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Emission Control: The inconvenient truth about coal, big hydrogen moves, and NEM power prices set to fall

Coal has been high on the decarbonisation agenda, but Wood Mackenzie metals and mining vice chair Julian Kettle says the … Read More
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Coal has been high on the decarbonisation agenda, but Wood Mackenzie metals and mining vice chair Julian Kettle says the inconvenient truth is that we still need coal-fired power to ensure an orderly transition to a low carbon world.

While the COP26 statement is clear – “to accelerate the phase out of coal” Kettle emphasises that it falls short on the detail.

“What’s more, this commitment could be considered something of a pyrrhic victory against coal, primarily because none of the countries with the top three largest coal-fired power fleets – China, India and the US – are signatories to the agreement,” he said.

“China, which possesses the largest coal-fired power plant capacity, has committed to peak carbon emissions, yet has made no firm commitment to reduce reliance on coal.

“And India was late to the decarbonisation pledge party but has committed to net neutrality by 2070.

“More urgently, it has pledged to reduce its projected carbon emissions by a billion tonnes by 2030 and has committed to 50% renewables share of power generation and to reducing the carbon intensity of its economy by 45% by the same date.

“That’s a tough ask for an economy projected to grow by 6-7% a year over the next decade,” he said.

Meanwhile, in the US, President Joe Biden’s plan for a zero-carbon grid by 2035 arguably embraces the spirit of the COP26 text.

But again, Kettle says there is the possibility of a significant reversal in policy should the next presidential election be won by the Republicans.

And regardless of these targets, under Woodmac’s base case, thermal coal demand (where it is burnt to produce electricity) will continue to rise until the mid-2020s.

 

How will COP26 commitments impact coal demand?

Emission Control
Global thermal coal demand (Mt). Pic: Wood Mackenzie

Under Wood Mackenzie’s base case Energy Transition Outlook (ETO), which is aligned to a 2.7C warming scenario, demand for thermal coal will peak in 2025 at just over 7 billion tonnes, falling by just 5% to 6.7 billion tonnes in 2030.

“That is hardly a transformation,” Kettle said.

And to achieve Wood Mackenzie’s accelerated energy transition (AET) of -2, 2C pathway, demand for thermal coal will need to fall by a billion tonnes by 2030 while an AET-1.5 pathway removes a further 1.9b tonnes of demand.

“This is a dramatic 2.4b tonne reduction compared with the current base case peak in 2025,” he said.

The key question Kettle says, is will the yet-to-be-enacted policies based on watered down commitments made at COP26 be enough to deliver an AET-2 or AET-1.5 decarbonisation pathway?

“If the non-delivery against commitments made at COP Paris in 2015 are anything to go by, success by 2030 looks to be a long shot and is by no means guaranteed,” he said.

 

WA Government invests $117.5m in two hydrogen hubs

The McGowan Government has announced its plans to invest up to $117.5m for renewable hydrogen hubs in the Pilbara and Mid-West putting WA at the forefront of the new industry.

This week the State lodged applications through the Commonwealth Government’s Clean Hydrogen Industrial Hubs program for matching Commonwealth funding to develop hubs in the Pilbara and Mid-West.

The Pilbara Hydrogen Hub involves development of a hydrogen or ammonia pipeline connecting the Maitland and Burrup strategic industrial areas, the creation of a Clean Energy Training and Research Institute based out of both Karratha and Port Hedland, and port upgrades to facilitate export opportunities.

For the Mid West, the proposal includes construction of renewable energy and road infrastructure at the Oakajee Strategic Industrial Area, as well as connecting the area to power and water, and developing hydrogen refuelling infrastructure.

Combined, the hubs would create around 2,000 jobs across the State.

Hydrogen Industry Minister Alannah MacTiernan said both the Pilbara and Mid-West are attracting global attention for their renewable hydrogen potential.

“Energy companies from across the world are setting their sights here,” she said.

“We want to partner with the Federal Government to embrace this job-creating opportunity for Western Australia, which will make a significant contribution to global efforts towards net zero emissions.

“We urge the Commonwealth to recognise the huge national benefit from locating two hubs in WA.”

 

Edify Energy signs MOU  to accelerate hydrogen export in Townsville

Queensland’s city of Townsville is one step closer to becoming a renewable hydrogen powerhouse after the signing of another memorandum of understanding (MOU) – this time with Australian solar and battery storage developer Edify Energy.

The Port of Townsville and Edify Energy will join forces to investigate the feasibility of exporting hydrogen through the city’s port and work to advance Edify’s renewable hydrogen project.

This move follows Edify’s recent development approval to build and operate a renewable hydrogen production plant with up to a 1GW electrolyser for 5,000-150,000 H2 tonnes per year of renewable hydrogen at the Lansdown Eco-Industrial Precinct, 46km south of Townsville.

Port of Townsville CEO Ranee Crosby said North Queensland is “uniquely positioned to play a leading role in the world’s growing demand for hydrogen.”

“Hydrogen made with renewable energy is completely carbon free and is a flexible energy carrier that can power almost anything that requires energy,” said Ms Crosby.

“This versatility represents boundless opportunities to align the North’s economic prosperity with global ambitions to transition to a clean energy future.”

Edify Energy joins a growing list of proponents seeking to export renewable hydrogen through the Port of Townsville, including Origin Energy and Ark Energy Corporation.

 

A QLD hydrogen fuel cell facility gets the green light

In another exciting move for Queensland, Australian energy technology company LAVO Hydrogen Technology has been given the green light to establish a $15 million hydrogen fuel cell manufacturing facility in Greater Springfield.

Backed by the Palaszczuk Government’s Invested in Queensland program, and part of the $3.34 billion Queensland Jobs Fund, construction of the facility will take place in early 2022 ahead of expected delivery by the end of the year.

Emission control
LAVO Hydrogen Technology will establish the $15 million facility. Pic: Supplied

 

Set to be Australia’s “first hydrogen fuel cell manufacturing facility”, Treasurer and Minister for Trade and Investment Cameron Dick said the fuel cells will be used in hydrogen energy storage systems for homes and businesses, developed by LAVO and the University of New South Wales.

The LAVO HESS (Hydrogen Energy Storage System) is an integrated hybrid hydrogen battery that can be combined with rooftop solar to store 40kWh of electricity – enough energy to power a typical household for two days.

Lavo CEO and executive director said the company is excited to be manufacturing the fuel cells here in Australia under a joint venture agreement with Netherlands-based Nedstack, developer of the fuel cells.

“Through our research and development, we are taking existing fuel cell technology and introducing integrated solutions to make hydrogen possible for everyday use and for a much wider audience,” Yu said.

 

Fossil fuels and nuclear nab a win in Biden’s clean hydrogen strategy

During the week President Biden unveiled a $1 trillion infrastructure package focusing on the build out of a ‘clean hydrogen’ industry in the US, with a dedicated $8 billion to fund four regional production hubs.

It represents the country’s first national hydrogen roadmap and strategy and will ultimately create tens of thousands of jobs. “It’s a big deal,” Biden said.

According to Argus Media, the Democratic-controlled US Congress is considering giving additional support for clean hydrogen as part of a separate $1.85 trillion budget bill that is still being negotiated.

“The bill would provide $3.5 billion in grants to support domestic manufacturing of electric and hydrogen vehicles, along with $200 million to fund hydrogen fuelling equipment,” Argus said.

Congress also directed funding so that “at least one hub would use fossil fuels, one would use renewables and one would use nuclear.”

But the largest hydrogen section would create a tax credit for hydrogen production that is significantly cleaner than the conventional technique of steam methane reformation.

Director of energy finance studies at the Institute for Energy Economics & Financial Analysis Tim Buckley said this commitment is a major step forward on the global technology race to commercialise green hydrogen.

“Clearly fossil fuel advocates have gained a small win, getting a fossil fuel-based hub mandated as one of the four regional centres, and nuclear has wangled a massive new subsidy as well, but the proposed tax credits are aggressively defined as a very low level of CO2 emissions starting at <6kg CO2 per kg.

Emission control
Unabated SMR emits around 9kg CO2 per kg of H2. Pic: Argus Media

 

“This could be a new opportunity for CCS subsidies but given the very likely external verification of the whole supply chain, the key focus of the bill is to scale up deployments so as to make green hydrogen commercially viable.

“It is a major positive in the decarbonisation of the US economy,” he said.

“Electrify everything, rapidly decarbonise the electricity grid, drive building standards up, roll out EVs nationally and then use GH2 to help decarbonise the hard-to-abate heavy industry areas remaining.”

 

Aussie household electricity prices to fall across NEM

Yesterday the Australian Energy Market Commission (AEMC) announced household electricity prices are set to fall across the National Electricity Market (NEM) on the back of lower wholesale electricity costs and an increase in renewable generation.

The Residential Electricity Price Trends 2021 report from the AEMC said electricity costs to consumers are expected to decrease this financial year and fall further by 2023-24.

It found the average residential customer in the NEM will save $77 a year, or 6 per cent, on their electricity bill by 2024 compared with costs in 2020-21.

State by state electricity bill changes between 2020/21 and 2023/24 are:

  • QLD decrease by 10 per cent (or $126);
  • NSW decrease by 4 per cent (or $50);
  • ACT increase by 4 per cent (or $77);
  • VIC decrease by 8 per cent (or $99);
  • SA decrease by 2 per cent (or $35); and
  • TAS decrease by 6 per cent (or $125).

 

Who is winning from green energy this week?

Scroll or swipe to reveal table. Click headings to sort.

CODE COMPANY PRICE 1 WEEK RETURN % 1 MONTH RETURN % SIX MONTH RETURN % 1 YEAR RETURN % MARKET CAP
PGY Pilot Energy Ltd 0.083 22.1% 6.4% 1.2% 207.4% 45,144,153
FMG Fortescue Metals Grp 17.88 14.7% 24.9% -16.3% -1.2% 54,097,413,609
DEL Delorean Corporation 0.22 12.8% 12.8% -8.3% 0.0% 39,397,222
IRD Iron Road Ltd 0.21 10.5% 7.7% 6.3% 44.8% 158,918,059
PRM Prominence Energy 0.011 10.0% -31.3% 0.0% 83.3% 12,406,306
AVL Aust Vanadium Ltd 0.027 8.0% 12.5% 42.1% 107.7% 85,316,637
BSX Blackstone Ltd 0.615 2.5% -3.9% 64.0% 70.8% 221,598,857
VUL Vulcan Energy 10.62 1.9% -20.7% 58.7% 346.2% 1,276,734,860
ECT Env Clean Tech Ltd. 0.056 1.8% 250.0% 273.3% 460.0% 74,707,532
SKI Spark Infrastructure 2.88 1.8% 1.1% 33.3% 36.5% 5,036,718,784
RNE Renu Energy Ltd 0.11 0.0% 96.4% 66.7% 214.3% 15,931,551
AST AusNet Services Ltd 2.54 -0.4% 1.2% 46.8% 33.7% 9,804,709,084
IFT Infratil Limited 7.68 -2.2% -2.8% 10.0% 40.1% 5,546,937,877
MEZ Meridian Energy 4.37 -2.2% -9.9% -8.4% -23.3% 5,725,355,201
GNX Genex Power Ltd 0.19 -2.6% -13.6% -15.6% 20.2% 208,630,509
PRL Province Resources 0.16 -3.0% 3.2% 3.2% 1349.1% 180,745,570
NEW NEW Energy Solar 0.805 -4.7% -5.3% -3.0% -16.1% 263,950,956
KPO Kalina Power Limited 0.027 -6.9% -10.0% -34.1% -15.6% 38,066,005
RFX Redflow Limited 0.052 -7.1% -13.3% -11.0% 102.0% 71,676,673
HZR Hazer Group Limited 1.37 -8.1% 3.8% 28.0% 122.8% 221,693,128
QEM QEM Limited 0.2 -9.1% 11.1% 11.1% 110.5% 23,251,783
GEV Global Ene Ven Ltd 0.115 -11.5% 4.5% 49.4% 23.7% 67,208,733
CXL Calix Limited 7.03 -12.0% 32.6% 172.5% 572.7% 1,172,314,001
HXG Hexagon Energy 0.089 -15.2% 6.0% -8.2% 50.8% 40,141,244
PH2 Pure Hydrogen Corp 0.495 -16.1% 65.0% 147.5% 511.1% 169,219,712
LIO Lion Energy Limited 0.074 -17.8% 21.3% 37.0% 393.3% 22,629,957
MPR Mpower Group Limited 0.042 -32.3% -35.4% -54.8% -23.6% 8,746,398

Pilot Energy (ASX:PGY) is the biggest winner this fortnight with shares up 22.1% on no news, followed by Fortescue Metal Group (ASX:FMG) gaining 14.7%, and Delorean (ASX:DEL) up 12.7%.

The biggest loser is MPower Group (ASX:MPR) with shares down 32.3%.

The post Emission Control: The inconvenient truth about coal, big hydrogen moves, and NEM power prices set to fall appeared first on Stockhead.




Author: Jessica Cummins

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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
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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
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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.

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Author: Special Report

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Guy on Rocks: Iron ore – back in black

Guy on Rocks is a Stockhead series looking at the significant happenings of the resources market each week. Former geologist … Read More
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Guy on Rocks is a Stockhead series looking at the significant happenings of the resources market each week. Former geologist and experienced stockbroker Guy Le Page, director, and responsible executive at Perth-based financial services provider RM Corporate Finance, shares his high conviction views on the market and his “hot stocks to watch”.

 

Market Ructions

Reports of iron ore’s demise may have been premature with improving economic data coming out of China.

GDP growth in October 2021 came in at a better-than-expected YoY bottom of 3.3% (or 4.9% 2Y CAGR) in 4Q21 and rebounding to 5.5% in 2022 according to Morgan Stanley (China and the Miners, November 2021).

The property market is also looking a little healthier after a sharp contraction in property sales and construction starts over CY 2021 (figure 1).

Property and infrastructure demand rose 3.5% YoY in October (+3.1% September), however PMI contracted to 49.2, from 49.6 in September 2021. The PMI however rose to 50.1 last month for the first time in three months reinforcing the more positive manufacturing outlook.

Figure 1: China Property Sales and Construction starts (Source: Morgan Stanley, China and the Miners, November 2021).

The Chinese government’s response to the soft property market is a loosening of property policy to bolster demand.

It appears the government is also about to ease production cuts, with My Steel suggesting that Chinese steel mills are restocking ahead of a restart sometime this month after running down steel inventories (figure 2).

This is also likely to coincide with an increase in pig iron production which is projected to rise by around 37,000 tonnes per day.

Guy Le Page iron ore
Figure 2: Total steel inventory (Source: Morgan Stanley, China and the Miners, November 2021).

The Dalian iron ore price jumped over 6% on Tuesday to just over US$103/tonne.

The January contract was also around 2.5% higher at US$95.75, still in backwardation but higher, nonetheless.

Guy Le Page iron ore
Figure 3: Iron ore spot price (Source: www. https://tradingeconomics.com/commodity/iron-ore)

The supply side also remains tight with Vale forecasting production in the range of 315-320 million tonnes this year which is on the lower end of their guidance of 315-335 million tonnes.

The other variable to watch out for, of course, are disruptions to shipping as Australia enters the wet season over November to March.

RFC Ambrian published an updated report on copper as a follow up to their ‘Copper M&A – The Cupboard is Nearly Bare’, that was published in November 2018.

Well not surprisingly, figure 4 confirms what we know about declining exploration over the last 9-10 years with the majority of the world’s largest copper projects located in regions subject to civil and political unrest (figure 5).

Put this together with the EV demand and you have set the scene for a bull market that could run for 5-10 years or more.

Guy Le Page iron ore
Figure 4: Global exploration for copper by region (Source: RFC Ambrian, Copper Projects Review, December 2021).
Guy Le Page iron ore
Figure 5: Copper Reserves and Resources (Source: RFC Ambrian, Copper Projects Review, December 2021).

Some interesting information from Sprott regarding uranium safety (surely they are not talking their own book?).

It is interesting that everyone wants to talk about the handful of people that have been fried from nuclear accidents, but it appears hydro, wind and solar have claimed many more victims on a per terawatt hour (TWh) basis! (figure 6).

Figure 6: Mortality rate/TWh of energy produced (Source: Sprott, Special Report on Uranium; Uranium and nuclear power play a critical role in the US, 15 November 2021).

It appears Biomass has claimed a very high number of people also.

Burning wood and biomass creates a PM2.5 air pollution, including volatile organic compounds (VOCs), and nitrogen oxides (NOx).

All of this air pollution damages health, from airway inflammation to free radical damage to cancer and numerous health problems. They are also known to aggravate and can cause asthma and emphysema.

The following map (figure 7) shows the current reliance on nuclear power. I would think the yellow footprint will spread.

Figure 7: Countries reliant on nuclear energy as a percentage of total energy consumption (Source: Sprott, Special Report on Uranium; Uranium and nuclear power play a critical role in the US, 15 November 2021).

So, what are the biggest pollutants out there now?

Electric vehicles that consume more carbon than petrol cars in their construction and plug into coal-fired power for their energy.

That is if you believe that carbon is the primary contributor to global warming of course. Cooling during the Middle Carboniferous reduced average global temperatures to about 12C (54F) however atmospheric carbon levels were similar to today. So maybe the whole carbon debate is also crap?

So, if the Stockhead faithful think the world has gone mad pumping money into relatively inefficient power sources such as wind and solar while chasing a possibly flawed carbon argument as the primary driver to global warming, you are probably correct.

The real crime is turning our backs on nuclear, the cleanest, greenest, and safest source of available base load power in the medium to longer term.

 

Company News

Figure 8: COD two-year share price chart (Source: CMC Markets, 1 December 2021).

Coda Minerals Ltd (ASX:COD) has seen a 21% spike in its share price possibly following the release by Shaw and Partners research report which put a price target of $2.30/Share based on their projected copper resources at their Elizabeth Creek Copper Project (100km south of BHP’s Olympic Dam). That includes the Emmie Bluff deposit (figure 9) which Shaw’s believe should come in around 800kt CuEq (100% basis) at ~1.6% CuEq or 50Mt @ 1.6% CuEq.

It’s a little deep at around 400m below the surface but if the grades come in as Shaw’s anticipate this will be one of the first Zambian style copper projects of any size found in the Adelaidean formation, a sequence of rocks that sits above the Hiltaba suite (lower Proterozoic felsic intrusives) that host the giant Olympic Dam deposit.

I believe Emmie Bluff looks a little more promising than the IOCG targets at Elizabeth Creek which are +800m deep and a bit lower grade.

On the other hand, there are some decent widths (up to 28m downhole) with plenty of assays outstanding together with visible bornite.

In other words, they are drilling in the “boiling” zone at similar ore forming temperatures, pressures, salinities etc to Olympic Dam so they are well and truly still in the game to find something large and relatively high-grade, or at least comparable grade to Olympic Dam.

More recently, the company had some encouraging results at its Cameron River project (earning 80% an interest) located in the Mt Isa province of North QLD.

A total of 696 samples were collected, 31 returning anomalous copper and 16 returning anomalous gold values. Better results included 12.6% Cu, 2.72g/t Au and 4.3g/t Ag. I don’t generally get too excited about rock chip results but will be reviewing the results of the planned 50-hole RC program in due course.

Figure 9: COD two-year share price chart (Source: COD ASX Announcement, 19 November 2021).
Figure 10: Elizabeth Creek Project (Source: COD ASX Announcement, 19 November 2021).

I thought the company was a little expensive when it was trading at $1.72 (+$170 million market capitalisation) but at 83 cents and an enterprise value of just over $65 million it is coming into buying territory with a good a good pipeline of news flow to follow (figure 11).

You have to admire companies drilling holes to the centre of the earth and with plenty of new targets to follow up (such as Elaine – IOCGU target) the company looks set for an exciting and volatile 2022.

Figure 11: Coda Minerals 2021-2022 work program (Source: COD ASX Announcement, 19 November 2021).

 

At RM Corporate Finance, Guy Le Page is involved in a range of corporate initiatives from mergers and acquisitions, initial public offerings to valuations, consulting, and corporate advisory roles.

He was head of research at Morgan Stockbroking Limited (Perth) prior to joining Tolhurst Noall as a Corporate Advisor in July 1998. Prior to entering the stockbroking industry, he spent 10 years as an exploration and mining geologist in Australia, Canada, and the United States. The views, information, or opinions expressed in the interview in this article are solely those of the interviewee and do not represent the views of Stockhead.

 

Stockhead has not provided, endorsed, or otherwise assumed responsibility for any financial product advice contained in this article.

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Author: Guy Le Page

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