WA1 unearth 200Mt inferred resource at Luni
Mining experts Argonaut downgrade price target to $25.45
The ‘high grade’ subset of the resource is larger but lower grade than Argonauts predictions
The owner of what could be Australia’s first niobium mine has unveiled an initial 200Mt resource, establishing the Luni deposit as a leading, global critical mineral discovery.
Niobium, a lightweight critical mineral used largely in steel to make it stronger, has been catapulted into investor consciousness once again by WA1 Resources (ASX:WA1) – the ones responsible for uncovering the mammoth Luni discovery in 2022.
The find at the time set shares in the stock alight, surging some 500%, on the possibility that WA1 may have unlocked a new critical mineral province in WA’s remote West Arunta region.
Fast forward only two years later, the company has gained some 7,816%, carried out more than 29,000m of drilling, and has gone from a $9m market cap stock to above $1b.
And today, well, it’s unveiled a maiden 200Mt inferred resource at 1% niobium with a significant, high-grade subset of 53Mt at 2.1% niobium.
“This resource confirms Luni as the most significant niobium discovery globally in more than 70 years in an entirely greenfield belt in the West Arunta,” WA1 managing director Paul Savich says.
“The shallow, high-grade nature of the deposit, coupled with the recently announced initial metallurgy results, indicates the deposit may be amenable to conventional processing techniques and reinforces Luni as a highly strategic critical mineral asset.”
On the radar of major world economies
Niobium is on the critical lists of several countries around the world including Japan, South Korea, the United States, the United Kingdom, India and the European Union, meaning it is vital for modern technologies and our national security, yet the supply chain is at risk.
Around 80% of global niobium supply comes from a single mine in Brazil, while the rest comes from a second Brazilian mine and another smaller mine in Canada.
Adding niobium to steel in cars is considered a fuel efficiency measure as it reduces the weight of a car.
Argonaut downgrades WA1 price target
But although it looks like WA1 could be in the running to bring on Australia’s first niobium mine, WA stockbroker and mining expert Argonaut has shaved off a $1 from its previous valuation to $25.45.
“The 200Mt global deposit is an impressive accumulation of potentially economic mineralisation,” Argonaut senior analyst George Ross says in the firm’s latest research note.
“In our view, a large tonnage global resource is great on paper but delineation of high-grade material with strong metallurgical performance remains the main game.
“We would expect future iterations of the MRE to include greater detail on high grade zones within the resource,” Ross writes.
“The ‘high-grade’ subset of the MRE is larger, but lower grade than our predicted ~34Mt grading 2.6% Nb2O5. We anticipate future updates of the resource will include a higher grade ‘high-hrade’ resource.
“We still expect a future development would process between one and two million tonnes of ore per annum but continued success from metallurgical test results will be key to derisking and the entry of a strategic corporate partner could drive further investor interest.”
Luni development scenario
The currently envisaged 2Mtpa throughput development could deliver strong returns including a NPV of $3bn, Argonaut says.
“With an assumed mineable inventory of 32Mt grading 2.5% Nb2O5 our proposed operation would operate for 17 years with plant commissioning from 2030,” Ross says.
“Mining and flotation processing would occur at site, high-value mineral concentrate would then be trucked to a pyrometallurgical refinery located at either Port Hedland or Karratha and concentrate would be leached and converted into ferroniobium for sale.
“Assuming a US$40/kg Nb2O5 (US$26/kg FeNb) price, the project would generate profits after tax of ~A$400M per annum.”
For the remainder of the year, WA1 plans to convert a portion of the current resource to the indicated category, targeting additional high-grade potential both laterally and at depth.
The post Monsters of Rock: WA1’s 200Mt Luni discovery is officially the most significant niobium find in +70 years appeared first on Stockhead.
