Mining Insights: three critical metals shares

Building the next generation of technology requires enormous amounts of critical minerals. At this year’s Mining Indaba in Cape Town, we spoke to a trio of companies supplying the metals that make modern technology possible.

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Ron Heeks, managing director, Larvotto Resources: We’re a very young company but we’re rapidly moving into production of gold antimony deposit. We’ll be doing that in five months, so we will supply 7% of the world’s antimony, one of the most critical minerals on the planet, and we look forward to doing that. So, there’s going to be a lot of news coming out as we produce gold, antimony and tungsten.

We’ve been focused on that project and it’s something we can talk about ad infinitum but in two years we’ve taken it from acquisition, no resources, no reserves, to having 1.7 million ounces at 7.5 grams in resource.

Our first reserve came out, our DFS (definitive feasibility study) came out and we financed the project six weeks after the DFS came out. The highlights were the grade, our reserve grade, which is very heavily diluted, is still 6.5 grams per tonne gold equivalent, and we work in gold equivalent, and that sits at about 1.5% antimony, which is a very high-grade antimony deposit. 

We inherited what we now say is probably about A$400 million worth of infrastructure, plus we could move quickly into production and we paid A$3 million for that.

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Chris Showalter, managing director, Lifezone Metals:Lifezone Metals Ltd (NYSE:LZM), so we are a public listed company on the New York Stock Exchange. We’re a combination of a flagship project called the Kabanga Nickel project based in Tanzania, and that’s really our core priority project we’re developing right now.

But we also blend that in with hydromet technology where we have over 120 global patents on hydrometallurgical processing capability. So, we’re kind of a hybrid between having specific projects, but then also we have the expertise in the technology side where we look to use that as a competitive advantage when we look to target and develop some of these critical metals deposits that really are focused on ensuring there’s additional supply chain security for a number of countries, specifically the Western Mineral Security Partnership.

For Lifezone, I think the exciting part of our project right now is we are right on the cusp of going into that FID (final investment decision) process. We have delivered a bankable positive DFS,  and so that’s kept us busy over the past few years, but now we’re on the cusp of really bringing in the next round of funding to really start the construction and really see Kabanga finally go into development, and that’s a critical period for us, but it’s seeing Kabanga go through this long process and really now be on the verge of going into full development.

The flagship project, Kabanga, obviously, is our key priority right now, but in parallel we have a joint venture partnership with Glencore where we are finishing all the R&D and piloting for a hydromet recycling facility that would be recycling catalytic converters from the US market.

We’ve applied for some funding partnerships with the Department of Energy and what we are looking to do is really bring to final refined product platinum, palladium and rhodium within the US, and rhodium is very high on the critical metals list.

So, this is one of the solutions for identifying how can domestic production be achieved. And it’s not only going to be through mining, but recycling is a big priority. So, we’re delivering one of these solutions for the US government domestically in North America. And this is a partnership with Glencore (LSE:GLEN), and it’s something we’re actually quite excited about. So, it’s going to be a really good story.

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Andre Liebenberg, CEO Yellow Cake:Yellow Cake Ordinary Shares (LSE:YCA) was set up to provide investors with the opportunity to invest in the uranium commodity. It’s not a commodity that you can easily own yourself. There are only three storage accounts that you can go to set up a storage account. It’s very expensive, a lot of KYC (know your customer) involved. So, we set up this entity that allows investors to invest in our share price, which has a direct look-through to the uranium price.

If you look at our balance sheet, on a pro-forma basis £23 million of uranium and some cash, so it’s a physically backed structure that allows investors to invest in the uranium commodity.

It’s designed to create as little as possible leakage and as much as possible exposure to the underlying commodity. If we look at it in the shorter time frame, the back end of last year we were trading at quite big discounts to net asset value and then we tripped over into January and in the second week suddenly we popped into premium, and have been consistently at a premium, and even got as high as a 10% premium.

But I guess you’ve seen the run-up in gold, silver and copper, and uranium’s had a strong run up. For me, it’s remarkable how quickly sentiment can change in the space.

If you take a longer time frame, I guess really what happened during the course of last year is that the fundamentals that we’ve been talking about for quite some time started to play out.

We’ve seen a number of projects restart and most of them have had hiccups. Then, really, the last quarter of last year we saw significant contracting taking place. We’ve talked about  the utilities having to contract for quite a long time. I think total volumes for last year were around £120 million, with £70 million done in October, November, December. So, significant contracting, and perhaps the utilities are starting to see the supply side.

Everyone’s talking about supply side constraints. The two price reporters, TradeTech and UxC, have been saying that for a while, but the banks have also been coming out with reports. Canaccord came out this week with their report, UBS last week, and we’ve seen other banks really highlighting supply side fragility, and I think that’s starting to get embedded.

The other things that happened early this year, President Trump announced this critical minerals bill, there was the $2 billion of finance, plus another $10 billion of US EXIM (the Export-Import Bank of the United States) finance, so that’s $12 billion.

At the same time, the Sprott Physical Trust also tripped into positive territory and started issuing units and raised quite a lot of money, and started buying uranium. So, we saw the uranium price go from the mid-80s, bang, up to 100 very quickly. It’s now back to the mid-late 80s. So, it ran too fast, too quickly. But it seems to be well underpinned in the mid-80s price range.