Coda hopes Olympic Dam hunt will put another much-needed brick in ASX copper wall
Plus, nothing in DGO share price for exploration programs now underway and Australian Strategic Minerals winning strong support for its downstream processing play.
26th March 2021
Resources Rising Stars
Anyone in need of a Pink Floyd cover band to help celebrate a stock market killing would be best advised to contact Coda Minerals (ASX:COD) boss, the bass-playing Chris Stevens.
Pink Floyd cover bands are few and far between. The same can said about copper-focussed junior explorers on the ASX.
And that is what the musically-named Coda is after its IPO in October last year which pulled in $8.5m at 30c a share to fund the copper hunt, initially at its Elizabeth Creek project in South Australia’s Olympic Dam province.
The stock has been doing well too. It last traded at 39c for a market cap of $35m. It has helped that copper has moved in to $US4/lb territory.
It is a seriously good price for the red metal – it averaged $US2.80/lb in (calendar) 2020 – and guarantees an amped response by investors to good copper exploration results.
Coda has been delivering that from Emmie Bluff, its flagship prospect at Elizabeth Creek. It is a familiar name as drilling by others way back confirmed iron oxide copper gold (IOCG) mineralisation at depth.
Olympic Dam is an IOCG, so too are OZ Minerals’ (OZL) Prominent Hill and Carrapateena mines in the province.
They are all a bit different, including Emmie Bluff. As an IOCG target, it still rates following the earlier “technical” success by others. And Coda’s geology team has been busy planning where best to drill to come up with the good stuff, with a drilling campaign due to kick off next month.
That is interesting in itself for a $35m company given the size of the potential prize.
But Coda has a dual focus at Emmie Bluff. There is the IOCG target, and then there is the Zambian copper belt style copper/cobalt mineralisation encountered at a shallower depth of about 400m in the Tapley Hill formation.
Coda (it is the operator with a 70% interest and is partnered in the project by Torrens Mining (TRN) with 30%) has previously worked up an exploration target of 44-77mt at a grade of 0.5-2.3% copper equivalent for the narrow but laterally extensive mineralisation in the Tapley.
Confidence in the exploration target has been increased as a result of a recent 17-hole drill program hitting the mineralisation in every hole, with a best result of 7.58m grading 1.51% copper equivalent.
Coda is now plugging in the numbers into a maiden resource estimate for the third quarter this year. It’s one to watch out for, as is what comes from drilling the IOCG target.
While Elizabeth Creek very much remains the focus, Coda has also recently added a Mt Isa region copper/gold project to its playlist – the Cameron River project near Cloncurry, and adjacent to the old Mary Kathleen uranium mine.
It comes with numerous shallow and already well-defined targets ready to get cracking on during quiet times at Elizabeth Creek.
Ed Eshuys’ DGO Gold (ASX:DGO) is in an interesting space at the moment thanks to its investments – including a 15.8% stake in boom gold explorer De Grey (DEG) – covering its $225 million market cap ($3.08 a share).
It means that the market is currently giving zero value to DGO’s substantial exploration interests, which is kind of odd remembering Eshuys has an enviable track record of making discoveries.
That has been said here before, but the difference this time is that the zero value being ascribed to DGO’s exploration interests comes at a time of high activity in the portfolio.
It has got to be thought the implied zero value for the exploration interests won’t last long should the drill bit at one of projects come up with something interesting.
DGO too has been drilling Zambian style sedimentary copper targets at its Pernatty project in SA. It is also active at its Bryah project, about 95km from Sandfire’s (SFR) DeGrussa copper/gold mine.
Then there is DGO’s own drilling programs to come on ground it holds in the Mallina Basin, home to De Grey’s spectacular Hemi Discovery, and its exposure to an interesting artificial intelligence-driven program at Mt Magnet.
The list goes on but the point is made - there is nothing in DGO’s current market cap for the programs.
Australian Strategic Materials:
The Alkane (ALK) spin-off Australian Strategic Metals (ASM) went off into a trading halt on Thursday while it put to bed a “material capital raising”.
A $65m placement at $4.80 a share in conjunction with a $41m 1-14 rights issue was said to be the plan, and it’s fair to say that it was slide 20 in a presentation pack doing the rounds in support of the capital raising that was generating lots of interest.
As previously mentioned here, ASM has got its hands on a Korean-developed process covering the ability to produce metals, alloys and powders across the critical materials space (rare earths, titanium and zirconium).
It is standalone downstream adventure for ASM while it works away at securing partners/financing for the $1.3 billion development of what stands as its main event, its Dubbo critical materials mine and processing project.
An initial 5,200tpa downstream plant to be built in Korea was recently scoped by ASM as having the capacity to generate annual EBITDA of $US45-$50m from a capital spend of $US35-$45m. Interesting enough in itself.
But slide 20 pointed to follow up plants on short time frames in Australia (2022/23), Europe (2022/23), Japan (tba), and the US (tba). So if the initial Korea plant is good for EBITDA of $US45-$US50m, what would all five mean to a company currently capitalised at $A622m, and with Dubbo to come?
Lots is the answer. It all goes to why the spin-off has been one of the most successful seen on the on the ASX.
ASM was demerged into a stand-alone company last July on the basis of one ASM share for every five Alkane shares held.
ASM started out at $1.40 a share (effectively 28c an Alkane share) and has since taken off to $4.99 (99c an Alkane share). Alkane is a gold producer and gold-copper explorer of note in NSW.
Before the spin-off, little if anything was in its share price for Dubbo and the standalone downstream potential market of the Korean metal-isation process. So as an exercise in highlighting the value of Dubbo and the technology-driven downstream opportunity, the spin-off has been a major success.
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