Another Diggers & Dealers bash in Kalgoorlie has come and gone and there is no surprise in knowing that there was an overwhelming lithium flavour to it all.
Why, even all the company gongs handed out at the bash went to an all-lithium crew – Pilbara (PLS/Digger), Allkem (AKE/Dealer) and Patriot (PMT, Emerging).
All thoroughly deserved they were too. But of all the presentations made over the three days, what company fired up investor’s interest?
It was the one from Boss Energy (BOE) by Duncan Craib. The proof in the pudding was the uranium developer’s share price outperformance following Craib’s err…boss performance on the big stage at the Goldfields Arts Centre.
Craib spoke on Monday, the first day of the conference. On the Friday before when the 2600 conference delegates were still winding their way to Kalgoorlie, Boss was a $2.92 stock.
By the time everything was said and done in Kalgoorlie, and all the delegates were back in their Perth and Eastern states offices on Thursday morning nursing their heads, Boss had headed off to $3.35, making for a 14.7% gain on its pre-conference levels.
In essence, Craib served up a reminder that while lithium is rightly a hot investment thematic, so too is the uranium thematic, one which Boss is about to capitalise on with first production from its Honeymoon project in South Australia’s outback due before the end of the year.
Uranium currently fuels about 12% of the world’s electricity. And with growing support for nuclear power in a decarbonising world, the fuel has finally picked itself up from the ground after the fallout of the Fukushima accident in 2011.
Add the world’s decarbonising imperative to the turmoil in energy markets of all types caused by Russia’s invasion of Ukraine, and Craib reckons there is no doubt that the uranium price will take-off big-time in the next 1-3 years.
He told Diggers that that energy security post the Russian invasion had become a priority around the world. “Supply is under threat like we haven’t seen since the early 1970s,” Craib said.
“Demand is growing and so too is the supply deficit. Inventories are now significantly lower than they were in the early 2000s. The US on average has about two years of cover, and when we look across the EU, there is about 36 months of cover.
“Those inventories need to be replenished. The tide has turned.
“There is very little inventory around and new production is needed in the near-term. With an emphasis on security, fuel buyers around the world are looking for uranium from geopolitical stable countries, friendly nations such as Australia.
“And here we are, in that sort of sweet spot.’’
As it is, uranium has been one of the strongest performing commodities in the past couple of years, rising from $US29.63/lb at the start of CY2021 to $US56/lb of late. In past uranium price booms, the price has demonstrated a potential to go crazy.
“There is no doubt in my mind that the price is going to overshoot in response to this currently forecast supply deficit,” Craib said.
As he said earlier, pending first production from Honeymoon puts Boss in a sweet spot.
It is actually a restart of the operation after its mothballing in 2014 when uranium prices really were in the dumps.
The in-situ leach project though is coming back with an ion-exchange (IX) enhancement over the solvent extraction method previously used.
It is not novel to the uranium industry and allows Honeymoon’s annual production to be increased to 2.25Mlbs (export permits allow for an eventual increase to 3.3Mlbs annually) at lower operating costs (cash costs of less than $US20/lb and AISC of $US32/lb are forecast).
The low-capex restart is fully funded and because of its $200m in cash and 1.25mlb uranium inventory position (acquired a couple of years back at about $US30/lb) Craib has been able to avoid contracting too early in a rising market.
“In the last 6-12 months we have been constantly inundated with fuel buyers wanting to enter in to off-market contracts,” he said.
“I am confident that we will be announcing contracts before we enter production by the end of this year. We have been resisting, however, the temptation to do so in the lead up this point because we have a strong belief that uranium prices would rise. And they have.”
There was nothing much new from the long list of lithium presenters at Diggers.
That left discussion over coffee on the Goldfields Arts Centre forecourt and in various waterholes around town to focus on which explorer might next go for a lithium-fuelled run, or what was in the lithium IPO pipeline.
In the latter category, operatives in attendance reported back on the pending $5m IPO of Pioneer Lithium.
It is out of the Robert Martin stable of lithium juniors (Critical Resources, Battery Age and Equinox Resources) that have headed off to Quebec and Ontario in Canada. They also have former senior Pilbara geologists in common.
They are all at various stages along the exploration value curve and could well make for an interesting combination with some serious critical mass further down the track.
Pioneer is at the start of its journey at its flagship Root Lake project in north-west Ontario, which is as strategic as they come given it sits between two known lithium deposits held by the $153m and ASX-listed Green Technology Metals (GT1).
Historical drilling at Root Lake returned coarse grained spodumene-in-pegmatite grading up to 2.8%. Confirmation Root Lake has the mineral resource potential that GT1’s ground is demonstrating will come in a maiden drilling program planned for as soon as October.
Interesting to see that Macquarie recently initiated on Meteoric (MEI) with its world-class rare earths ionic-clay discovery in Brazil.
Macquarie set a 12-month price target of 45c. That compares with Thursdays’ price of 22.5c.
It is not known if a copy of the Macquarie note has been sighted by Amanda Lacaze, the boss of ASX rare earths king Lynas (LYC).
But it should be given that at Diggers, Lacaze again mentioned the company’s interest in adding a heavy rare earths-rich clay deposit to complement Lynas’ comparatively light rare earths Mt Weld hard-rock deposit in WA.
Lacaze told Stockhead’s Reuben Adams that Lynas was open to partnering, offtake agreements, and acquisitions in the clay space. The guess is that Meteoric would be too.