(SSV.V) has been very busy the past twelve months as it continued to drill the Cerro Las Minitas project in Mexico. The company took advantage of an excellent financing window in the summer of last year, and the proceeds of that financing, as well as the proceeds from warrant exercises throughout the year, allowed Southern Silver to keep drilling the property.
The updated resource estimate now contains 12.3 million tonnes in the indicated resources (up 1.2 million tonnes) while the inferred resource increased by almost 50% as it now contains 19.6 million tonnes, up 6.8 million tonnes compared to the previous resource estimate. That’s actually an impressive increase on both accounts as Southern Silver added 8 million tonnes of rock to the two resource categories with just about 21,000 meters of drilling. There were a few other factors at play as well, like the updated metallurgical recoveries for the silver and zinc content in the rock.
This is a very important and interesting step forward for Southern Silver and we will incorporate the new data into a new economic model. That will obviously be a back of the envelope model, as Southern Silver is working towards a maiden Preliminary Economic Analysis at Cerro Las Minitas, which should be completed by the summer of next year.
Disclosure: The author has a long position in Southern Silver. SSV is a sponsor of the website. Please read our disclaimer.
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.
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.”
“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.
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.
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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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”.
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.
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.
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.
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.
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).
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.
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.
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.
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.
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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