New World Resources running on bumper copper hits
This also means the Australian miner's initial focus on cobalt is delivering shareholders a "free kick." And additionally, Firefly’s move to set manganese Firebird free delivers a windfall for shareholders, alongside the question of whether Tolga has an elephant by the trunk at Aston.
It is a nice problem to have when ongoing drilling continues to return high-grade hits of increasing thickness at depth.
And so it is with New World Resources (ASX: NWC), last mentioned here in June last year when it was a 1.3 cent stock with a $13 million market cap.
NWC is now a 10.5 cent stock with a market cap of $140 million on expanded capital, so it’s been a 10-bagger any way it’s cut.
The excitement around the stock is due to its high-grade Antler copper project in north-western Arizona. Think the heartland of the US copper industry, and saguaro cacti.
It’s a historic producer, with production stopping back in 1970 when copper was all of US45c/lb compared with this week’s $US4.05/lb pricing.
NWC’s “nice” problem to have is that since acquiring Antler in January 2020 on a cheap staged payments basis, the potential scale of the resource has been growing, just about with every hole drilled.
So a maiden resource estimate originally due out about now has been pushed back as there’s no point making an estimate now and using it as the basis for moving into a preliminary feasibility study and the US permitting process. Best to wait for the bigger picture to emerge.
And getting bigger is what has been happening. That was reflected in this week’s excitement in the stock with the reporting of a 25.4m intersection grading 3.13% copper, or 5.2% copper equivalent when zinc, lead, silver and gold values are taken into account.
It was actually not the very best intersection to date in terms of metal values. But it did go to the idea that Antler’s mineralisation gets better in grade and thickness in the deeper drill holes below the old workings.
The maiden resource estimate will come soon enough, as will the following PFS and DFS. Put more simply, the grades and thickness more or less ensure that NWC will be mining Antler in the not-too-distant future.
The only question now is at what scale. That remains a movable feast, with assays results still to come in from 13 drill holes, and with two diamond core rigs continuing to whirr away.
Then there is the potential upside from likely targets to the south of the old workings generated by some recent modern-day geophysical work.
Followers of the stock will remember that before Antler came along, NWC’s original focus was on cobalt, with the Colson project in Idaho the flagship. When cobalt was running hot, NWC got to be a $40m company.
It is safe to assume that there is little if any value for the US cobalt interests in NWC’s current market value. It’s all about Antler.
But here we are and cobalt is starting to run hot as the electric vehicle thematic takes off at warp speed post the COVID slowdown. The price is up by 50% on the 2020 (calendar) average of $US15/lb to $US22.60/lb.
Some of the big automakers have been talking up the potential for cobalt in the preferred NMC batteries to be done away with because of the cost, and a reliance on non-ESG compliant supply sources. They would say that, wouldn’t they.
Cobalt’s recent price surge suggests the metal’s use in the leading battery technologies is here to stay for the foreseeable future, and that supply and ESG concerns are back on the agenda.
NWC’s US cobalt interests are made for the moment. Made-in-America cobalt has a certain ring to it compared with Made-in-Democratic Republic of the Congo cobalt.
Given the cobalt interests carry little if any value in the market’s rating of NWC, it would not surprise to see them spun-off into a standalone company. It has become a fashionable, and value creating, thing to do of late.
It was back in December that Firefly (FFR) decided that the market was ascribing little or no value to its Oakover manganese project in the Pilbara.
Oakover had been worked up as an advanced manganese project between 2009 and 2016 but it fell off the radar once Firefly began kicking goals as a gold explorer at its Yalgoo project.
So instead of letting it languish, Firefly decided to spin it out into a new standalone company – Firebird Metals (FRB).
There was an in specie distribution of shares to Firefly shareholders, and a $5.5m capital raise with entitlements at 20c a share.
Juiced up with a couple of less advanced manganese projects in the Pilbara, Firebird has gone off like a cracker. Its shares are now trading 64c, giving it a market cap of $34.4 m which based on ordinary shares alone, makes it worth more than Firefly ($32m).
So it has been a value creation exercise par excellence. There are a couple of themes that have made Firebird’s debut on the ASX on March 16 such a value-creating affair.
First up, look no further than fellow Pilbara manganese stock, Element 25 (E25). It is in the process of commissioning the low capex stage 1 development of its Butcherbird project and is sporting a $360m market cap ($2.40 a share).
Manganese is a bit like the nickel market. Its fortunes have long been determined by the steel market (90% consumption) and the dry cell battery market, but a wave of demand of is coming from lithium-ion batteries (it’s the M in NMC batteries).
Then there is the falling grades/lack of investment in manganese because of a long stretch of low prices and as mentioned above, carmakers like Volkswagen saying that one day maybe, it could up the manganese load in batteries and drop cobalt all together.
Investor interest in E25’s Butcherbird project reflects those themes, and it seems that Firebird’s stellar start-out does as well.
They are at different stages of development but as far as the underpinning resources are concerned, both have grades of 10% manganese. In terms of tonnage, Butcherbird is 264mt and Oakover 64mt.
Both are low grade compared with the likes of South32’s Groote Eylandt operation but then again, everything is. The latest in dense media separation and ore sorting means that saleable product is no longer the problem that 10% grades might have posed in the past.
And besides, the record global steelmake and the battery revolution means new mines are required more than ever.
Melbourne’s bustling Tolga Kumova likes the Firefly/Firebird stories and recently increased his Firebird stake to 10.15% through on market purchases.
Aston Minerals (ASO):
Talking about Tolga, he was mentioned here on March 12 for his excitement level over another junior in which he holds a 10% or so stake, Aston Minerals (ASX: ASO).
It was 6.4c and rising at the time on the strength of its maiden drilling program at its Edleston gold project on the prolific Abitibi greenstone belt in Ontario, Canada.
It has since more than doubled to 13.5c, so Tolga’s excitement was well-founded. There is no doubt about that following this week’s report of a 1m intersection grading 2,035g/t (65ozs a tonne) from 362m.
The hit was 520m along strike from a 5.3m hit grading 81.4g/t from 110m when Edleston was last drilled in 2012 by the previous owner who lost interest can you believe, because the speculative dollar in Canada had switched to cannabis.
Tolga has become Aston’s executive chairman since March 12 and in Aston’s ASX release on the latest super high-grade hit, he said it “justifies entering the jurisdiction, now it is a matter of defining scale”.
He also noted that the Abitibi is elephant country for gold. So has Aston found Tolga found his elephant? Lots of more work to do but the interest is there, both by investors here, and the big name gold producers who inhabit the Abitibi.
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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.