Monsters of Rock: Chalice makes recovery run as Feds back critical minerals

Canberra has delivered additional support for the approvals process on Chalice Mining’s Julimar PGE project in WA.

Josh Chiat

3 min read

October 14, 2024 - 4:39PM

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There are some happy holders at Chalice today. Pic: Getty Images

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Chalice lifts as Julimar/Gonneville palladium project picks up major project status in Canberra
Westgold and Alkane release production numbers for golden September quarter
Miners lift as iron ore futures rise, despite China's ho-hum economic news

Located on the cusp of a state forest, for a long time the environmental and community overlay has hung over Chalice Mining's (ASX:CHN) Julimar project.

Its primary Gonneville deposit sits on private farmland some 70km north of Perth with part of the resource that extended beneath the bounds of the forest effectively excised from mining plans, as it looks to pursue a smaller higher grade starter development.

A $3 billion company within a couple years of uncovering the Gonneville deposit with a share price in excess of $10, Chalice crashed to a low of just 88c in February this year and fielded a 95c price as late as early September.

To be fair, that was less about ESG matters than a poorly received scoping study and crumbling prices for the West Yilgarn project's key commodities palladium, platinum and nickel.

But improving optics around its approvals pathway and a slight rebound in platinum group metals markets, where big miners have been shutting ops and taking product off the shelf in response to loss-inducing spot prices, have led to a recovery of sorts.

A pre-feasibility study is in the works after critical metallurgical test work is assessed by the Tim Goyder and Gina Rinehart backed developer.

Met test work and environmental modelling is anticipated to be completed by the end of this year, with spending lopped from $2.4 million to $1m a month with a plan that the cashed up explorer can get to a decision to mine without raising new capital.

CHN is back above the $500 million watermark we use to designate a 'monster of rock'. At a $599m market cap, its shares have flown up ~30% in the past month to $1.625.

Today's 5.5% rise comes off the back of major project status from the Federal Government, just weeks removed from new the project's environmental approvals would be streamlined through the WA Government's new Green Energy Assessment Unit.

That will give investors hope any future development scenario can be progressed as smoothly as possible.

National significance

Chalice says the major project status granted by industry and science minster Ed Husic recognised the 'national significance' of the Gonneville deposit.

"Chalice would like to thank Minister Husic and the Australian Federal Government for recognising the national significance of the Gonneville Project as the first major Platinum Group Element discovery in Australia, and an important part of Australia’s future critical minerals ambitions," MD Alex Dorsch said.

“It is particularly pleasing to receive this support from the Commonwealth in addition to the Strategic Project status recently granted by Western Australian Premier Roger Cook."

Chalice is hopeful of converting a non-binding MoU to collaborate on the project with Japan's Mitsubishi, which along with being an OEM is also one of the world's top platinum group metals traders, into a more formal arrangement.

“We look forward to continuing to work with the Commonwealth and Western Australian Governments, local communities, Traditional Owners, and Mitsubishi Corporation under our strategic MOU as we progress approvals and project studies to advance this important project towards development," Dorsch said.

Gonneville contains 660Mt of ore at 0.79g/t 3E (palladium, platinum and gold), 0.15% nickel, 0.083% copper and 0.015% cobalt, for 17Moz of 3E, 960,000t nickel, 540,000t copper and 96,000t of cobalt.

READ: Chalice seeks second wind powered not by EVs, but hybrids

Gold miners get down to business

The materials sector lifted 1.41% today despite a poor lead-in from China's stimulus measures and weakening producer prices in the Middle Kingdom.

Iron ore lifted regardless by 2.3% in Singapore to US$108.65/t

ANZ's Daniel Hynes and Soni Kumari mused that the PBOC's fiscal stimulus measures could still support property and commodity demand even without the "bazooka" the market is baying for.

"A combination of stability in the real estate sector and stronger equity markets could see consumer sentiment rebound, which could bolster domestic confidence enough to lead to an economic rebound and stronger demand for commodities," they said.

"More importantly, it may enable China to continue to execute the measures it has already announced. Investment in grid infrastructure amid ongoing expansion of renewable energy capacity should support copper and aluminium demand.

"An improvement in manufacturing should also help offset ongoing demand weakness in the property sector for steel and iron ore. The downside could be weaker demand for gold, as investors pivot back into equity markets."

Gold miners brought the most notable news to the ASX large caps today.

Westgold Resources (ASX:WGX) reported record production, having held Karora Resources and its Beta Hunt mine for the final two months of the September quarter.

WGX delivered 77,369oz, sold at an average price of $3723/oz, boasting 91,357oz if it had held the Beta Hunt and Higginsville mines in July as well.

On the eastern seaboard, Alkane Resources (ASX:ALK) maintained FY25 guidance of 70,000-80,000oz at costs of $2400-2600/oz at its Tomingley mine in New South Wales after delivered 18,418oz at an AISC of $2182/oz in the September quarter, churning out $19.2m in operating cash flow.

But Alkane's cash pile was down from $54.5m to $52m as it makes major investments in extending and expanding Tomingley.