Monsters of Rock: Spartan sizzles with high-grade gold, big copper, heavy rare earths

Spartan Resources lifted almost 24% on a major Never Never gold upgrade, while Metals Acquisition delivers a copper record.

Spartan's felling hot, hot, hot. Pic: Getty Images

• Spartan Resources dazzles with resource upgrade at sizzling Dalgaranga gold project

• Metals Acquisition pulls off record quarter as grades lift at CSA copper mine

• Lynas flags interest in fresh heavy rare earths supply after sanctioning $25 million upgrade at Malaysian plant

How about that high-grade gold out at Spartan Resources (ASX:SPR)! After a +20% rise today – unusual for a company of its market cap – don't be surprised to see this one talked about for a while yet to come.

Ramelius Resources (ASX:RMS) decided to fork out ~$180 million to pick up an 18% stake on-market recently, something which looks like a prescient move.

The update today of the Dalgaranga resource to 2.48Moz and of the Never Never discovery to 1.49Moz at 8.07g/t, echoing the early resource upgrades five or so years ago of ASX 200 miner Bellevue Gold (ASX:BGL), will no doubt put an even steeper premium on this year's boom stock.

And it already boasts a 2.5Mtpa processing plant, suggesting its better placed than most junior and mid-tier developers to go it alone. How that figures into its long-term plans will be seen in future studies, with work on an exploration decline to access high grade ounces from depth and infill current resources more cost effectively already underway.

Reminder, this company was recapped only 18 months ago after multiple attempts to make a bulk, low grade mine at Dalgaranga near Mt Magnet work and narrowly avoided being swallowed whole by Westgold Resources (ASX:WGX). Sometimes you need a hard reset.

You can check out a few of CEO Simon Lawson's thoughts in our Resources Top ... column with Cam Drummond earlier today.

Copper record buoys Metals Acquisition

Metals Acquisition (ASX:MAC) produced at a rate of more than 60,000tpa in June at its CSA mine in Cobar, delivering a record copper quarter at the former Glencore project in NSW of 10,864t for the three months to June 30.

That was a 24% jump QoQ, with April output weighing after a planned maintenance shut.

At 4.2%, MAC dug into high grade stopes, helping ramp up output and curb costs at C1 of US$1.92/lb and total of US$2.62/lb, 11% and 17% down on the March quarter. Copper spot averaged US$4.42/lb in the quarter – hitting an all time high of almost US$11,000/t in May – with MAC making US$21m in free cash on a sales price of US$4.41/lb.

That brought its first half output to 19,650t at a total cash cost of $2.86/lb, with MAC reducing debt levels by 9% to US$231m and holding US$88.6m in the bank and paying a US$23.2m stamp duty bill.

While costs were lower with reduced development rates in the months of May and June, there are some reasonably big ticket items coming up with $42m to spend on a vent project, due to be completed by mid-2026, while development to a new mining area called 8430 FWD north has begun.

MAC thinks it can lift mining rates to 1.7Mtpa through the investment, something assisted by a deal to get rights for water held by nearby explorer Polymetals Resources (ASX:POL).

While grades have risen 20% in the past quarter, MAC CEO Mick McMullen suggested analysts should be guiding 3.7-3.8% Cu stope grades in the half ahead.

MAC shares were 2% higher at 4pm AEST.

Lynas flags heavy rare earths

Lynas Rare Earths (ASX:LYC) has placed a $25 million bill on the construction of a heavy rare earths circuit at its Malaysian refinery which could produce up to 1500t of a heavy rare earths compound from mid next year.

It would see the company break into a stronghold of the Chinese rare earths market, having previously been a large producer of light rare earths neodymium and praseodymium.

The key materials here are terbium and dysprosium, which like NdPr are used in the production of permanent magnets.

While NdPr average US$44/kg in China in June (minus local value added tax), dysprosium collected US$226/kg and terbium US$678/kg, with dysprosium in particular keeping its value better than its rare earth counterparts in the past year.

Lynas MD Amanda Lacaze flagged the miner was interested in acquiring more projects or inking supply deals with to access more heavies.

"At this stage we are considering feeding those facilities with material from Mt Weld, but we are also discussing with the various different projects which are focused on producing materials which have heavy rare earths in them about potential future supply," she said on a conference call today.

"As you know there are many projects (but) there's relatively little production outside South-East Asia at this stage with the exception of one firm in South America.

"We are actively engaged, we certainly would like to see additional material come into the market but if not we will feed from out Mt Weld deposit."

Lacaze said Lynas would be more sophisticated in mining by element rather than grade at Mt Weld to optimise its mix of heavy and light rare earths.

Improved sales volumes from 2310t to 3231t of rare earth oxides saw Lynas grow its revenue from $101.2m in the March quarter to $136.6m in the June quarter, its best outcome for the financial year.

Sales receipts of $117.5m were a marked improvement on the March quarter but below the $128.5m mark set in September last year. Lynas saw its average sale price fall from $43.8/kg to $42.3/kg, but weathered weak commodity pricing by timing sales to improve its basket price.

Lynas' production was lower, falling from 3545t REO to 2188t REO and 1724t NdPr to 1504t NdPr, maintenance affected, closing the quarter with $523.8m in cash (down QoQ from $616.7m).

But it delivered the first shipment of mixed rare earth carbonate from its overdue Kalgoorlie plant, with ramp up running 'in accordance with plan'.

The plant has run into a major conundrum with BHP (ASX:BHP) shutting its Kalgoorlie Nickel Smelter later this year, cutting off WA's top supplier of sulphuric acid, a key input for Lynas. It will work with BHP to source sulphuric acid under its existing contract up to 2027.

"We're working on it ... it's not as easy as our suphuric in Malaysia, which is literally over the back fence, but we are confident we can find a pathway through," Lacaze said.

Meanwhile, Lacaze flagged Lynas would continue to hold inventory, saying Lynas had the cash behind it now to avoid selling into a weak spot market.

The materials sector slid 0.45% today as iron ore, gold and copper prices slid, the latter threatening to break below US$100/t for the first time in months. Lynas ate a small 0.7% loss.

Making gains

Spartan Resources (ASX:SPR) (gold) +23.6%

Vulcan Energy Resources (ASX:VUL)  (lithium) +4.9%

NexGen Energy (ASX:NXG) (uranium) +3.1%

Metals Acquisition (ASX:MAC) (copper) +1.9%

Eating losses

WA1 Resources (ASX:WA1) (niobium) -3.6%

Emerald Resources (ASX:EMR)  (gold) -3.5%

Paladin Energy (ASX:PDN) (uranium) -3.1%

Red 5 (ASX:RED) (gold) -2.5%

At Stockhead, we tell it like it is. While Spartan Resources was a Stockhead advertiser at the time of writing, it did not sponsor this article.

Originally published as Monsters of Rock: Spartan sizzles with high-grade gold, big copper, heavy rare earths