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MoneyTalks: In 2016 these guys bet on ESG and mining tech. It is now at the heart of their business

A bet on X-rays that assesses gold particles in rock samples is about to pay off handsomely for RFC, early … Read More
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This article was originally published by Stockhead

Around five years ago resources-focused corporate advisors RFC Ambrian took a punt on a little-known technology developed by the CSIRO.

It was called PhotonAssay, a process that uses X-rays to stimulate and assess the proportion of gold particles in rock samples.

What Australia’s chief science body believed was that the technology could become a disrupter in the billion dollar minerals analysis business.

RFC agreed and got to work sourcing investors, providing a management team and getting the business up and running.

It is a bet that is about to pay off handsomely for RFC, early investors and the CSIRO.

That firm, Chrysos Corporation, this year raised $50 million in its latest funding round and is heading towards an IPO next year, where it is estimated it could have a value of $500 million.

RFC has since piloted the commercial spin-out of the CSIRO’s partner technology NextOre, a magnetic resonance imaging machine that sorts waste rock from copper rich ores which appears to be on a similar trajectory to Chrysos.

Chrysos Corporation is now worth an estimated $500 million. Pic: Supplied/RFC

 

$75 million VC fund on the way

Once a traditional mining focused corporate advisory firm, early stage investment opportunities in groundbreaking mining and industrial technology now make up around half of the RFC business.

It is now launching its $75 million basic industries venture fund, expected to close by the end of this year, focused on making early stage “impact” investments to commercialise the next wave of technologies like Chrysos and NextOre.

“Essentially after Chrysos and NextOre, we’d had a lot of techs come through and knock on our door,” RFC associate director and VC fund chief investment officer Chris Vinson told Stockhead

“And what we realised is there’s quite a big gap in the market. Most VC firms, essentially all VC firms, and most people in general, are really just not focused on this area and there are several reasons.

“One is it can be technically challenging, so having a blend of the engineering and the technical skills across our firm is really useful in evaluating these technologies, and figuring out where the value levers lie, and what you might actually get out of them.

“What’s the downstream effect of that? Will that actually be valuable to somebody, that’s not always a straightforward analysis.

“The other one is, these are very different than a software company, or an IT company, that can begin as one or two guys on computers, they can be developing a product and could turn into a big business if it’s scalable.

“In these instances, where you develop these industrial technologies, especially industrial technologies for heavy industries, they tend to be big pieces of equipment. So there’s a capital need in not only the development, but in building the first unit to be deployed.”

 

ESG a key theme when it comes to mining tech

Vinson said one of the key themes of the technologies in which RFC is invested is how they reduce the environmental footprint of mining and the businesses that operate around it.

That, he says, is where the “impact” comes in.

“All these investments that we’ve done, including Chrysos and NextOre, and the third one that we’re working on is a conveyor company called CMA, they all make a substantial difference to the environmental footprint and/or to the safety in the industry in one way or another,” he said.

“Chrysos is replacing the fire assay process, which eliminates quite a bit of toxic waste that comes out of fire assay, as well as removes the risk of lead poisoning to operators because the lead and the gold is mixed together in fire assay. Chrysos is non-destructive, chemistry free, and the machine takes the reading, so there’s really no harm or potential harm to the operators.”

NextOre uses technology akin to an MRI machine to sense copper grades. It is considered more accurate than conventional ore-sorting machines, which only scan for visual cues regarded as proxies for metal grades.

“NextOre is probably the most impactful one, because the sensing and sorting not only has a huge economic benefit to the operation, but it also has a huge environmental benefit.

“What you’re doing is digging up a bunch of rocks, and you’re guessing and you’re saying that on average, all this rock we dug up is 0.3% copper.

“But what’s really more likely, is that some of it is 0.6%, some of it is 0.1%, and some of it is probably zero; there can be a lot of variability in there.

“Every tonne of rock that you send through the mill uses 500 or 600kg of water, and a heap of energy in grinding and processing and flotation. So every tonne that you can take out that was not worth processing, it actually lowers the environmental impact of producing copper significantly.”

CMA is the latest early stage business Chrysos has taken on
CMA is the latest early stage business RFC Ambrian has taken on. Pic: Supplied/RFC

 

VC fund to capitalise on Chrysos, NextOre success

On top of that Chrysos and NextOre have proven commercially successful.

While he declines to put a dollar value on the investments, Vinson says they are worth many times the initial outlay.

They are of material value to the equity portfolio of the CSIRO, which is set for a major payday to fund further research when it sells down its stake in the upcoming Chrysos IPO.

Now what started as a side project has become an increasingly important component of RFC’s business model.

Vinson says the impact fund, structured as an early stage venture capital limited partnership fund, will enable it to provide a dedicated resource to progress a number of investments derived from the CSIRO, universities, start-ups and private tech developers.

“The business planning process, the negotiations, the fundraising, fundraising actually takes quite a bit of time as well. And that’s a big effort. Preparing materials for every subsequent fundraise round, going out and talking to the market, negotiating, doing contracts, doing diligence, it’s a big use of time,” he said.

“So one thing that would cut down on that and give us more time to spend back on the business is having a dedicated pool of investment capital that we can draw from.

“So that leads us to launching this $75 million Impact Fund structured as an ESVCLP. There are a couple of other investors in the space that are targeting METS or that are targeting early stage and even say industrial technologies. But I don’t think we’ll have any true competitor in the space.

“When I think about skill sets and experience and track record, there’s just not that many people with the ability or the desire to fund these types of things.”

Vinson said RFC has a large amount of expertise internally in fields like engineering and geology it could leverage to support investments made through the fund, which he said would be complemented by the capital raising and financial acumen within its traditional corporate advisory business.

“This has been a side project within a corporate advisory firm and we want to turn it into a proper business that has its own focus, and truthfully, I think the two businesses will be highly complementary,” Vinson said.

“The knowledge and experience and insight into technologies and the market will be really useful from an advisory perspective.

“And the market experience, discussion with other industry players, as well as the technical knowledge residing within the corporate advisory business will be extremely useful to the investment side of the business.”

NextOre is an MRI machine for copper grades.
NextOre is an MRI machine for copper grades. Pic: Supplied/RFC

 

What are ESVCLPs exactly?

Vinson says it is hard to quantify exactly how much value the ESVCLP brings to RFC Ambrian compared to its corporate advisory work because its value is based on the underlying investment.

“I think 50/50 is a good approximation for the relative size of the two businesses, they’ll be close,” he said.

“The corporate advisory business will have steady work generating fees on a regular basis, whereas the investment business will largely depend on performance of underlying investments, and that will take some time to realise.

“If you’ve performed well, you may earn some sort of performance fees or some profit sharing toward the end of it.”

ESVCLPs have other benefits as well. They are extremely tax effective, Vinson said, thanks to rules introduced by the Federal Government in 2016 to encourage venture capital investments in Australia.

“So if you’re an outside party, one of our investors in the fund, you’ll get a 10% tax offset when the money goes in,” Vinson said.

“And then on the back end, when the fund is successful and creates investment returns, those returns are going out to the limited partners capital gains tax-free. So it’s extremely tax efficient, very attractive for investors.”

 

ESG tech a growth opportunity

There are no guarantees that a venture capital investment will work out, but RFC and the CSIRO’s partnerships have been winners so far.

That is not measured in commercial terms only, with Vinson noting Chrysos and NextOre had leveraged access to capital and human resources through RFC to develop their ESG-focused technologies further.

“We want to build sustainable businesses, because the whole point in doing these things, it’s not just so that we can make a dollar,” Vinson said. “Of course, we want to make some money for our efforts and be compensated.

“But the whole point in doing this and setting the business up for success and making it sustainable and making it generate its own profit is so that those research activities can go into the business.

“Chrysos started with the one scientist, they now employ half a dozen nuclear PhDs, which is a significant portion of all the nuclear PhDs in Australia.

“They used CSIRO as contract research for the last several years while the company has built its own capabilities in-house, all that time creating a source of external consulting work for CSIRO.

“And so what these commercialisation partnerships do is give the technology a life of its own, take them off the CSIRO’s or any research institution’s balance sheet, so that they’re not only funding the research internally, it actually turns it into a revenue stream for them.

“Once the company grows and becomes self-sustaining, and it can continue to develop and not only push the initial technology out, but continue to improve upon it and widen the scope, such as with new applications or by creating complementary products.”

The post MoneyTalks: In 2016 these guys bet on ESG and mining tech. It is now at the heart of their business appeared first on Stockhead.



Author: Josh Chiat

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Ground Breakers: Costs rise for ASX gold miners as inflation bites

Gold miners have endured an arduous 2021 in equity markets. While cash has been easy to come by and deals … Read More
The post Ground Breakers: Costs…

Gold miners have endured an arduous 2021 in equity markets.

While cash has been easy to come by and deals are being done, most gold producers have been hit by poor sentiment as prices have struggled to break out.

Over the past year the All Ordinaries Gold Index has sagged around 20%.

Although most are still making good money, rising costs and the impact of inflation and labour challenges are also hitting miners in the hip pocket.

Metals Focus says the global average all in sustaining cost for gold miners hit its highest level since 2013 in the September quarter, rising 3.6% quarter on quarter to US$1123/oz.

Costs are on the rise for gold producers
Pic: Metals Focus

Australian miners were the worst off when it came to cost pressures, with costs in Australia climbing by an average of 13.1%.

Global AISC margins fell by 9% QoQ to US$667/oz, with Australia’s sliding 18%, Canada’s dropping 5% and Russia’s falling 7%.

Margins remain high historically speaking, and 94% of gold operations tracked by Metals Focus remain profitable.

“As might be expected, increasing costs and a lower gold price have squeezed margins in the September quarter,” they said.

“However it is worth noting that their margins are still substantially higher than in previous years.”

“Despite the relatively healthy margins, the lower gold price and rising costs are putting pressure on higher cost operators,” Metals Focus said.

“While the proportion of output that is profitable remains high at 94%, it has fallen from 98% in Q2.21. A number of operations and projects are already under strategic review with regards to increasing costs.”

Costs are up for goldies for the fourth straight quarter
A few more gold miners are touching the margins. Pic: Metals Focus

“If cost inflation persists and margins diminish even further it is likely that development project approvals will be delayed and also possible that the highest cost production of more marginal producers could potentially be closed.”

Although global average head grades rose 0.5% (5% in Australia), inflationary pressures including crude oil prices, rising salaries amid Covid restrictions, labour shortages and turnover, and the cost of equipment due to supply chain issues drove up operating costs for the fourth straight quarter.

Markets reacted badly this morning to news of the spread of the omicron coronavirus variant around the world, with materials sliding 1.19% this morning.

Chalice soars on new Julimar discovery

Market darling is a phrase that doesn’t quite cut it with Chalice Mining (ASX:CHN), which is up 60 times over since making the Gonneville nickel-copper-PGE discovery 70km north of Perth early last year.

Shares jumped more than 4% this morning after Chalice announced another discovery at Julimar, where last month it declared Gonneville the world’s biggest nickel sulphide discovery in 20 years and Australia’s first major platinum group elements resource.

The new mineralised intrusion is an ultramafic unit to the west of Gonneville, separated by around 70m of metasediments.

Located immediately south of the 6.5km Hartog anomaly, Chalice struck 3m at 2g/t palladium, 0.3g/t platinum, 0.6% nickel, 0.5% copper and 0.05% cobalt for a 1.7% nickel equivalent from 68m in one hole.

The second mineralised intercept struck 2m at 1.8g/t Pd, 0.2g/t Pt, 0.6% Ni, 0.5% Cu and 0.06% Co for a 1.9%NiEq from 139.2m.

The discovery did not show up on EM, “highlighting the potential for further blind discoveries” according to Chalice.

While Chalice has already drilled around 180,000m at Julimar, part of its value proposition is the idea that more will be found with the Gonneville resource accounting for just 7% of the 26km strike of the Julimar complex.

It has submitted a conservation management plan to get at the Hartog target, which will be a bit more thorny because unlike previous drilling which has been located on private farmland, Hartog lies beneath the Julimar State Forest.

Chalice says its CMP for drilling the Hartog-Baudin targets is sitting with the WA Government and it expects approvals shortly.

Chalice Mining share price today:

 

The post Ground Breakers: Costs rise for ASX gold miners as inflation bites appeared first on Stockhead.




Author: Josh Chiat

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QMines tops the class with second resource update just a few months after listing

Special Report: In just the six short months since making its debut on the ASX, QMines has delivered its second … Read More
The post QMines tops the…

In just the six short months since making its debut on the ASX, QMines has delivered its second resource estimate for the Mt Chalmers copper-gold project, which is 38% higher than the previous estimate and largely in the higher confidence measured and indicated categories.

QMines (ASX:QML) has delivered an updated resource for its flagship Mt Chalmers project in Queensland of 5.8 million tonnes at 1.7% for 101,000 tonnes of contained copper equivalent, which includes for the first time measured and indicated resources.

Significantly, 78% of the updated resource falls into the higher confidence measured and indicated categories. This is important because it gives an explorer sufficient information on geology and grade continuity to support mine planning and allows the definition of a reserve.

The updated resource is not far off the 120,000 tonnes that respected Australian investment firm Shaw and Partners forecast for the latest resource upgrade in a research note in early October.

Shaw and Partners, however, anticipated the updated resource would still be 100% inferred. This attracted an increased 72c price target from the investment firm which is a nearly 90% premium to the 38c share price QMines is trading at currently.

QMines share price chart (ASX:QML)


 

So the fact that such a large chunk of the resource is in the measured and indicated categories is a big leap in terms of confidence in the resource and should be a positive signal to the market of QMines’ ability to over-deliver against the target.

“As the company only listed in May 2021, it is a fantastic achievement to be delivering a resource upgrade for our shareholders in such a short period of time,” executive chairman Andrew Sparke said.

“It is very pleasing to see that the upgraded resource has substantially grown in both size and confidence level, with the measured and indicated categories now comprising 78% of the overall resource.”

Offering further exploration upside, Sparke says QMines has identified several volcanic-hosted massive sulphide (VHMS) prospects outside the known resource, which bodes well for further resource upgrades and the potential for future development.

A world class mine in the making

Mt Chalmers is already considered one of the world’s highest-grade gold-rich VHMS systems.

QMines has previously demonstrated the significant size potential and high-grade nature of the deposit, with recent peak grades of from a 15-hole, 2,182m diamond drilling program including 5.3% copper, 11.75 grams per tonne (g/t) gold, 243g/t silver, 33% zinc and 19% lead.

Those results, which were reported just last week, follow close on the heels of ‘bonanza’ grade copper, gold, silver, lead and zinc intercepts announced in October.

A major 30,000m drilling program continues unabated, with a third resource upgrade planned for the first half of 2022.

QMines

 

This article was developed in collaboration with QMines, a Stockhead advertiser at the time of publishing.

 

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

The post QMines tops the class with second resource update just a few months after listing appeared first on Stockhead.






Author: Special Report

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Miramar finds ‘very large’ gold footprint at Glandore project

Special Report: Miramar has outlined shallow supergene gold anomalism over almost 5 kilometres of strike and across multiple targets at … Read More
The…

Miramar has outlined shallow supergene gold anomalism over almost 5 kilometres of strike and across multiple targets at its Glandore project in WA.

Multiple holes from the lake aircore drilling across the expanded Glandore East footprint returned and/or ended in results >0.25 g/t gold including hole GDAC037 which intersected 6m at 0.62 g/t from 12m and ended in 2m at 1.04 g/t.

Hole GDAC061 intersected 4m at 0.46 g/t and 4m at 0.61 g/t – and is approximately 400m south of historical aircore holes which intersected 6m at 1.33 g/t and 9m at 1.10 g/t (EOH).

The Glandore East footprint now extends for over 3km towards historic gold workings and remains open.

Follow up drilling planned in the new year

Miramar Resources’ (ASX:M2R) executive chairman Allan Kelly, said the recent lake drilling had identified a very substantial gold system at Glandore and greatly increased the potential for the discovery of gold mineralisation including that like the nearby Majestic and Trojan deposits.

“Our first pass lake drilling has outlined coherent supergene gold anomalism within multiple targets over almost five kilometres of strike which is a considerable proportion of the entire project area,” he said.

Miramar Resources
Glandore Project showing recent drilling and historical holes.

“Today’s results indicate the presence for multiple NE-trending mineralised structures within the granodiorite pluton extending over a significant strike length, along with coherent gold mineralisation across several other targets which will need to be followed up early in the new year.

“Gold mineralisation at Majestic and Trojan is also hosted in NE-striking structures within granitic intrusions, so our recent results indicate significant potential for a similar discovery at Glandore.”

The company will now plan for follow-up aircore drilling in the new year, and then plan for diamond drilling.

 


 

 

This article was developed in collaboration with Miramar Resources Limited, a Stockhead advertiser at the time of publishing.

 

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

The post Miramar finds ‘very large’ gold footprint at Glandore project appeared first on Stockhead.



Author: Special Report

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