First Quantum to hunt for copper and gold at Boss’ Honeymoon uranium project

Barry FitzGerald

Independent Journalist

Deal with global giant comes as Cameco fuels uranium bulls with decision to restart two mines. Plus, Coda’s corporate action puts spotlight on its upside and Caspin likens its find to Chalice’s Gonneville.

Last week’s suggestion that Boss Energy (BOE) must be close to deciding what to do with the hidden copper-gold-zinc potential of the tenements covering its Honeymoon uranium project in South Australia’s Curnamona province was on the mark.

The suggestion was based on a diary entry from February last year which noted Boss had completed a comprehensive desktop review of all historical geoscientific information acquired since exploration began in the area in the late 1960s.

The review highlighted uranium upside which was nice. But it also highlighted the region’s untapped copper-gold-zinc exploration potential, prompting the idea that a year on, Boss must have been close to capturing value for the non-uranium potential.

As luck would have it, the diary note came good, with Boss this week striking an exploration farm-in deal with Canada’s First Quantum (FQM), the $C25 billion copper producer that some of the more excitable types in the wire services would have you believe BHP has in its sights as a takeover target.

But back to the Boss deal. The farm-in deal gives FQM the right to earn a 51% interest in any base or precious metal discovery on five Honeymoon tenements by spending $6m on exploration, and a further 24% interest by sole-funding expenditure up until a decision to mine.

News of the farm-in fuelled a 13c, or 6.25%, price rise for Boss to $2.22, taking its gain since last week’s mention here on the strength of the diary note to 12.2%.

So that desk top review of the region’s base and precious metals potential was a worthwhile exercise, both for the uranium upside it uncovered and excitement that could come from the search by a company of FQM’s standing for SA’s next big copper-gold deposit, or zinc.

Boss has said previously that its desktop review yielded coincident gravity/magnetic anomalies from more than 30 years of exploration in the area that had not been followed up, even though 12km west of Honeymoon, Havilah Resources (HAV) has worked up one of the biggest undeveloped copper-gold deposits in Australia at its Kalkaroo project (1.09mt copper/3.18m ozs gold).

Cameco:

Boss didn’t have to say it, but it did anyway – returning its Honeymoon uranium project to production remains very much its prime focus.

The project is ready to go once market conditions are right. Judging by comments by the Canadian uranium giant Cameco on its fourth quarter earnings call this week, the right conditions could be around the corner.

Among other things, Cameco announced it was returning two of its high-cost Canadian mines to production, while cutting production at another. It was another example of its leadership role in supporting the market.

But more than that was Cameco’s disclosure that it had added 70 million pounds of new long-term contracts to its book since the beginning of 2021. It is long-term contracts that count in the industry.

As Cameco put things in its capital markets call, there is no substitute for a full blown utility-driven long-term contracting cycle.

It was little wonder then that other ASX-listed uranium stocks traded higher on Cameco flagging the long-term contracting cycle was underway. It has been the missing piece of the puzzle that has held back uranium markets for the past 10 years.

For Boss, it was probably more important than its SA farm-in deal with FQM. Nice to have both anyway.

CODA (COD):

Talking about SA’s copper riches, there was a sensible rationalisation during the week at the Elizabeth Creek project, with the 70% owner Coda (COD) announcing a friendly scrip offer for the 30% owner Torrens Mining (TRN).

Elizabeth Creek lies some 100km south of BHP’s Olympic Dam monster, and 50km west of OZ Minerals’ new Carrapateena copper-gold mine, and has come into its own in the last 12 months or so.

First there was the emergence of the Emmie Bluff Deeps prospect within the Elizabeth Creek project areas as an IOCG deposit with some serious upside potential, something which is now being chased down with the drill bit.

And then there was the tripling of the mineral resource estimate at the nearby but separate Emily Bluff shale-hosted deposit to 560,000t of copper, 20,000t of cobalt, and 15.5Moz of silver, carrying the total across three of the same style at Elizabeth Creek to more than 1.1mt of contained copper equivalent.

Shaw and Partners has maintained its $2.50 price target on Coda – the stock traded on Thursday at 87c - and said absorbing Torrens was a sensible and logical move.

It said the move to 100% of Elizabeth Creek will provide the enlarged Coda with full exploration optionality, increased scale and some cost synergies.

“In addition, the price paid appears to be reasonable, effectively at ~$A60/t (EV/t CuEq) via Coda scrip or a ~30% discount to the value implied (EV/t CuEq) by Coda’s pre-offer close,” it said.

Shaw also flagged more newsflow on the way.

“With a net cash balance $14m (end Dec21q), key catalysts are approaching, including: Ongoing drilling and assay updates from Emmie Bluff Deeps (Mar22q), drilling of the prospective Elaine IOCG prospect to commence (Mar22q), and RC drilling to commence at Cameron River (Mar22q),” it said.

Cameron River is near the long-gone Mary Kathleen uranium mine near Mount Isa in north-west Queensland. Large scale and near surface copper-gold systems are the target. Apart from anything else, the newsflow from the project will help to fill in the gaps when Elizabeth Creek is quiet for a period.

Caspin (CPN):

The exploration market has been hoping for some excitement with the drill bit to shake-off the pullback in investor interest caused by the broader market sell-off.

It might have just got what it was looking for thanks to assays results reported by Caspin (CPN) confirming the XC-22 prospect at its Yarawindah Brook PGE-nickel-copper project was a significant find.

How significant remains to be seen but the assay results were impressive enough to drive Caspin shares from 72c on Tuesday when the results were announced to $1.03 by the close on Thursday.

Caspin traded at much higher levels last year but like all these things, teasing out significant discoveries can take time, particularly with the current delays at assay labs.

The assays result from XC-22 was for a 68m zone which it can now be said comes with two distinct higher grade zones – an upper nickel-copper zone, and a lower low-sulphide zone rich in platinum group metals.

Caspin CEO Greg Miles takes up the story: “This is a captivating result. We’ve confirmed significant nickel and copper sulphide mineralisation at shallow depths associated with the AEM anomaly that stretches over 700m.

“Mineralisation is open in all directions and is an exciting target. The lower PGE-rich mineralisation is probably even more enticing. This is the first time we’ve been able to demonstrate continuous PGE mineralisation from surface into the basement rocks at potentially economic levels.

“The geological setting is also different from what we’ve previously observed within the Central Yarabrook Hill area and is more akin to mineralised settings at Gonneville. We’ve opened up a new and exciting exploration front and taken a substantial leap forward on the pathway to discovery”.

Gonneville is of course a reference to the Julimar PGE-nickel-copper discovery by Chalice (CHN) 40km to the south. It is the one that has turned Chalice from a $40m company ahead of the March 2020 discovery to $2.76 billion today.

The Gonneville deposit at Julimar is the first to defined by Chalice along a 26km stretch of prospective rocks and it currently stands at 1.9Mt nickel equivalent, or 17Moz palladium equivalent, if you prefer.

It is world-class stuff and it is the hope of Caspin and a bunch of other juniors in the same exploration fairway that they can unearth another Julimar on their ground. 


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Barry FitzGerald
Principal
Independent Journalist

One of Australia’s leading business journalists, Barry FitzGerald, highlights the issues, opportunities and challenges for small and mid-cap resources stocks, and most recently penned his column for The Australian newspaper.

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