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Resources Top 5: This $180m coal stock expects to book an eye-watering $80m profit for Q4

Lode hits ‘significant sulphides’ at Webbs Consol silver project Coal producer Terracom predicts $81m EBITDA for the December quarter Cannindah ……

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This article was originally published by Stockhead
  • Lode hits ‘significant sulphides’ at Webbs Consol silver project
  • Coal producer Terracom predicts $81m EBITDA for the December quarter
  • Cannindah hits monster 282m @ 1.28% copper equivalent intersection at namesake project

Here are the biggest small cap resources winners in early trade, Tuesday, October 19.

 

LODE RESOURCES (ASX:LDR)

The newly listed explorer hit “significant sulphides” — including 27.5m at ~15% sphalerite (zinc ore), 1% galena (lead ore) and 0.5% chalcopyrite (copper ore) – in maiden drilling at the ‘Webbs Consol’ silver project in NSW.

This intercept — directly below the Webbs Consol main shaft where historical mining was recorded to a vertical depth of 60m – indicates the orebody continues at depth:

Significant silver mineralisation is also expected to be shown in assays, which are anticipated in 3-4 weeks.

The $11.7m market cap junior is up 50% on its IPO price of 20c per share.

 

TERRACOM (ASX:TER)

Coal miners are raking in the cash.

The latest to report results is Terracom, which made $17.2m EBITDA (earnings before interest, tax, depreciation, and amortisation) in September from the ‘Blair Athol’ mine.

This was from revenue of $177 per tonne of coal sold (margin: a hefty $101 per tonne).

More importantly, TER says forecast revenue for the entire December quarter will be $230/t – which would give it a cash margin of more than $140/t.

At forecast production of ~575,000t, that equates to EBITDA of over $81m for the quarter. Merry Christmas, shareholders.

The $180m market cap stock is up 53% over the past month.

 

VALOR RESOURCES (ASX:VAL)

(Up on no news)

On October 11, VAL announced that rock sampling returned thick, high-grade copper at the ‘Cobremani’ and ‘Maricate’ targets, part of the Picha project in Peru.

Results include a 35.6m long channel sample averaging 1.3% copper and 22.85g/t silver at Cobremani, as well as several samples up to 13.4% copper at the 1km-long Maricate target area.

Over 150 assay results from the Maricate and ‘Cumbre Coya’ targets are expected imminently.

Geophysics and drill planning will kick off once the current field program is complete, VAL says.

This Tolga Kumova favourite also has uranium projects in Canada’s Athabasca Basin.

The $45m market cap stock is down 5% over the past month, but up 90% year-to-date.

 

CANNINDAH (ASX:CAE)

Looks like CAE has grasped the tail of a monster at its namesake project in QLD, with new assays returning a further 92m at 1.2% copper from the bottom half of hole 21CAEDD002.

All up, this monstrous intersection totals 282m @ 0.94% copper, 0.3 g/t gold, and 19 g/t silver — which translates to 282m @ 1.28% copper equivalent.

The next hole, (21CAEDD003) still has assay results pending, with the hole ending at 762.6m (versus a planned 250m). CAE is expecting these “in the short term”.

The brownfields ‘Mt Cannindah’ copper-gold-silver project has an existing resource of 5.5 million tonnes @ 0.93% copper.

The company is currently undertaking a 1,450m drilling program to explore both new and existing areas.

The $116m market cap stock is up 130% over the past month, and 666% year-to-date.

 

TIGERS REALM COAL (ASX:TIG)

The Russian coal producer has been experiencing exceptionally strong demand for its met and thermal coal, particularly in China, it said on October 15.

“The Chinese spot metcoal market has been very strong for US, Canadian and Russian coal producers, with CFR prices for hard coking coal (HCC) rising from $300/t in Q2 to around $400/t at this moment,” TIG says.

“Occasional cargoes are rumoured to have been secured at prices approaching $600/t.”

And when it comes to thermal coal, the current QHD marker price is RMB 1,461/mt, which is up by 46% since the start of Q2 and is providing strong support to Russian import prices, TIG says.

“Newcastle 6,000 NAR and 5,500 NAR coals are trading at $203/t and $115/t respectively, according to trade publications,” it says.

“Whilst prices are expected to moderate eventually, supply is so tight at present that significant retracing is not likely before the end of the Chinese winter season.”

“Given our mining and port performance for the first nine months, TIG raises its full‐year 2021 sales guidance from 700 – 800kt to 800 – 850kt.”

TIG’s costs of production were US$32.96 per tonne for the six months to June 2021.



The post Resources Top 5: This $180m coal stock expects to book an eye-watering $80m profit for Q4 appeared first on Stockhead.






Author: Reuben Adams

Energy & Critical Metals

3 Rare Earth Stocks on Watch as Talk of a Chinese Mega-Merger Grows

At a time when both the global supply chain crisis and U.S.-China relations hang hotly in the balance, China has announced an important decision that threatens…

At a time when both the global supply chain crisis and U.S.-China relations hang hotly in the balance, China has announced an important decision that threatens to affect both matters significantly. Today, the Wall Street Journal reports that China is planning to create a new rare earth mining company that will be owned by the state. While there’s no question that the forming of such a company will directly affect rare earth stocks, so far the reactions from the sector have been mixed.

Source: LuYago / Shutterstock.com

What’s Happening With Rare Earth Stocks

The rare earth sector has been an interesting one to follow this year, particularly as the electric vehicle (EV) boom has highlighted a new market for its companies. The news out of China today hasn’t done much to affect Nevada-based MP Materials (NYSE:MP), a company that has seen more than its fair share of turbulence this past year but has remained overall in the green for most of it. As of this writing, MP stock is up 2.16% for the day, although it has declined slightly from the peak it saw this morning. While it’s down more than 6% for the week, the stock is in the green for the month by more than 2%.

In a state not too far away, though, things aren’t looking so rosy. Texas Mineral Resources Corp (OTCMKTS: TMRC) has seen its shares fall by more than 4% today, demonstrating a fairly turbulent pattern. Despite being up by more than 12% for the week, TMC is down for the month by almost 19%.

Many miles away in Australia, a similar company is experience similar patterns. Lynas Rare Earths (OTCMKTS:LYSCF) is down by more than 2% for the day with losses for the week just shy of that figure. For the month, though, the small stock has seen shares rise by more than 18%.

Why It Matters

China’s new firm, titled China Rare Earth Group, will be based in the country’s southern province of Jiangxi, an area rich in resources. It will be built through the merging of assets of several prominent state-owned mining firms. According to WSJ, part of the mindset behind this massive industry consolidation is the goal of gaining the clout necessary to “undercut Western efforts to dominate critical technologies.”

For a company like MP Materials, there will very likely be negative implications if the firm is indeed constructed. The company has emphasized that its goals involve helping restore the rare earth supply chain and helping reduce the sector’s heavy dependence on China. The international economic superpower that MP has focused on challenging is about to get considerably stronger and more powerful. That’s bad news for MP and most other rare earth stocks.

While some reports have framed it as a company well-positioned to accomplish an important task, the picture painted for investors hasn’t always been so positive. In October 2021, a report from Grizzly Research staked the claim that the company had issued unattainable projections. While the stock was down during that month, it’s been rising fairly steadily since. Earlier this year, InvestorPlace’s Joseph Nograles touted the upside potential he saw in MP stock as a key component of the emerging EV market.

What It Means

As TRMC and LYSCF trade at much lower levels than MP, it’s hard to gauge just how much they stand to be affected. What is clear, though, is that China is clearly furthering its quest to dominate the section of the global supply chain that concerns strategic metals. The construction of a state-owned giant to help the country gain further control of highly valuable rare earth materials certainly won’t do any favors for the U.S.

This story is certainly worth watching as it unfolds, but this is likely not the time for a bullish play on rare earth stocks.

On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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Author: Samuel O'Brient

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Precious Metals

Looking for Leverage? Silver Sands at a Sub $10 Million Valuation Offers the Highest Leverage Drilling Play Around

Nearing the end of a phase III drill program, this high-leverage silver/gold play couples enormous upside with an unusually low risk profile.  Eric Sprott is the largest shareholder…

silversands_drill_program

Nearing the end of a phase III drill program, this high-leverage silver/gold play couples enormous upside with an unusually low risk profile.  Eric Sprott is the largest shareholder.

Veteran analysts predict gold and silver are on the cusp of another bull run, with some speculating that after a year of consolidation we may see prices rise to $50 per ounce for silver and $2,500 per ounce for gold near term. A further leg up is forecast, and some say precious metals will hit unheard of levels over the next few years as the US dollar staggers. This is big news considering that past silver bull markets have delivered gains ranging from 330% to 900%.

silversands_drill_program

Which brings us to Silver Sands Resources Corp. (CSE: SAND), and why its Phase III drill program currently underway makes it the best high leverage silver junior around.   SAND started out with a silver resource of 15 million ounces at its Virginia project in Argentina last year and this is their third round of drilling. Their goal is to have grown that to 50 million ounces by the time Phase III is finished, on their way to 100 million.    

But that’s the low-risk part.  The leverage comes from drilling the silver/gold Santa Rita vein field in the northern part of the property first explored by Mirasol and Hochschild in 2007.  Surface sampling and channel sampling highlights included 340 g/t silver and 5 g/t gold. Mirasol put 7 green field exploratory drill holes into the structure and came up with mineralization in 6 of 7 holes before Hochschild dropped it to focus on their San Jose discovery (now mine).  

Silver Sands largest shareholders are Mirasol Resources and Eric Sprott, who has invested twice – increasing his initial investment by 300%. Commenting on the silver market, Sprott said:

“There’s going to be a shortage of silver. We get information from dealers looking for supply and paying premiums, which is almost unheard of. And when I look at the amount of silver going into ETFs and India, we know a shortage is on its way. The last time silver had a breakout, the price went up 10-fold. Do I think that could happen again? Absolutely.”

Sprott is not the only one with Silver Sands on his radar. In his Gold Newsletter, well-known precious metals expert Brien Lundin firmly put the company into the buy column, reiterating his previous buy recommendation. Speaking to the high leverage nature of Silver Sand’s Virginia project, he described the company as “a great ongoing lever on …… silver.”

SAND is near the end  of a Phase III exploration program at its Virginia project located in mining-friendly Santa Cruz, Argentina, in close proximity to four producing precious metal mines. Virginia started out with a silver resource of 15 million ounces, and the goal is to grow that to 50 million ounces by the time Phase III is complete.

The right people, place, and resource

Silver Sands hits the mining trifecta of people, place, and resource. The company is overseen by market veteran Keith Anderson who brings to the mix a successful 20-year history of structuring and financing resource companies. Leading a deeply experienced management team, Keith has brought in a top-class investor, executed operations under budget, and delivered a clear roadmap towards the development of a significant resource.

The company’s flagship Virginia project is located in mining-friendly Santa Cruz, Argentina, in close proximity to four producing precious metal mines. This year, Argentina was rated the 5th most attractive region in the world for investment, and a global top 10 of silver mining jurisdictions. Furthermore, Santa Cruz ranks above Mexico on the investment attractiveness index. 

Following up on highly successful Phase I and II exploration programs, Silver Sands is nearing the end of its Phase III program which comprises 2,685 metres of drilling across more than 16 holes. The program is targeting seven silver vein structures along with the high priority Santa Rita silver-gold prospect. 

Overall, the Virginia property has the markings of an exceptionally large epithermal vein system yet only a tiny fraction outcrops at or near surface. Silver Sands has just started to scratch the surface of the property’s potential. By the time Phase III is completed, the company believes it will have grown its resource from 15 to 50 million ounces, on the way to 100 million plus. 

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Phase III will comprise 2,685 metres of drilling across 16 holes and is targeting seven silver vein structures along with the high priority Santa Rita silver-gold prospect. This will all be driven by a low-risk model that involves mostly drilling gaps and extensions between high-grade intercepts along known vein structures. 

Adding ounces on the low-risk journey to massive upside potential

The 59,750-hectare Virginia project is a low to intermediate sulphidation epithermal silver deposit nestled in the mineral-rich Deseado massif, roughly 100 kilometres south of Newmont’s Cerro Negro Mine, one of the largest gold mines in the world. 

 Through initial discovery in 2009 and four follow up drill programs between 2010 – 2012, Mirasol Resources defined an indicated resource of 11.9 million ounces of silver at 310 g/t and an inferred resource of 3.1 million ounces of silver at 207 g/t, which were documented in an NI 43-101 technical report filed in 2014. Mineral resources are contained within seven conceptual open pits including Naty, Julia North, Julia Central, Julia South, Ely North, Ely South, and Martina. 

Phase I and II drilling subsequently identified four new conceptual open pits – Ely Central, Ely North Extension, Julia South Extension, and Martina NW. Drilling confirmed the Ely structure can be traced over 2.3 kilometres in strike length from north to south, open along strike and at depth. The Naty-Julia structure now extends to over 3 kilometres in strike length, open to the north and south, and at depth. 

Phase I focused on exploring new high-grade silver zones to expand on the existing NI 43-101 and consisted of 2,831 metres across 18 drill holes along with 80.5-line kilometres of IP surveying. Phase II followed up and yielded some impressive results, testing several new prospective zones through 3,104 metres of drilling across 20 holes. New discoveries were made in areas of lower IP chargeability, showing potential for strike extensions of known veins, as well as new discoveries within previously untested linear trends of lower intensity.

Phase II also led to the discovery of a new high-grade zone at Ely Central, where drilling intersected strong and continuous Ag grades in four drill holes over a 200-metre strike length that lies within a 580-metre untested gap from original drilling in 2012. Furthermore, drilling intercepted high-grade silver mineralization at the Ely North, Martina, and Julia South targets.

Highlights from Phase I and II exploration programs include:

• 639 g/t Ag over 9.60m

• 625 g/t Ag over 10.80m, including 1,110 g/t Ag over 5.70m

• 560 g/t Ag over 9.98m, including 1,578 g/t Ag over 2.87m

• 476 g/t Ag over 4.0m, including 929 g/t Ag over 1.85m

• 198.5 g/t silver over 33.5m

• 123.43 g/t silver over 8.5m, including 168.34 g/t silver over 3.9m

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Phase II encountered phenomenal grades at shallow depths. It also led to the discovery of a new high-grade zone at Ely Central, where drilling intersected strong and continuous Ag grades in four drill holes over a 200-metre strike length that lies within a 580-metre untested gap from original drilling in 2012.

A New Vein Field Target That Looks Like Virginia

Adding to the positive results, an IP survey to the northeast of the existing vein field identified 17 targets with a chargeability response similar to known veins in the main field, suggesting that a new vein field akin to Virginia has been discovered.  The 37.5-line kilometres of IP surveying has since been worked up for drill targeting. 

“In Phase II, we hit some of our best holes ever and encountered phenomenal grades at shallow depths – this is pretty big stuff, indicating tremendous upside potential,” said Keith Anderson. “Our main goal with Phase III is to climb to 50 million ounces, on our way to 100 million plus. Nothing is set in stone, but it’s definitely within the realm of possibility, especially when you consider the size of our property.”

In addition to identifying new mineralized zones and a key target area for expansion, Virginia’s potential is unique in that the property has never been explored to depths greater than 150 metres, while surrounding miners have successfully encountered mineralization to depths as low as 450 metres. 

Furthermore, silver veins in the south and east portions of the Virginia property do not outcrop to the surface and require deeper drilling than what’s been endeavored so far. If Silver Sands encounters mineralization at lower depths the resource potential could very well double or triple.