Resources Top 5: Errawarra gives its neighbourhood another success story
Good neighbours never go astray, and Errawarra Resources has some corkers close to its Andover West project. So it’s no surprise ERW has been surging.
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Errawarra Resources (ASX:ERW) has been the breakout star of the ASX on Wednesday, fresh off the release of a new investor presentation on the potential of its Andover West project.
At 3pm (AEDT), Errawarra shares were up 20 per cent for the day.
The spex are thus: ERW’s Andover West, in WA’s West Pilbara region, boasts a pegmatite swarm just 12km from Andover’s priority pegs and under 4km from where RDN has found lithium samples containing up to 2.73 per cent Li2O.
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A number of pegmatites were found in a maiden program primarily focused on drilling for nickel, with multiple assays of over 150ppm lithium, well above background levels of 15ppm.
Meanwhile, ERW says ground reconnaissance and sampling is ongoing with a number of new pegmatites identified, with follow up sampling showing numerous anomalous results containing LCT (lithium, caesium and tantalum) elements.
‘Lithium anomalous pegmatites may be part of a new discrete lithium pegmatite zone that includes recent discoveries by Raiden (Resources),” ERW claims.
No doubt much enthusiasm has been generated by the stunning performance of neighbour Azure Minerals (ASX:AZS) at its Andover project.
Recent opulent buying in Azure shares has pushed the one-time exploration minnow to near untouchable levels, with Mineral Resources (ASX:MIN) revealed to have upped its stake to 13.56 per cent with yet more on-market purchases, at well above Chilean giant SQM’s $3.52 offer price.
Azure was up 2 per cent on Wednesday morning to $4.12, having become a billionaire’s plaything since SQM lobbed its bid.
Gina Rinehart is already sitting pretty with an 18.9 per cent stake, Pilbara Minerals (ASX:PLS) is said to be snooping.
Not to say anything of more than 13 per cent holder Mark Creasy, who also owns 40 per cent of the large-scale Andover lithium discovery in the Pilbara that has made Azure and its investors wealthy(-er).
German investor Wilhelm Zours’ Delphi Group, who committed to the SQM offer, has 10.8 per cent, while SQM controls almost 20 per cent. There’s not a lot left to go around, with many early punters surely taking their winnings in the maelstrom.
Interestingly, AZS shares eased as the day went on, to be 1 per cent down for the day at 3pm (AEDT).
That’s really nothing with Azure up in the order of 1750 per cent in 2023, having started the year at just 24c, and well over 2000 per cent since it shifted focus from Mexico to explore -initially for nickel and copper – at Andover in the aftermath of the pandemic.
We all dream of gains like those.
So with Azure looking close to maxed out for now – like Mario on 99 lives – punters are looking next door hoping their pegmatites contain similarly massive spodumene intercepts.
Such as Erawarra, perhap.
Or next door neighbour the $167 million Raiden Resources (ASX:RDN) was up another 13 per cent early Wednesday and almost 700 per cent over the past year, as Andover fever grips the market. At 3pm (AEDT) it was still up more than 4 per cent for the day.
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Other resources stocks in the news
OSMOND RESOURCES (ASX:OSM)
Osmond Resources has thrown down a wide net in search of the resources play that sticks since emerging on the bourse in 2022 with a string of nickel and copper targets across Western Victoria and South Australia’s famous Gawler Craton.
Earlier this year it made a quantum leap into lithium, picking up the Salt Wells lithium and borate project in Nevada from advanced boron developer 5E Advanced Materials (ASX:5EA).
On Wednesday morning the $6 million market capper has piled on a more than 40 per cent gain, via another agenda-shifting acquisition.
At 3pm (AEDT) it was still up more than 22 per cent.
OSM announced a staged earn-in agreement with Spain’s Global Mining Enterprises Pty Ltd and subsidiary Omnis Minera SL to launch headfirst into a European fertiliser project known as Iberian One.
The target here is potassium sulphate (let’s not call it sulphate of potash lest we revive ill memories of Aussie investors scorched by the promise of the salt), alumina and graphite.
It all fits into the theme of increasing Europe’s capacity to feed its own materials supply chains. The EU wants to extract 10 per cent of its critical minerals and undertake 40 per cent of its processing onshore by 2030. Currently? Nowhere near.
Graphite, in particular, is almost completely dominated by China, which recently announced export controls on battery grade graphite products.
Good timing for OSM, then, to announce its acquisition, which will include a $75,000 payment for six months of exclusive due diligence.
It can acquire a 100 per cent interest in the assets by issuing 65 million shares and 5 million options to the vendor, subject to a three stage earn-in.
Iberian One already contains 190 historic drill holes, with hits including 3.7m at 37.21 per cent aluminium oxide from 34m in hole SI-30, 2m at 36.1 per cent SO3 from 55.5m in SI-9, 3.3m at 19.93 per cent SO3 from 42m in SI-10, 11.3m at 4.8 per cent K2O from 38.7m in SI-3 and 8.1m at 21.62 per cent carbon from 32.5m in SM-26.
“This project represents an exciting opportunity for Osmond to fast-track the development of a European fertiliser and critical materials’ project,’ OSM executive director Andrew Shearer said. “With over 190 historic drill holes and two historical mines, the project is well delineated meaning we can fast track resource definition with a view to focusing on early mining studies.
“The earn-in terms are also very advantageous for shareholders with expenditure focused on project delivery and Osmond having sole discretion at each relevant milestone whether or not to progress.
“This has the potential to be transformative to Osmond and to deliver serious value to shareholders.”
A quick little bit of background here. Iberian One is located in a historic region know for its kaolin, iron and graphite mining between Madriguera and El Negredo in Spain’s Segovia Province, jut 100km north-northwest of the capital Madrid.
Spread over 50SQ km, the project area contains a mining permit at Becerril of 1.6sq km and the Grafenal Investigation Lease, covering 47.5sq km of turf, where exploration since the 1970s has focused on the potential to extract aluminium from alunite, a mix of aluminium and potassium sulphate.
Osmond’s main aim will be to hone in on the increasing global demand for SOP, normally produced through the emissions intensive Mannheim Process, to identify the potential to extract SOP from the alunite material at Iberian One.
Used in higher value crops like fruits, vegetables, nuts and coffee, SOP attracts a premium of $US200-300/t over the more commonly traded muriate of potash, which is the main feedstock for SOP via Mannheim.
But other projects have previously tapped alunite as a source of SOP, including a long-running operation in Azerbaijan and the Blawn Mountain project in Utah, which is currently at a DFS stage.
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TITANIUM SANDS (ASX:TSL)
Precious little going on today to really explain the 50 per cent run (as of 3pm Wednesday, AEDT) in $23 million capped penny stock Titanium Sands’ share price.
It’s still trying to work on a mining licence for its Mannar project in Sri Lanka’s northwest, where it holds five exploration licences on Mannar Island and the adjacent mainland.
The company has placed a $545 million NPV on the development of the heavy mineral sands project, where it announced written and binding land access agreements had been received from affected landowners in the priority zone, where it boasts 82Mt of high grade ore, housing and its initial processing plant back on November 6.
TSL says the Sri Lankan government’s Central Environment Authority has initiated environmental clearance for the project and completed an initial site visit.
The CEA’s sign-off is, according to TSL, the key step towards the issue of the project’s mining licence.
“The signing of the priority 1 zone land access agreements is another milestone achieved in the CEA process. Further CEA site visits are expected to address other outstanding milestones that will lead to completion of the process,” TSL MD James Searle said at the time.
A scoping study in May placed a $122 million capex bill on developing the first stage 4Mtpa project, which would have a mine life of 20 years with “potential for capital payback within two years”.
“The high quality ilmenite product is expected to find a ready market with titanium slag and sulphate route pigment producers in the Middle East, Korea, India, China and elsewhere,” the company said in May.
ODESSA MINERALS (ASX:ODE)
Speaking of a bit of nearology, Odessa Minerals has been surging up the bourse on Wednesday, trading huge volumes and collecting up to 43 per cent in gains after announcing — in ALL-CAPS mind you – STANDOUT LITHIUM PEGMATITE DRILL TARGETS AT YINNETHARRA.
OK, I know what all of those words mean on their own, but together?
This isn’t quite discovery territory, but Odessa has identified some anomalous lithium pegmatite trends based off 248 soil samples returning over 100ppm Li2O, with a 4km by 2km northwest trending anomaly at Robinson Bore with lithium and pathfinders like caesium, tantalum, beryllium, rubidium and bismuth ‘coincident to 16,500m of sub-cropping fractionated pegmatites, and another 2.7 by 2km Li-Cs-Ta-Be anomaly at the Eastern Pegmatite field.
There’s more smoke from its Yinnetharra project at the Lockier Range in WA’s Gascoyne, a nearology play for Delta Lithium’s (ASX:DLI) Yinnetharra, where a maiden resource for the initial Malinda prospect is due soon.
That’s in the form of rock chip samples at Mt Yaragner and a number of elevated lithium peg pathfinders in rock chips, with a peak Li2O result of 1911ppm and 22 samples above and beyond 500ppm. This all sets up an ALL-CAPS “MAIDEN DRILLING PROGRAMME”.
“Odessa’s exploration team have processed thousands of rock chip and soil samples from Lockier Range over the past 6 months and the results have now defined some exceptional lithium rich areas that will be targeted with our maiden drilling program,” exec director David Lenigas said.
“The company is actively engaging with native title holders to complete the necessary access permissions so that we can get the drills turning on the ground.
“We have excellent targets to drill at four locations, with a number of key indicators pointing to existence of extensive LCT systems, and drilling is the next phase of exploration planned here. At Robinson Bore alone, for example, we have identified a lithium trend of 4km that needs to be drilled.”
Lockier Range is located 25km west of Delta’s Yinnetharra, adjoins Tim Goyder’s Minerals 260’s (ASX:MI6) Aston lithium project and is 8.5km southwest of Delta’s Jameson prospect, the next major target the MinRes backed junior (which emerged from an Ellison backed $70 million cap raising today) will drill after Malinda.
Odessa Minerals was still up 25 per cent for the day at 3pm Wednesday.
ATLANTIC LITHIUM (ASX:A11)
The materials sector was up a party hardy 3 per cent on Wednesday morning and there were plenty of resources players surging, meaning we had a few options for this last slot.
We’ve decided to go with dual-listed Atlantic Lithium, which has punted a 33 pence a share offer from its major shareholder Assore International Holdings to buy up the company looking to deliver Ewoyaa, Ghana’s first lithium mine.
That’s 63c a share in Australian terms, well above Atlantic’s current share price of 49c but far below its 52-week high of 93c. It’s the latest M&A play in the lithium sector, which until now has largely focused on Australian assets in WA’s world-leading Pilbara and Goldfields spodumene districts.
But Ewoyaa has emerged as a prize for a bargain-hunting buyer after Atlantic had its mining lease granted last month for the project, that is set to be owned 50-50 between it and US lithium refining hopeful Piedmont Lithium (ASX:PLL).
According to a DFS in June the mine would produce some 3.6Mt of spodumene concentrate over a 12-year life, delivering $US316 million in EBITDA annually with a 19-month payback on its $US185 million capex.
The mine would have low all in sustaining costs of $US610/t if the study is to be believed, based off a resource of 35.3Mt at 1.25 per cent Li2O and what was then considered conservative pricing of $US1587/t.
However, spodumene prices have fallen hard in recent months, threatening those levels. Despite the pullback in lithium prices, premium M&A bids have flown in for companies sitting on substantial or potential lithium resources in recent months, with Liontown Resources, Essential Metals and Azure Minerals all recent takeover targets.
In rejecting the bid, Atlantic said the offer “undervalued” the company and was not in the best interests of shareholders “having regard to the near-term producer status of the project, the status of the pending investment from the Minerals Income Investment Fund and the positive near-term outlook for lithium project developers.”
South Africa’s Assore, taken private and delisted from the Johannesburg Stock Exchange in 2020, holds around a quarter of Atlantic, and also owns a similar stake in the Gemfields Group, industrial minerals producer Wonderstone, half of the Assmang manganese and iron ore business and the Dwarsrivier chrome mine.
Ghana’s Minerals Income Investment Fund announced a non-binding deal to tip $US32.9 million ($51.4 million) into Ewoyaa in September.
The market has responded positively to the goings-on, with Atlantic Lithium up more than 35 per cent at 3pm Wednesday.
This content first appeared on stockhead.com.au
At Stockhead, we tell it like it is. While Titanium Sands is a Stockhead advertiser, it did not sponsor this article.
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Originally published as Resources Top 5: Errawarra gives its neighbourhood another success story
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