Bulk Buys: Iron ore prices defy China’s property woes and bring small players back to life

Iron ore prices remain stubbornly high, with even the collapse of Evergrande doing little to hurt sentiment
Could iron ore juniors be back in action if high prices remain stable?
Genmin seeks $30m for Gabon iron ore while Venture starts strategic review on potential to restart Tassie iron ore mine

There are growing signs of life emerging at the small end of the iron ore market, where stubborn prices are defying some of the worst conditions in China’s property market in decades.

Prices have held up above US$130/t so far this year and remained consistent since the final quarter of 2023 despite concerns from a number of analysts that they had run ahead of fundamentals.

And the sliding sentiment around battery metals could bring investors back to old world commodities as the volatility seen in iron ore three years ago looks to have transitioned into the new energy metals space.

That is giving more confidence to investors looking to support projects in the world’s largest metal market.

Even the liquidation of Chinese property giant Evergrande after three long years on thin ice has been met with a yawn, with prices for iron ore still above US$134/t in Singapore yesterday.

Citi this week said strengthening fundamentals and stimulus hopes provide upside to iron ore that could take the 62% Fe benchmark as high as US$150/t, levels not seen since early 2022.

Already this year, we’ve seen a Chinese-backed company make a $120 million play for two small Pilbara mines which could become a new 5Mtpa export hub (and make Mark Creasy a whole bundle of (more) cash).

Yesterday two more signs of life at the junior end emerged, in both Africa and Australia.

Genmin bolsters cash as it seeks return to trade

Operating in Africa is always a gamble, no matter what Robert Friedland says about the legitimacy of the so-called ‘African discount’.

Two Aussie iron ore players found that out when Gabon faced a Coup last year.

One was Fortescue (ASX:FMG), which maintained plans to export a tiny amount from its Belinga project last year despite the ousting of the Bongo family after more than five-and-a-half decades in power on August 30.

Junior Genmin (ASX:GEN), which unlike FMG has all its eggs in the Gabonese basket, has faced a somewhat tougher run.

It’s been suspended from trade since the Coup on account of the uncertainty around what is its only asset.

But those nerves were abated somewhat with news earlier this month a mining permit had been issued by Presidential Decree from General Brice Clotaire Oligui Nguema for its Baniaka project.

That will enable Genmin to produce iron ore from the permit for 20 years.

“It enables us to set a target date for the commencement of production of the end of Q2-2025, and in the next 6 months to finalise project build funding against a backdrop of a new government in Gabon actively promoting, and streamlining timeframes for new economic development, and a strong iron ore price environment that has traded in the range of US$105 to US$144 per tonne over the past six months and averaged US$136 per tonne over the past 45 days,” Ariti said of the ceremony to confirm the permit’s award on January 8.

After all that time it needs a bit of cash, which looks like it could come in the form of a raising led by MST Financial and Fosters Stockbroking.

According to a term sheet seen by Stockhead they were putting the feelers out yesterday for $30.1 million at 10c per share including a two-tranche placement to raise up to $15m and a pro-rata non-renounceable entitlement offer to raise up to $15.1m.

Bids for the placement were due by midday today, with $8.4m already committed to the placement by major shareholders and directors before the offer was sent out at a 44.7% discount to its pre-suspension price.

Genmin has announced MoUs with Chinese steelmakers Baowu, Jianlong Group and Hunan Valin, with a 2022 PFS suggesting it would cost around US$200 million to develop a mine with a nameplate capacity of 5Mtpa over an initial 10 year mine life.

A vestige of the 2021 boom

Back in the first half of 2021, when iron ore prices were stirred by record Chinese investment in steel production, they hit a record US$237/t.

It’s never been seen since, with environmental controls sinking demand so fast prices tumbled US$150 to just US$87/t in six months.

That saw small operations that opened as the boom emerged switch off just as fast.

But if iron ore prices can be more stable at current levels, there could yet be a future for them, even if it is one many investors and mineworkers will view with a skeptical eye.

One of those operations was the Riley iron ore mine in Tasmania, which made just one shipment consisting of 45,632t at 57.3% Fe iron ore out of Burnie before being placed on care and maintenance in September of that year.

Its owner Venture Minerals (ASX:VMS) has since focused its attention on critical minerals like tin, tungsten, nickel, PGEs and rare earths.

When VMS committed to restart Riley in 2019, it had reserves of 1.6Mt at 57% Fe. While that’s low grade, it also bears low impurities and in recent times weak margins for steelmakers have seen them preference lower grade ore, closing the gap to benchmark pricing on 2021 levels.

Venture yesterday announced it had tapped Argonaut PCF for a strategic review of the asset now that an offtake deal originally signed with Prosperity Steel for its development has run up.

“The strategic review will include an initial assessment of the project including a potential restart, joint venture or an asset sale, focussing on delivering near term value for the Company and our shareholders,” VMS said in a statement.

“Interest in the project from third parties including potential offtake and joint venture partners has increased in recent months and whilst the iron ore price remains strong, the Company will consider the full range of pathways to unlock the commercial value of the project for Venture shareholders.”

CODE COMPANY PRICE WEEK RETURN % MONTH RETURN % 6 MONTH RETURN % YEAR RETURN % MARKET CAP ACS Accent Resources NL 0.007 0% -13% -36% -72% $ 3,311,890.98 ADY Admiralty Resources. 0.007 17% 0% 17% 17% $ 9,125,054.07 AKO Akora Resources 0.125 -7% -17% -38% -24% $ 11,872,851.75 BCK Brockman Mining Ltd 0.028 12% 0% -10% 22% $ 259,846,499.67 BHP BHP Group Limited 47.05 3% -7% 3% -5% $ 237,571,833,816.69 CIA Champion Iron Ltd 8.14 6% -3% 39% 5% $ 4,192,676,777.33 CZR CZR Resources Ltd 0.315 -5% 50% 117% 34% $ 73,077,740.26 DRE Dreadnought Resources Ltd 0.021 -16% -30% -62% -81% $ 76,539,605.12 EFE Eastern Resources 0.007 0% -13% -42% -61% $ 8,693,625.23 CUF Cufe Ltd 0.022 38% 57% 47% -4% $ 21,776,134.94 FEX Fenix Resources Ltd 0.2675 1% -6% -14% -1% $ 187,546,838.40 FMG Fortescue Ltd 29.7 7% 2% 37% 32% $ 90,059,723,851.50 RHK Red Hawk Mining Ltd 0.62 2% 4% 40% 26% $ 110,423,610.93 GEN Genmin 0.18 0% 0% 0% -8% $ 81,275,982.12 GRR Grange Resources. 0.47 9% 1% -10% -55% $ 543,949,188.06 GWR GWR Group Ltd 0.094 12% -1% 22% 54% $ 28,909,498.95 HAV Havilah Resources 0.155 -3% -21% -34% -57% $ 50,662,273.60 HAW Hawthorn Resources 0.095 -3% 2% -27% -10% $ 30,151,405.17 HIO Hawsons Iron Ltd 0.036 -14% -23% -5% -61% $ 34,005,629.18 IRD Iron Road Ltd 0.066 -1% -1% -26% -40% $ 52,546,195.52 JNO Juno 0.09 -5% -18% 17% -13% $ 16,375,073.40 LCY Legacy Iron Ore 0.017 -6% 0% -11% 0% $ 108,916,045.38 MAG Magmatic Resrce Ltd 0.038 -3% -22% -49% -64% $ 11,310,633.53 MDX Mindax Limited 0.051 -4% -15% -23% -14% $ 104,323,497.78 MGT Magnetite Mines 0.265 -4% -15% -40% -45% $ 26,085,149.13 MGU Magnum Mining & Exp 0.018 -10% -36% -60% -31% $ 16,187,228.06 MGX Mount Gibson Iron 0.545 4% -1% 16% -20% $ 662,111,634.49 MIN Mineral Resources. 60.84 16% -13% -15% -34% $ 11,679,955,851.52 MIO Macarthur Minerals 0.13 -7% 0% -38% -26% $ 21,612,953.44 PFE Panteraminerals 0.058 16% 12% -23% -59% $ 7,559,485.29 PLG Pearlgullironlimited 0.032 7% 7% 7% 0% $ 5,931,711.91 RHI Red Hill Minerals 5.1 2% 2% 15% 9% $ 325,907,187.00 RIO Rio Tinto Limited 132.46 3% -2% 14% 4% $ 48,933,721,329.48 RLC Reedy Lagoon Corp. 0.005 0% 0% -35% -48% $ 2,478,162.93 CTN Catalina Resources 0.003 0% -33% -25% -67% $ 3,715,460.68 SRK Strike Resources 0.038 -10% -22% -43% -58% $ 11,066,250.00 SRN Surefire Rescs NL 0.01 11% 18% -33% -38% $ 21,594,735.94 TI1 Tombador Iron 0.014 0% 0% -33% -53% $ 30,218,753.22 TLM Talisman Mining 0.205 -13% -13% 24% 21% $ 35,780,866.31 VMS Venture Minerals 0.009 13% 29% -36% -68% $ 17,680,104.28 EQN Equinoxresources 0.28 -7% -7% 133% 75% $ 25,799,625.77 AMD Arrow Minerals 0.005 0% 0% 25% -38% $ 17,368,825.48

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Thermal coal prices take a tumble

Australian thermal coal prices have hit their lowest level in almost three years, with futures for next month’s delivery dropping to US$116.40/t.

It’s a massive reversion from the all time highs seen after Russia invaded Ukraine in 2022, when Newcastle High CV coal rose as high as US$450/t and above.

It’s come with a ramp up in output from India and China reducing demand for energy coal in Asia.

India’s coal output rose 10.75% YoY to 92.87Mt last month, though it is more reliant on external sources for metallurgical coal.

While thermal coal futures tumbled some 8.7% on Monday, premium hard coking coal remains resilient, paying US$332/t with steel production in China up 3.7% in mid-January to 2.1Mt a day across large steel mills.

CODE COMPANY PRICE WEEK RETURN % MONTH RETURN % 6 MONTH RETURN % YEAR RETURN % MARKET CAP NAE New Age Exploration 0.005 0% -17% 0% -38% $ 7,175,595.64 CKA Cokal Ltd 0.105 0% -13% -9% -50% $ 124,079,132.70 BCB Bowen Coal Limited 0.071 -8% -29% -34% -76% $ 190,545,496.41 SVG Savannah Goldfields 0.037 -3% -26% -58% -79% $ 9,447,597.26 GRX Greenx Metals Ltd 1.095 19% 19% 18% 42% $ 305,971,934.24 AKM Aspire Mining Ltd 0.22 10% 110% 182% 224% $ 116,756,506.55 AVM Advance Metals Ltd 0.037 3% -8% -74% -85% $ 1,483,143.30 YAL Yancoal Aust Ltd 5.89 8% 19% 15% 0% $ 7,817,001,467.04 NHC New Hope Corporation 5.26 0% 2% -2% -10% $ 4,505,638,023.12 TIG Tigers Realm Coal 0.006 20% 9% 20% -60% $ 65,333,511.84 SMR Stanmore Resources 3.95 -3% -1% 38% 6% $ 3,524,441,288.94 WHC Whitehaven Coal 8.26 4% 11% 17% -2% $ 7,002,348,562.08 BRL Bathurst Res Ltd. 0.9 -3% -6% -9% 10% $ 172,223,802.00 CRN Coronado Global Res 1.615 -1% -8% -3% -22% $ 2,782,913,191.80 JAL Jameson Resources 0.033 3% -27% -35% -65% $ 14,379,199.63 TER Terracom Ltd 0.355 -3% -15% -15% -59% $ 288,347,844.60 ATU Atrum Coal Ltd 0.004526 0% 0% 0% -38% $ 8,853,517.37 MCM Mc Mining Ltd 0.14 8% -7% -15% -62% $ 53,025,796.72 DBI Dalrymple Bay 2.78 1% 3% 0% 12% $ 1,378,217,434.26 AQC Auspaccoal Ltd 0.1 5% 0% -34% -57% $ 51,296,759.10

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