Plenty of news from the mining and resources sector on Tuesday, here are the details.
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More cheese, sorry gold ore, at the Gruyere mine in WA of Gold Road Resources?
The $1.2 billion miner Gold Road Resources went into a trading halt yesterday with the company saying it needed time to release information about “a material increase in the Ore Reserve at Gruyere”.
It’s more than a bit odd to request a trading halt to announce a lift in reserves – that like telling investors to tune in or that trumpets will sound when the statement is made.
Miners usually make announcements about reserves increases in routine quarterly reports or special releases with detailed maps and assays and drill hole results.
But Gold Road has been having a bit of trouble with Gruyere (which it half owns with Goldfields Ltd) with two downgrades this year thanks to machinery problems.
Earlier this month Gold Road told shareholders the Gruyere mine had produced nearly 60,000 ounces of gold in the June quarter. But it lowered annual guidance from a maximum of 300,000 ounces down to a maximum of 260,000 ounces.
The December quarter was forecast to see up to 81,000 ounces of gold produced.
Tuesday’s statement from the company to the ASX stated “Gold Road anticipates that the trading halt will be lifted on or before market open on Thursday, 28 October 2021 by provision of an announcement to the ASX regarding the material increase in the Ore Reserve at Gruyere.”
“The material increase in the Ore Reserve at Gruyere is the Ore Reserve increase that Gold Road has guided the market would be delivered in the second half of 2021. Gold Road is not aware of any other information necessary to inform the market about the trading halt.”
Last week it made a $166 million bid for all the remaining shares in miner Apollo Consolidated it did not already own.
The cash offer of 56 cents an Apollo share tops Ramelius Resources’ $128 million offer last Monday.
Gold Road, which is the largest shareholder in Apollo with a 19.9% stake, said its offer was more compelling due to its ability “to realise certain and near-term value”.
Gold Road will fund the offer with $116 million in existing cash and draw down on its undrawn $250 million revolving corporate facility.
Perhaps the ‘material’ increase in reserves at Gruyere is more about polishing that deal’s attractions than anything else?
Gold Road shares were halted at $1.355.
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Up Monday, down Tuesday – the life of Mineral Resources, the wannabee Perth-based mining ‘house’, is nothing if not volatile.
Monday’s rise resulted from the news that it and its US partner, Albemarle were restarting the mothballed Wodgina lithium mine in the Pilbara.
The miner’s shares rose 9.0% on the news it would restart the Wodgina mine in that was placed into care and maintenance in November 2019.
MinRes owns 40% of Wodgina in a joint venture with US lithium giant Albemarle. The venture aims to start one of Wodgina’s three 250,000 tones a year spodumene concentrate processing lines by September, 2022
Tuesday’s 7% fall (to $39.89) was in reaction to the contents in the company’s September quarter report – they were not positive.
MinRes revealed a 13% fall in lithium spodumene production from its Mt Marion operation in the three months to September because of bad weather and a shipping delay.
The company said Mt Marion produced 99,536 dry tonnes of spodumene during the quarter, 13% lower than 4th quarter of 2021. Shipments during the quarter were 54% lower than Q4 FY21 due to a shipment being delayed to the second quarter of FY22. It said Mt Marion remained on target to meet FY22 guidance of 450,000-475,000.
Mt Marion Lithium Project is jointly owned between MRL, with a 50% interest, and China’s Jiangxi Ganfeng Lithium Co. with the other 50%.
“Mining was impacted by significant rainfall experienced in July affecting pit face positions which limited access to higher grade ore and lowered recoveries for the quarter,” MinRes said.The average realised spodumene price for the quarter was US$740.6 a dry tonne. No price was given for the 4th quarter of 2021 or the September quarter in 2020.
Iron ore shipments and production totalled 5.03 million wet tonnes and 4.96 million wet tonnes respectively during the quarter down from the 5.2 million tonnes for the 4th quarter of 2021 but well above the 4.1 million tonnes produced and 3.5 million tonnes shipped in the September, 2020 quarter.
Iron ore production and sales though remain “on target to meet FY22 guidance of 21-22 million tonnes. This quarter’s iron ore shipments represented were up 40% on the previous corresponding period, according to the company.
The average realised iron ore price for the quarter was $US78.32 dry tonne (down almost $US100 a dry tonne from the 2020-21 average price, with a realisation against 62% Fe Platts of 48%(ie MinRes’s ore shipped during the quarter but settled after the end was priced at 48% of the average price on the Platts pricing platform for 62% Fe fines shipped from the Pilbara).
“This realisation was negatively impacted by current quarter shipments priced on the lower September Platts price and negative adjustments totalling US$33.8 million for finalisation of FY21 shipments,” MinRes said which explained.
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MinRes’ lithium rival Pilbara Minerals saw its share price bounce on Tuesday after its trading halt was lifted.
Pilbara confirmed market rumours that it had linked up with South Korean steel giant, Posco on a processing operation in that country.
Pilbara says it has formed an unincorporated joint venture with Posco to develop and operate a 43,000-tonnes per year lithium hydroxide monohydrate (LHM) conversion facility in South Korea.
Pilbara Minerals will initially hold an 18% stake in the joint venture and says it has opportunities to increase this to 30% in the future, depending on performance.
The shares jumped more than 8% on the news to end at $2.26.
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Like its larger peers Woodside and Santos last week, Oil Search has been a big beneficiary of the surge in oil and gas prices.
The group’s revenue for the September quarter rose 12% to $US409 million.
The company will soon merge with Santos to form a $21 billion energy industry juggernaut and the September report will soon be history.
Oil Search on Tuesday revealed posted a 12% rise in quarterly sales revenue for its mostly PNG centred production of oil and LNG.
LNG prices in Asia have hit record highs in the past month due to a rebound in economic activity, dwindling energy stockpiles in China especially and intensifying competition for cargoes ahead of the winter in northern Asia and Europe.
Oil Search says its average realised LNG price rose 16% from the prior quarter to $US10.02 per million British thermal units, while its average price for crude oil was $US71.9 a barrel.
The shares eased 1.3% to $4.42 yesterday.
Acting Oil Search chief executive Peter Fredricson said a 5% production increase for the quarter demonstrated the resilience of its operations its outlook for the 2021 full year was positive.
“Both LNG and oil markets remain strong, with spot LNG markets continuing to exhibit high volatility and record highs which is a supportive environment for market soundings in respect of new medium-and-longer term LNG sales contracts,” he said in Tuesday’ statement.
Mr Fredricson said Oil Search and Santos had taken important steps during the September quarter towards their proposed merger, under which Santos shareholders would own 61.5% of the combined company and Oil Search shareholders would own 38.5%.
By bringing together assets spanning Australia, Papua New Guinea, East Timor and North America, the combined entity would rank among the 20 biggest oil and gas producers globally and unlock “greater access to capital markets” to fund new and existing opportunities, he said.
“The potential benefits of a combined entity remain clear,” he said.
