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Who’s hunting for the next supersized SEDEX zinc-lead discovery?

Special Report: Sedimentary exhalative deposits (SEDEX) are monstrous accumulations of zinc and lead, originally formed by the discharge of metal-bearing…

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Sedimentary exhalative deposits (SEDEX) are monstrous accumulations of zinc and lead, originally formed by the discharge of metal-bearing fluids onto ancient seafloors.

These super giant Tier 1 deposits account for 25% of global zinc and lead production, and six of the 10 largest active zinc mines globally.

They are also an important source of silver and copper.

Famous SEDEX deposits include Red Dog (Alaska), McArthur River (Northern Territory), and Mount Isa (Queensland).

These things can be very lucrative.

Teck Resources’ (NYSE:TECK) ‘Red Dog’ operation — about 170km north of the Arctic Circle in northwest Alaska — is one of the world’s largest zinc mines.

In 2020, it made a $US513m gross profit on the sale of 551,000t of concentrates.

Most recently, Rumble Resources (ASX:RTR) announced that the large scale zinc-lead-silver system emerging at ‘Earaheedy’ could be SEDEX.

The discovery at the ‘Chinook’ prospect sparked a 320% increase in the company’s share price, but Rumble believes it is “just at the start of uncovering [its] scale”.

“These results to date, only partially testing 2km of the 45km of prospective mineralised strike, have highlighted the potential to delineate multiple very large-scale Zinc-Lead SEDEX style (Tier 1) deposits throughout the entire Earaheedy Project,” the company said in June.

In late August, a massive drilling program was expanded to 40,000m to find the edges of the 3km by 1.8km ‘Chinook’ deposit, as well as push down towards the ‘Magazine’ and ‘Navajoh’ prospects ~10 – 12km to the southeast.

 


 

Critical Resources: hunting for the next SEDEX deposit

Located in the prolific NSW base-metals region, Critical Resources’ (ASX:CRR) Halls Peak has potential to host a large scale SEDEX style deposit of its own.

Halls Peak sits in the same geological setting as the McArthur River.

Historical mining was shallow, and exploration rarely went beyond 200m. Critical believes the big prize is at depth, Chief Executive Officer Alex Biggs says.

“There’s been talk about it being a large scale SEDEX deposit before, but I guess what stopped the work happening is that people didn’t think deep enough,” he says.

“They only went to 100m, 200m. We are looking at 400m, 500m – and even deeper than that.”

“You look at deposits like MacArthur River, Cannington, Mount Isa – certainly structurally Halls Peak has all those indications, and of course, near- surface high grade mineralisation.”

This near-surface stuff is impressive on its own. A recent drill program in 2016 hit a highlight:

  • 2m @ 8.7% zinc, 3.0% lead, 85g/t silver, 1.4% copper
  • 3m @ 15.18% zinc, 8.02% lead, 597g/t silver, 1.61% copper, and
  • 2m @ 19.71% zinc, 10.77 % lead, 134.96 g/t silver, 0.8% copper.

An upcoming 17-hole ~4,000m drilling program will target base-metal hosted massive sulphide mineralisation at the ‘Gibson’ and ‘Sunnyside’ prospects.

 


 

A bullish outlook for lead and zinc

Glencore says the electrification, industrialisation and urbanisation of developing economies supports demand growth for zinc, due to its anti-corrosive properties and use as an alloy in materials used in cars, electrical components, and household fixtures.

“The major transformation of the global energy system necessary to achieve the goals of the Paris Agreement is zinc’s use in offshore wind-energy generating facilities,” it says.

“These scenarios show zinc demand growing to 150% of 2019 levels by 2035 and to 200% by 2050 on 2019 levels.”

Lead – 80% of which is used in lead-acid batteries – will benefit as demand rebounds quickly post-pandemic.

Meanwhile, world lead mine supply is forecast to stay at pre-pandemic levels for a couple of years.

Fitch Solutions says the global market is likely to slip into a marginal production deficit of 8,000t in 2027, widening to 439,000 t by 2030.

The use of refined lead in the global automotive industry will continue to grow, despite tightening environmental regulations and increasing use of lithium batteries in electric vehicles, it says.

Critical Resources are bullish on where zinc and lead are going, Biggs says.

“There is a lot of expectation on post-COVID global recovery, which will need a lot of metal,” he says.

“We are at the start of a new commodity super cycle – probably only the third one [since in the 1970s].”

 

This article was developed in collaboration with Critical Minerals, 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 Who’s hunting for the next supersized SEDEX zinc-lead discovery? appeared first on Stockhead.

Energy & Critical Metals

Betolar and JA-KO Betoni to use Keliber’s lithium mine side streams for lower-carbon concrete

Betolar, a Finnish material technology company that offers sustainable and low-carbon concrete production, and concrete company JA-KO Betoni, are assisting…

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Betolar, a Finnish material technology company that offers sustainable and low-carbon concrete production, and concrete company JA-KO Betoni, are assisting Keliber (earlier post), which is preparing a lithium mine in Kaustinen, Finland, in utilizing the massive side streams typically produced in the mining industry.

Tailings produced as a side stream in Keliber’s minerals processing and analcime sand produced later in the lithium production process will be used in concrete production as aggregate at JA-KO Betoni’s plant in Kokkola, Finland.

The Geoprime solution developed by Betolar will replace cement used as a binder in concrete production with blast furnace slag produced through a steel industry side stream in Raahe, Finland. Replacing cement will significantly reduce carbon dioxide emissions. Low-carbon concrete can be used, for example, in the structures of Keliber’s mine.

Significant environmental benefits arise in two ways. Firstly, replacing cement with materials refined from industrial side streams will drastically cut CO2 emissions from the raw material, to as much as one-fifth of current levels. Secondly, the use of side streams as the aggregate for concrete instead of natural rock material significantly reduces the use of virgin natural resources.

—Innovation Director Juha Leppänen, the Founder of Betolar

Different side streams, which must be reused or deposited, are produced in mining activities. Most of these side streams are put in a waste rock stockpile at the mining site. From Betolar’s perspective, side stream materials are important future raw material sources the utilization of which on a more extensive industrial scale has only just started.

We wanted to ensure well in advance that the environmental impact of our lithium mines will be as low as possible. Our future side streams will not only be environmentally safe but will also enable the creation of new products and reduction of the use of virgin raw materials.

—Hannu Hautala, CEO at Keliber

The concrete industry produces approximately 7% of human CO2 emissions. Betolar says that with its solution, it is possible to reduce the CO2 emissions for raw materials by up to 80% in many concrete industry product groups.

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Monsters of Rock: IG’s top two miners to watch this week

Whitehaven Coal (ASX:WHC) and Northern Star Resources (ASX:NST) are two large cap miners worth keeping an eye on in the … Read More
The post Monsters…

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Whitehaven Coal (ASX:WHC) and Northern Star Resources (ASX:NST) are two large cap miners worth keeping an eye on in the week ahead, according to trading platform IG Markets.

Despite general concerns about global growth and subsequent drop in global bond yields, gold prices fell throughout last week.

The drop in the value of the yellow metal weighed on Aussie gold miners like Northern Star.

Northern Star’s share prices fell to two-year lows as investors reduced exposure to gold-mining stocks, to close below what was price support at roughly $8.80 per share.

“The technicals look quite poor for the stock now, with the trend and price momentum skewed to the downside,” IG analyst Kyle Rodda says.

“The next major level of long-term price support looks to currently sit at around $7.65 per share.”

The stock was down another 1.15% in Monday trade.

 

At the other end of the spectrum was Whitehaven Coal, which surged last week.

Global coal prices jumped to a record high as energy demands spikes on what is an unfolding and worsening energy shortage globally.

“Whitehaven shares look to be forming a primary uptrend now, with the weekly RSI showing a stock that is technically overbought, but that that is not signalling yet a meaningful slowdown in momentum,” Rodda says.

“WHC shares probably remain highly tied to the budding energy crisis now and any further upside in coal prices, and in the short-term, risk-reward appears skewed to the downside given the stock’s overbought technicals.

“A re-test of previous price resistance now support at around $2.50 may indicate whether the stock’s longer term uptrend remains in play.”

WHC was down 2.5% in late arvo trade.


 

Iron ore miners up as Materials ekes out small gain

Pic: CommSec

The ASX 200 Materials index was up ~0.15% at close of play Monday, dragged higher by the major iron ore miners BHP (ASX:BHP), Rio Tinto (ASX:RIO), FMG (ASX:FMG) and Mineral Resources (ASX:MIN).

The benchmark iron ore price – down 30% year-to-date – has staged a small comeback to ~$US110/t since going into the low 90’s on September 21.

In the mid cap space, +$1bn market cap lithium hopeful AVZ Minerals (ASX:AVZ) led the winners after securing a “cornerstone investor” for its Manono development in the DRC.

Private Chinese company CATH will pay US$240 million cash for an initial 24% equity stake in the project.

“Proceeds from the transaction will fund a majority of the total project financing required, whilst AVZ will retain a controlling 51% interest in the Manono Project post-completion of the transaction and its position as lead developer of the Manono Project,” the company says.

The post Monsters of Rock: IG’s top two miners to watch this week appeared first on Stockhead.

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This ASX-listed iron ore developer is well placed to benefit from the shift to high grade ore

Special Report: All eyes have been on the price of iron ore in recent days as volatility in the iron … Read More
The post This ASX-listed iron ore developer…

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All eyes have been on the price of iron ore in recent days as volatility in the iron ore price has had a big impact on markets.

But while that is where the focus is in the here and now, there remains a story bubbling under the surface about where iron ore is headed in the future.

Increasingly, iron ore experts believe grade will be an important factor for steel mills, as efforts to curb emissions and pollution from steelmaking take centre stage.

Take this comment for instance from Fastmarkets index manager Peter Hannah, who observes iron ore markets for one of the two major price-reporting agencies.

“To succeed in decarbonizing the global steelmaking industry there needs to be a greater recognition of how much the iron ore supply base needs to change,” he wrote recently.

“Vast volumes of existing production will need to be replaced by higher-grade supply, first to meaningfully reduce CO2 emissions from the prevailing BF/BOF (blast furnace) technology, and later to meet the demands of a DRI (direct reduced iron) sector at least an order of magnitude larger than it is today.”

The gap for discounts and premiums in iron ore have soared in recent years. Pic: Supplied

 

As Magnetite Mines (ASX:MGT) showed in a presentation released on Friday, it is one of a handful of iron ore hopefuls able to capitalise on this growing thematic.

Its Razorback mine in South Australia is now in the Definitive Feasibility Study stage leading to decision to mine, planning to start operations around the end of 2024. It would produce a 68% iron magnetite concentrate.

That is well above any commonly quoted indices like the 65% Brazilian index, which already generates an substantial premium compared to the commonly quoted benchmark 62% fines price.

While the 62% iron ore index – used by most of the Pilbara iron ore miners such as BHP –  was fetching US$108.67/t on Friday morning, 65% iron ore demanded US$134.60/t.

In the long run over the past decade the gap between discounted 58% iron ore, 62% product and premium product has trended wider and wider.

“Steelmakers need to adopt best practices that prioritise decarbonisation with existing assets. Some of these best practices include installation of energy efficient technology, optimisation of the blast furnace (BF) burden (e.g. with high- grade ore),” CRU Group says.

 

Razorback a logistical dream

While grade is one aspect of Razorback’s allure, it is not the only reason Magnetite Mines has been so keen to push ahead with a definitive feasibility study after releasing a successful PFS in July.

The mine, which has a resource of 4.2Bt of iron ore, stands to be a logistical dream. Located just 240km northeast of Adelaide, it has access to rail and high voltage powerlines that connect it to the Australian electricity grid.

That is significant from an ESG perspective as well because of South Australia’s high penetration of wind power and other renewables, which met around 60% of the State’s electricity needs last year.

Being in the vicinity of the town of Yunta, Razorback will have a 50km purpose built private all weather haul road and rail siding with access to an existing heavy freight network and iron ore port at Whyalla.

From a mining perspective it is also technically simple. Ore can be mined from surface, saving costs on pre-stripping with a low PFS strip ratio of 0.16:1 and the potential to improve grades with selective mining and or ore sorting.

Razorback is close to key infrastructure like power, rail and ports. Pic: Magnetite Mines

 

Low cash costs underpin long-life operation

Once built, the project is highly competitive.  As reported in Magnetite’s pre-feasibility study in July, the project is expected to generate cash when the 62% iron ore price is above  US$54/t (including the appropriate quality adjustment).  That would still be half the iron ore price on Friday, after the contraction seen in the benchmark 62% fines price in recent weeks.

At US$110/t, around the long-term average iron ore price over the past 10 years, Razorback would carry a post-tax NPV of $700 million and IRR of 20%, generating around $144 million a year in net cash flow after taxes and royalties.

At a production rate of 2.7Mtpa, the project would pay back its estimated $675m capex in 4.6 years, leaving two decades of reserves still to go.

If we were to see another bull run to US$150/t – and remember, at a 68% grade, Razorback’s concentrate would earn a premium on that – that would increase to an NPV of $1.67 billion, with an IRR of 33% and average net cashflow of $241m, something that would see Magnetite pay back its initial investment in just over 2 years.

Key results from the Razorback PFS. Pic: Magnetite Mines

 

DFS activities under way with appointment

Magnetite Mines this week appointed engineering and professional services company GHD to deliver its critical power supply and non-process infrastructure elements of the Razorback DFS, effectively kickstarting the process.

It will build on the power supply option selected from the DFS of installing a 132KV transmission line connecting to the national grid at Robertstown.

“GHD’s appointment is an important milestone for Magnetite Mines as it represents the commencement of the DFS and continues our commitment to delivering a well planned and high quality study for our shareholders,” Magnetite Mines executive chairman Peter Schubert said last week.

The DFS well underway and currently expected to be completed next year, with a decision to mine looking to be at the end of next year.  Project financing and permitting will take place in parallel.  The current schedule sees Razorback in production around the end of 2024, well placed to benefit from a stronger ESG focus in the mining and steel industries.

On the approval side of the ledger, work is well underway. South Australia is a predictable, stable and low risk mining jurisdiction and there is regular consultation between Magnetite and the State Government.

Baseline environmental studies are also well progressed, while the important consultation process with the people of the Ngadjuri Nation, the region’s traditional owners has started, reflecting the company’s acknowledgement of and respect for the traditional owners of the country.

Magnetite Mines is on track with its proposed development timeline. Pic: Magnetite Mines

 

Braemar district fertile for further development

While Magnetite has unlocked an impressive 5.7bt of resources across its Razorback (4.2Bt) and Muster Dam (1.5Bt) projects, that does not tell the full story of just how fertile the Braemar region is for iron ore discoveries and developments.

Of that bounty just 473Mt is included in the Razorback PFS reserve.

That factors in just 8% of Magnetite’s resource, 4% of the Braemar region’s kilometres long strike length and 0.3% of Magnetite’s tenured area.

That suggests Magnetite should have room to grow and expand beyond its initial 25-year project should the numbers stack up.

Its long life and plentiful resource and reserve base should be attractive to lenders, with Magnetite targeting early engagement to allow a collaborative approach to risk mitigation and achieve financial close by the fourth quarter of 2022.

Debt funding is likely to be complemented by a conventional equity raising or other options for equity funding.

Magnetite has $15.3m in the bank to progress its all important DFS, and a market cap of $69m as of September 21.

MGT stock is around 170% up over the past 12 months despite a dip after PFS release, but it has caught some tailwinds in recent days as investors responded well to news about its DFS preparations, rising by almost 29% from 2.1c a share to 2.7c a share over its past three trading days.

This article was developed in collaboration with Magnetite Mines, 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 This ASX-listed iron ore developer is well placed to benefit from the shift to high grade ore appeared first on Stockhead.

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