 before the ASX started asking some hard questions.
VIA’s trading history on Commsec was notably low volume for such a heady rise in the stock price.
In the 45-day period between August 27 and October 11, there were also days where it didn’t trade at all.
The largest daily volume on Commsec occurred on September 8, when 69,050 VIA shares changed hands and the stock mooned by 126%.
Some days, less than 100 shares change hands. But the buy-sell ladder continued to match at higher prices — every day.
The stock – which typically ekes out one or two boring announcements per quarter — has now been suspended since October 15.
A nice comeback story.
In early August, RHI announced plans to sell its 40% interest in the 820 million tonne Red Hill Iron Ore Joint Venture (RHIOJV) to miner Mineral Resources (ASX:MIN) for a mammoth $400 million in cash.
Red Hill Iron listed on the ASX in 2005, trading at big volumes and at prices north of $6 per share.
The share price then shrunk dramatically on the perception that the Red Hill Iron Ore Joint Venture (RHIOJV) “is a stranded project of modest grade and high impurities”, said chairman Josh Pitt in November last year.
The modest grade, high impurity part is true, but this project – a JV with Aquila Steel, part of China’s Baosteel Group — is also cheap to mine.
Which leads us to this deal with $9.5 billion market cap MinRes.
Beside the $400m, MinRes will pay Red Hill Iron a royalty of 0.75% of revenue on all iron ore extracted and sold from the RHIOJV tenements and — if developed in association with the development of one or more of the RHIOJV tenements — over MinRes’ ‘Bungaroo South’ tenement.
The sale does not include the other mineral rights over the RHIOJV tenements, which are retained by Red Hill Iron.
In 2017, SYA was one of more than 100 lithium exploration stocks on the ASX.
But “an avalanche of supply” led to plummeting prices, Macquarie and Morgan Stanley said ‘I told you so’, and these companies and their investors bailed into more appealing metals, like gold.
Only a handful of ASX-listed lithium explorers and project developers stayed the course. Four of them are now in our top 10 for 2021.
It’s been a good year for SYA. In January, it announced a major investment and offtake deal with fellow North American lithium play Piedmont (ASX:PLL).
The $15m windfall from PLL will help advance SYA’s flagship Authier project, its emerging Tansim project, and its long-term plans for a vertically integrated lithium hub in Québec’s Abitibi region.
This hub would be underpinned by a company changing bid for the mothballed $400m North American Lithium (NAL) mine, which was successful.
Preparations are now advancing for the resumption of operations at NAL from 2023.
While Lake Resources’ flagship Kachi project already ranks amongst the top 10 global lithium brine resources worldwide, it’s not-so-secret weapon is an innovative direct-extraction technique, which produces cheap, high quality, environmentally friendly lithium.
This tech belongs to Lilac Solutions, which has inked a deal to contribute tech, engineering teams, and an on-site demonstration plant to earn a maximum 25% in the advanced project.
Lilac, after earning its interest in Kachi, will be expected to fund ~US$50 million, equivalent to its pro rata share of future development costs.
This deal follows the recent successful sourcing of an Expression of Interest from the Export Credit Agency of the United Kingdom to provide project finance for the first stage of the Kachi Project.
This Expression of Interest will cover ~70% of the total finance required to expand production to 50,000 tpa of high purity lithium carbonate equivalent.
A project Definitive Feasibility Study (DFS) is due out Q2 2022.
The ‘Siviour’ project in South Australia could be among the world’s lowest cost producers of an important graphite product for EVs called purified spherical graphite (PSG).
Market data suggests an average operating cost of ~US$2,000/t for the existing PSG market, which is 100% based in China.
RNU’s gross operating cost of US$1,989/t PSG “is favourable by comparison”, it says.
A bunch of non-binding offtake agreements for the sale of up to 60,000 tonnes of PSG were signed this year, including one with global anode giant POSCO which may also throw in some cash to get the project up and running.
Renascor’s currently proposed Stage 1 PSG production capacity is just ~30,000tpa.
Like all battery metals, demand is set to exceed supply for the foreseeable.
Which is why RNU is now investigating a substantial increase in Stage 1 production capacity. It has also brought forward feasibility work for the Stage 2 expansion.
AVZ’s ‘Manono’ lithium-tin project in the DRC is a global standout.
According to the company, it is:
- the biggest undeveloped deposit in the world
- the second highest grade undeveloped deposit in the world
- in the bottom cost quartile for production globally, and
- in the bottom quartile for greenhouse gas emissions
As managing director Nigel Ferguson says – “very, very profitable”.
Over the past year or so it has inked long-term, binding sales agreements with three major Chinese lithium converters for 80% of its 6% Li2O spodumene concentrate.
It has also brought on cornerstone investor CATH Energy Technologies, who will shell out $US240 million for a 24% direct interest, plus another ~$160m to get the ~$US540m project into development.
The ducks are lining up.
This copper-gold porphyry hunter finished the year with a bang.
In October, it hit a 480m-long copper-gold intersection from 11m depth at the ‘El Palmar’ project in Ecuador.
Assays from the very first drillhole at the project include:
480.85m at 0.41g/t gold and 0.15% copper (0.66g/t gold equivalent) from 11.3m, including 163.55m at 0.71g/t gold and 0.20% copper (1.05g/t gold equivalent) from 52.35m.
In November it did it again, pulling up an incredible 111m long intersection grading 2.3g/t – including 7.2m at 26.9g/t – at the brand new ‘Alba’ target, part of STM’s ‘Bramaderos’ project in southern Ecuador.
That’s two potentially company-making discoveries in 2 months.
In February, Bill Beament, boss and founder of large cap gold miner Northern Star (ASX:NST), cornerstoned a big $58m funding package to advance DVP’s Sulphur Springs copper-zinc project towards production.
It has already spent $10 million on drilling with the aim of improving its business case over the next year or so.
But that’s not all.
DEVELOP would also be a bespoke mining services and mining company, focused on underground mining and decarbonisation.
It has already tendered for Bellevue Gold’s ASX:BGL) 200kozpa mine which will be one of the highest-grade mines in Australia and “the lowest GHG emitting on a per ounce basis”, DVP says.
With recent boardroom troubles behind it, uranium stock AEE re-joined the bourse with a bang late September.
AEE’s focus is the advanced ‘Tiris’ project in the Islamic Republic of Mauritania, Africa, which the company calls “one of the most compelling uranium development projects in the world today”.
The company says it has executed an offtake agreement for the project, with financing discussions currently advancing.
Highlights of recent DFS include low start-up costs of $US74.8 million and a low All-In Sustaining Cost (AISC) of US$29.81/lb – well below current prices.
Vanadium by-product recovery may lower costs further, Aura says.
GLN has two high grade lithium brines projects in South America – its flagship Hombre Muerto West (HMW) and Candelas – which have combined long term production potential of 34,000tpa LCE.
GLN has been plugging away toward production decision at HMW in 2021. Investors have rewarded the grind.
The company recently updated the project’s Preliminary Economic Assessment (PEA) study to account for the expected increase in the long-term average real lithium price assumption to US$18,594/tonne for the period of 2025 to 2040, up from the US$11,687/tonne in 2040 estimate that it had previously used.
This has resulted in a 120% increase in the unleveraged pre-tax net present value (NPV) of the project to US$2.2 billion while internal rate of return is now 37.5%.
Pilot plant operations – a smaller version of the real thing – are expected to be operational in Q2 2022.