Tin making long-awaited comeback as supplies run thin

Plus, Antipa tantalises investors with a tale of nine rigs and four programs while Talisman counts the cash from a juicy iron ore royalty.
18th June 2021
Barry FitzGerald

Back in the day, state schoolboys and girls would sit around the fire at the school camp and sing kumbaya. And they probably still do.

It was different for the boys-only private schools. They preferred to sing about Daddy’s portfolio.

One of their favourites went like this: We’ve shares in the very best companies; In tramways, tobacco and tin; In brothels in Rio ‘Janeiro; By god how the money rolls in.

Singing about tobacco and brothels is not encouraged nowadays, and private investment in tramways is not an option.

But there’s good reason to given voice tin and the tin exposures to be had on the ASX which are bubbling away right now in response to the metal’s spectacular price rise.

Tin was last quoted at $US32,925t (cash) which makes for a 92% increase on the average of last (calendar) year of $US17,155. Some heat has come out of metal in recent weeks as it got as high as $US34,500t in May.

Still, the last time tin – (roughly 48% is consumed as solder in electronics; 17% in chemical uses, 14% in tinplate and about 8% in the still kicking lead-acid batteries) – was at these levels was back in 2011.

Myanmar emerged as a major new supply source back then and killed off the party.

But production there has been drying up, and Indonesian supplies have been hit by COVID, raising concerns about supplies, both in the here and now, and the long term.

Macquarie’s commodities desk went as far this week to suggest “steady structural growth means current demand projections imply the erosion of almost all estimated inventory over the coming years”.

“To avoid estimated stocks dwindling to near zero in the coming years, the market is likely to need persistently high prices in-order-to deliver both demand destruction and fresh supply. The key question for the latter, however, is where from?”

That’s music to the ears of the ASX tin stocks. The go-to stock for tin exposure in this market is Tassie producer Metals X (MLX). It has been busy exiting copper over in the West, complicating its story for some.

But the stock is nevertheless up from 13.5c at the start of the year to 24.5c, a gain of some 80%.

Today’s interest though is in the bunch of ASX tin juniors that have been working away in tin’s sub-$US20,000t prices for years without any love from the market.

Now that a structural shift has carried tin to more than $USS30,000t , they have got busy at their projects, either at the exploration or development study level.

They want to be seen as part of the answer to Macquarie’s question of where the new supply will come from.

There’s too many of them to go through today. But a good starting point for junior tin stocks to watch includes Stellar (SRZ, trading at 2.7c), Elementos (ELT, 1.8c), Thomson (TMZ, 13c) and Venture Minerals (VMS, 13.5c), the latter also commissioning an iron project in Tassie.

ANTIPA:

Antipa (AZY, trading at 4.3c) has so much going on with the drill bit in WA’s Paterson province that it has had to issue a ready reckoner so shareholders can keep up with all the activity.

The ready reckoner brings together various announcements made by the key Paterson player in to the one exploration activities update so that at a glance, shareholders can see that Antipa is currently involved in no less than four major drilling programs.

There is the 100% Minyari Dome project, and the joint ventures with Rio Tinto (owner of the Winu copper/gold discovery in the Paterson), Newcrest (owner of the Telfer gold/copper mine and the lead partner in the Havieron gold/copper discovery in the Paterson ) and IGO.

All up, Antipa has exposure to some 60,000m of drilling across the projects in 2021, most of it funded by its heavyweight partners. It didn’t say so, but the 100% cost of that sort of program probably starts at about $40m.

For a company of Antipa’s scale ($130m market cap) , the cost and expertise standing behind the various programs is unprecedented stuff. That it is occurring in an exploration hotspot like the Paterson is all for the better.

There are 9 drilling rigs whirring away across the properties. And the news begins to flow next month, with first assay results expected from Minyari Dome and the Citadel joint venture with Rio.

The drill programs don’t just have the aim of finding another Telfer, Winu or Havieron. That would be nice for sure, remembering that Newcrest’s junior partner at Havieron, Greatland Gold (an eventual 30% interest on completion of a Newcrest earn-in), now has a market cap of $1.4 billion.

The program also has the aim of extending known resources at some of the properties with a view to the projects being wrapped into developments. On that score, it was interesting to note Rio’s comments in a recent presentation.

It said its Paterson footprint extended beyond Winu, now slotted for first production in 2024. It also noted the “strategic importance and development potential of Citadel,’’ about 45km from Winu.

Citadel is 65% owned and managed by Rio, with Antipa holding a contributing 35%. It already has a resource across the Calibre-Magnum deposits of 2.4Moz at 0.72g/t gold and 162,000t of copper at 0.75%.

The expanded exploration budget for Citadel in 2021 is $24.5m, making it one of the single biggest exploration efforts in the country. The idea seems to be to determine its upside as a broader scoping effort for a Winu-Citadel development, as well as chase up fresh targets.

That in itself makes Antipa one to watch in coming months. Then there are the three other projects now feeling the drill bit.

TALISMAN:

It’s a dream outcome for an explorer to have something in the bottom draw that goes to help funding its exploration effort.

NSW focussed gold and copper explorer Talisman (TLM) has got one of those – an uncapped 1% gross royalty on production from Mineral Resources’ (MIN) new Wonmunna iron ore mine, about 80km west of Newman in the Pilbara.

With the iron ore price doing what it is doing, the royalty is more than  a handy earner for Talisman which is actually nicely off in the cash stakes anyway, with its cash kitty standing at about $10m at the end of the March quarter.

Wonmunna is on its way to 5mtpa and possibly 10mtpa, with Talisman receiving two royalty payments to date during the ramp up phase. The most recent cheque was for $240,000, remembering it grows as Wonmunna grows.

That’s been good enough to fuel a share price gain for Talisman from 10c a share in April to 20c on Thursday, given the company a market cap of $37.3m. Non-executive chairman and 18% shareholder, Kerry Harmanis of Jubilee nickel fame, is no doubt pleased.

But wait, there’s more. The NSW focus of the former WA focussed company is reaching an interesting stage as projects mature in to drilling targets. That’s what’s happening at the company’s Cumbine gold prospect in the northern reaches of NSW’s Cobar Basin.

It is an interesting 650m long gold-in-soil anomaly target. It’s one to watch, given the group’s modest market cap when the iron royalty is taken into account.

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