Resources Top 5: Is it time for copper stocks to bounce off the canvas?

Copper hits multi-month high as sold-down Cyprium ups resources at Nifty mine
Hammered 29Metals on a tear after Chinese smelters agree copper production cut to spark copper revival
PolarX, Kingsland, Caravel up on old news

Here are the biggest small cap resources winners in morning trade, Thursday March 14.

KINGSLAND MINERALS (ASX:KNG)

A second day of tasty gains for Kingsland Minerals (ASX:KNG), now up 33% since departing a trading halt to announce ‘Australia’s largest graphite deposit’.

It reckons Leliyn in the Northern Territory, where drilling only began in May last year via 51 RC and 11 diamond holes, contains an inferred JORC resource of 194.6Mt at 7.3% total graphitic content for 14.2Mt of graphite.

Just one fifth of a 20km graphitic schist has been tested to date, with stellar thick intercepts like 206m at 10% TGC, 285m at 6.1% TGC and 114m at 8% TGC highlighting the scale of the prize.

Graphite prices have been underwhelming in recent times, one of a suite of battery metals facing pressure in the aftermath of the electric vehicle boom.

But the need to secure new sources of the commodity, used in the anodes critical to lithium ion batteries, has never been more clear.

The market for natural graphite mining and, especially, processing is dominated by China, which introduced export controls of battery graphite products in a tit-for-tat trade war in December.

That could put a premium on sources outside of China, with the bulk of the ex-China supply in jurisdictions like southern Africa and Brazil.

Met testing so far has already shown the upgrading of Leliyn ore can recover 93-95% at grades of ~90% TGC, implying a marketable graphite concentrate of >94%.

Testwork is ongoing, with infill drilling to take place in the June quarter.

Kingsland MD Richard Maddocks said the testwork and resource estimate were ‘ important initial steps in developing Leliyn into an important critical minerals project in the Northern Territory.”

It came the same day as it was revealed a consortium of Federal Government agencies would provide fellow NT explorer Arafura Rare Earths (ASX:ARU) with $840m in loan funding to progress its Nolans rare earth mine in Australia’s north.

Kingsland Minerals (ASX:KNG) share price today

CARAVEL MINERALS (ASX:CVV)

The Fortescue (ASX:FMG) connection is growing stronger at copper hopeful Caravel Minerals, up over 16% the day after Greg Lilleyman came on board as a strategic advisor.

Led by Fortescue’s old director of projects Don Hyma, Caravel has brought one of Australia’s best known mine builders into the fold.

A former CEO of small iron ore miner Nathan River Resources, Lilleyman’s four year stint as COO at Fortescue ended abruptly amid blowouts in the multi-billion dollar Iron Bridge magnetite project in 2021.

But his 26 year stint at Rio Tinto (ASX:RIO) is remembered for the pioneering role he played bringing new technology into the Australian mining industry, including implementing remote operating centres and autonomous haulage for the world’s biggest iron ore miner.

“I have followed Caravel’s progress of the Project with great interest and am pleased to now have this opportunity to be involved at this important stage of final feasibility,” Lilleyman said.

“Caravel stands out against a handful of new copper projects globally, that has the near-term potential to become a major long-term producer. I am very excited to be working with the Caravel team to help move this Project towards production.”

Hyma was also a major player at Rio, having been vice president of projects at its Iron Ore Company of Canada and general manager of projects for its Pilbara iron ore division.

Technology is a core component of Caravel’s proposal for the 65,000tpa mine of the same name, envisaging the use of autonomous haulage and remote operations at the large scale copper development.

Final feasibility studies are under way.

“We are absolutely delighted that Greg has come on-board as a Strategic Advisor, bringing a wealth of experience and a unique skillset that will be hugely valuable to Caravel as we work towards the development of our flagship Caravel Copper Project in WA,” Hyma said.

“We are particularly excited by Greg’s significant experience in designing and implementing next-generation technologies at mine sites. These technologies are set to play a pivotal role in the Caravel Project development, with a core focus within the Caravel Board on maximising mining efficiencies, minimising costs, and maximising margins.”

“Greg also brings significant experience and strong contacts to support our project finance strategy as we move towards the completion of feasibility studies for the Caravel Project.”

The most recent capital cost floated for the development clocked in at $1.7 billion, paid back in 4.9 years at US$4/lb copper and all in sustaining costs of US$2.07/lb.

Caravel Minerals (ASX:CVV) share price today

POLARX (ASX:PXX)

(Up on no news)

Bupkis news to report on this suddenly moving Northern Star (ASX:NST) backed copper explorer, which owns the Caribou Dome project in the arctic climes of central Alaska.

The $35m tiddler boasts 7.2Mt of resources at 3.1% copper and 6.5g/t silver at Caribou Dome as well as 4Mt at 1.1% Cu, 1.6g/t gold and 12.6g/t Ag further north at Zackly along with a host of targets across a 35km strike.

An updated scoping study earlier this year suggested PXX could make a marketable concentrate grading 21.7% copper, delivering a pre-tax NPV of $625m and IRR of 73.9%, with life of mine EBITDA of $1.27b and annual free cash flow of $120m over 9.5 years.

Owner of the nearby Pogo mine, 10.6% holder NST re-upped its support of PXX by underwriting a ~$5m 1.2c a share 1-for-4 entitlement offer announced in December, intended to fund the completion of the acquisition of PXX’s 80% interest in Caribou Dome and exploration at the Alaska Range copper gold project and Humboldt Range gold project.

PolarX (ASX:PXX) share price today

CYPRIUM METALS (ASX:CYM)

There’s little doubt this one is a cautionary tale, a spooky story about ‘a friend of a friend of a friend’ of yours.

Cyprium has captured the dark side of the post-pandemic mining boom like few other ASX mining stocks.

Attempting to revive the Nifty copper mine iced by Metals X (ASX:MLX), Cyprium raised $90 million at 20c a share back in 2021 to complete the deal, which clocked in at a total cost of ~$60m.

Ill-fated some might say. After hitting five year highs of 37c in May that year, when copper hit an ATH upwards of US$10,700/t, those same shares are now fetching just 2.3c as of 11am AEDT this morn. It later sunk back to 2c, a gain of 5.3%.

Financing terms to restart the mine, discovered in WA’s Paterson Province in 1981 by Western Mining Corporation and producing 700,000t of copper from 1993 until its closure under MLX in 2019, were deemed unsatisfactory.

Since then it’s been a money pit. Two MDs — Barry Cahill and Clive Donner — have come and gone. Private equity mob Pacific Road Capital became the major 15.5% shareholder after a recap at 4c last year.

Pacific Road boss Matt Fifield is now executive chair. Could the old adage that it’s always darkest before the dawn ring true for ~$33m capped CYM?

Could a resource upgrade bring the beaten down copper hopeful back to life as copper prices hit an 11 month high of US$8927/t overnight?

CYM says there’s now 119Mt at 0.84% copper in its measured and indicated resource at Nifty for 1Mt.

That doesn’t include previously mined oxide ores, which include 17Mt of material at 0.53% Cu that could be amenable to heap leaching.

“Nifty is one of the largest non-operational copper projects in Australia, and the only brownfield project that can be reactivated in short order. This update is the result of a disciplined process run by the Cyprium team and MEC Mining. Our objective with this MRE scope was to ensure a strong foundation for our planning work, including pit optimisation and mining studies,” Fifield said, noting that a review of data had bolstered its measured and indicated resource from 80 to 95% of the mine’s inventory.

“This MRE is the basis for our workstreams to redevelop Nifty into a significant new copper mine.

“With a million tonnes of contained copper, this resource should support a large scale mine. This is the long-term opportunity at Nifty.”

Cyprium Metals (ASX:CYM) share price today

29METALS (ASX:29M)

Remember that 11 month copper price high we mentioned in part 1? That’s been pretty good news for 29Metals, the EMR Capital backed copper miner hopeful.

New CEO and former BHP man James Palmer is hoping to turn around what has been a leaky ship; quite literally, since its problems last year started with flooding in the Capricorn copper mine in Queensland.

At 48 cents, $330m capped 29M remains almost 27% down YTD, but has surged 90% in the past month as copper prices appear to have turned a corner.

The run came on the back of news China’s copper smelters had agreed to cut output. A rapid expansion of copper refining capacity in China paired with weak supply from South American mines led treatment charges to fall 76% in two months to US$11.20/t by Friday, the lowest level in over a decade.

One of a handful of pure play copper stocks on the ASX, 29M expects to produce 18,000-22,000t of copper, 54,000-61,000t zinc, 17,000-25,000oz gold and 700,000-1Moz of silver at its Golden Grove mine in WA this year, mostly above 2023 levels.

But it has withheld guidance on Capricorn due to uncertainty on tailings approvals required to extend milling beyond April.