Chalice’s cup runneth over with talk it has unearthed yet another major metals province

7th July 2022
Barry Fitzgerald

Promising drill hit 10km north of its world-class Gonneville nickel-copper-PGE find, and one from Caspin 30km further along, set investors’ juices flowing again. Plus, last week’s words of rare earths wisdom were bang on the money, as Australian Rare Earths proved, and iron ore junior Genmin defies the odds with US$10m in funding from Anglo American.  

Expectations that Chalice’s (CHN) Gonneville nickel-copper-platinum group metals discovery could be but the first of many along the western margin of the Yilgarn craton to the north of Perth have been boosted by the latest exploration results.

The results reported on Thursday by Chalice from the Dampier prospect 10km north of Gonneville,  and by Caspin (CPN) from its Yarawindah Brook project 40km north of Gonneville, were not in same league as the first-hole wonder from Gonneville in 2020.

But they did highlight the potential for a major new metals province in the making.

That potential was reflected in the 25c, or 6.7%, share price pop for Chalice in Thursday’s market to $4, and the 4.5c, or 10.4%, lift for Caspin to 47.5c.

Chalice announced the discovery of a nickel-copper-PGE zone from the Dampier target while Caspin said the latest results from the Serradella prospect at Yarawindah Brook had demonstrated the “potential for a significant nickel-copper-PGE deposit”.

At Dampier, drilling intersected a 4.2 metre interval of heavily disseminated to matrix sulphides at the base of a 145m interval of mostly disseminated sulphides. The 4.2m hit of the good stuff is the first outside of the Gonneville deposit itself.

And according to Chalice, it is considered to be an exciting result which “demonstrates the highly prospective nature of the (Gonneville-hosting) Julimar Complex for additional nickel-copper-PGE discoveries”.

A better explanation of why Chalice is excited by the results will be given by the CEO Alex Dorsch at an investor webinar at 9.30am (Perth) today.

Excitement around Caspin came from a 91m hit of modest mineralisation. Modest but standing as the most significant zone of metal accumulation on a grade-width basis intersected to date, and importantly, providing a vector to the more prospective basal position of the intrusion.

While both stocks remain well below their levels before June’s savage market sell-off, the gains show the ability of exciting exploration results to drive stocks higher no matter what is going on in the broader market. 

Gonneville alone ranks as world-class find, with the maiden resource estimate released in November last year rating the find at 1.9 million tonnes on a nickel equivalent basis, or 17 million ounces of palladium equivalent.

Apart from anything else, Gonneville is also one of the few large-scale palladium-rich deposits outside of Russia, which accounts for about 40% of supply. So it has particular strategic appeal given the war in Ukraine.

Chalice is about to update the resource at Gonneville and is due to release a scoping study in the third quarter.

It all goes to underpinning the company’s $1.39 billion market cap. So whatever comes from follow up drilling at Dampier just adds to its value story, and the province in the making thematic, with Caspin doing its bit up north.

Rare Earths:

It was mentioned here last week that rare earths had long been considered critical to hi-tech modern-day life and that because of the mega trend of decarbonisation, they have become even more critical.

Add to that the geopolitical imperative for the Western world to break China’s grip on rare earth supplies, and the outlook for the ASX-listed rare earth stocks is as rosy as could be expected among the current equity market doom and gloom.

Three stocks were mentioned last week: RareX (REE), PVW Resources (PVW) and Australian Rare Earths (AR3). They all caught a bit of tailwind from last week’s thinking. RareX was 5.3c a week ago and is now 6c. PVW climbed from 24c to 28c and AR3 has gone from 37.5c to 43c.

The 13%-16% gains were welcome stuff given all three stocks have been beaten up in the current equity market shakedown. AR3’s gain was particularly noteworthy as it was driven by a big resource upgrade at its Koppamurra ionic clay-hosted rare earths discovery in south-east South Australia.

It was suggested here that the resource update could well trigger a re-rate, which it has to a certain extent. Sprott’s equity desk reckons there could be more to come and has a $1.30 a share price target on the stock.

It noted that the upgrade in the resource date to 81 million tonnes at 785ppm total rare earth oxide more than doubled the previous estimate, and was a beat on the 25-30 million tonne increase it was expecting.

It doesn’t sound like much when it is said quickly but Sprott gave it some context, saying the upgraded resource estimate put Koppamurra on the development map. Sprott reckons there is a lack of viable projects to supply the rare earth molecules the world needs.

“AR3 and Ionic Rare Earths (IXR, trading at 4.1c and owner of the big Makuutu clay-hosted project in Uganda) are our top picks globally as projects that have the heavy rare earths, size potential, and ability to get into production quickly enough to fill this gap,” Sprott said.

Finally, a quick word on Hastings (HAS) which is developing the Yangibana project in WA. It last traded at $3.95. That compares with a $6.70 price target on the stock by Canaccord.

Genmin:

The junior end of the mining market faces a funding freeze as investors hit the brakes on equity funding. But there are ways around the funding freeze if a junior’s underlying project has some big time appeal.

ASX-listed iron ore junior Genmin (GEN, trading at 21c) is an example.

It has side stepped the equity market to pull in $US10 million in funding from the mighty Anglo American in return for a capped royalty and an exclusive right to negotiate a $US75m financing package, and up to 100% of offtake.

The funding means Genmin can keep up the pace at its 700 million tonne Baniaka project in Gabon, central west Africa. A bankable feasibility into the project is now due at the end of the September quarter.

Genmin’s CEO Joe Ariti made the point that the $US10 million injection meant there was no dilution to existing shareholders, with the agreement also providing a mechanism to negotiate potential development funding, and an offtake solution in the longer term.

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