Talk of major Rio copper find set to reignite interest in the Paterson

Plus, vanadium emerging as TNT for revitalised TNG
6th April 2018
Barry FitzGerald

It is not often that this column kicks off with an item on Rio Tinto, or any mining company from the big end of town for that matter.

But the convention is broken today for a good reason. It seems that Rio has made a copper discovery of note in Western Australia’s remote Paterson province.

The find is suspected to be roughly 150km north-west of Newcrest’s Telfer gold-copper mine (which has produced more than 10 million ounces of gold with a very handy copper kicker over the years) on ground wholly-owned by Rio.

Rio won’t comment but well-placed talk is that the mining giant thinks the find is promising enough to order up two diamond drill rigs and a supporting 40-man exploration camp so it can give the find a serious workover in coming months.

Adding to the buzz around the copper find are reports from the tenement watchers in that part of the world that Fortescue has just taken up a large ground position well to the north of the Rio find.

It would indeed be a wonderful thing if a premier (and committed) explorer like Rio has in fact made a copper discovery worth some serious attention in the 2018 exploration field season in the Paterson – a region long suspected to be hiding more sizeable deposits.

Apart from Telfer, the region is home to the Nifty copper and Kintyre uranium deposits, the O’Callaghans skarn-hosted tungsten deposit, the Magnum and Calibre gold and copper deposits, and the advanced Obelisk polymetallic prospect.

Without knowing early results from Rio’s copper find, it is impossible to say just how significant it can be. It is, clearly, very early days.

What can be said with more certainty is that talk of the Rio copper discovery – and its clear intent to give it serious attention in 2018 – is good news for the bunch of explorers that have pinned their names to the hunt for the next big discovery in the Paterson.

Should Rio eventually confirm a big copper discovery, the dark art of nearology will immediately throw the spotlight on Antipa Minerals (AZY), trading at 1.6c, and Sipa Resources (SRI), trading at 0.9c.

The Rio copper discovery in the north Paterson is understood to be to the west of tenements held by Antipa (which has Rio as a big spending joint venture partner on part of its tenement package) and Sipa.

Geophysical mapping does suggest a clear trend of distinctive anomalies in an arc from the Sipa ground, through Antipa’s, and on to the suggested Rio discovery site.

Time will tell what it all comes to. But there looks to enough meat on the Rio discovery talk for investors with an appetite for leveraged exploration exposure to call up the recently released 2018 exploration programs for Antipa and Sipa on their tenements. Fortescue presumably has.

TNG Limited

TNG’s managing director Paul Burton used to cut a somewhat lonely figure at various mining conferences around the country.

Sandwiched between presentations from gold companies and the hot-to-trot battery materials space, Burton struggled to get interest up in TNG’s flagship project, its Mount Peake vanadium-titanium-iron project, 230km north-west of Alice Springs.

Here after all was a junior company presenting itself as the developer of a world-scale mine costing $850 million to get to the starting stalls, and claiming a project NPV (at an 8% discount rate) of $4.7 billion no less.

“Interesting stuff,” was the response to Burton’s presentations, but it was the quick-and-breezy tales from the goldies and the battery boys which were much easier to digest at any given conference.

But the tide has turned big time for TNG and Burton thanks to the turnaround in vanadium and titanium markets, with vanadium in particular shooting the lights out as supply deficits for the stuff materialise.

Prices for vanadium pentoxide have tripled from $US10/kg in early 2016 to more than $US30/kg in response to China sprinkling more in to its steel to make construction steels lighter and stronger, and the excitement building around the role of Vanadium Redox Flow batteries in the world’s energy storage (and dispatch) revolution.

It has been the grid-scale battery applications (monster ones are currently being built in China and Japan) that have fired up investor interest.

While there is a bunch of Johnny-come-latelies to the vanadium space who are enjoying their moment in the sun, it has to be said that TNG has been slogging away at Mount Peake for the best part of 10 years now.

Burton has juiced up his conference presentations of late, laying claim to Mount Peake being the “next world-class vanadium producer’’ thanks to the years of hard slog to get it to this point.

And it seems that institutional investors kind of agree, with TNG recently pulling in $3.5 million from a placement of shares at 14.5c each. For a company with a $130 million market cap (at the last sale price of 17c) and an $850 million project to finance, the scale of the raising is a bit of a head scratcher.

But like most of the vanadium stocks on the ASX have been saying, institutional investors are actively seeking exposure to the vanadium thematic. TNG looks to have responded in a modest way to the requests it has been fielding.

The funding nevertheless comes at a busy time for TNG as it advances pre-development activities which include completion of final off-take arrangements, final engineering and design, and the all important funding package.

In a company-commissioned research report by Independent Investment Research senior analyst Mark Gordon, the importance of TNG securing titanium product off-take to support the project funding was highlighted.

Apart from the demand and price improvement in the titanium market helping TNG’s cause, Gordon reckons the development of a simplified titanium pigment concentrate production circuit should help “advance negotiations’ ‘for titanium off-take.

He has a 51c price target on the stock.

 

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