Suitors Reportedly Prepare to Lob Bids for Chalice
Suitors lining up for $2.3 billion nickel explorer and developer Chalice Mining Limited (ASX:CHN) are preparing to lob their final offers by August 21, sources say. The company's main project is its Julimar nickel and copper project in Western Australia's Avon region, 70km northeast of Perth. The group's Gonneville deposit is one of the world's nickel sulphide discoveries. It reported a net loss of $33.7 million for the six months to December and is looking for a backer to fund its development through Standard Chartered. But some believe the process could result in an acquisition of the company as a whole. Sources say Chalice is open to several options including a partial sale of about 20% of the group, or 100%. The king maker is Founding Chairman Tim Goyder, who owns just over 8% of the business. He has proved a tough negotiator on price, based on the experience of Albemarle, which has been courting Liontown. Mr. Goyder, who stepped down as the Chairman of Chalice Mining in 2021, also owns 15% of Liontown. Albemarle, the world's lithium producer, offered $5.5 billion for that company, currently worth $6 billion, but that was rejected. Anglo American plc (LSE:AAL), South32 Limited (ASX:S32), BHP Group Limited (ASX:BHP) and Rio Tinto Limited are expected to be lining up for Chalice's platinum metals assets. Some experts say the big players will be obliged to look at the asset, simply given the size of the resource, but the project is not yet in production and will take a long time from an environment point of view. The world's platinum producer, Sibanye Stillwater Limited (JSE:SSW), could also be in the mix.
Surprised IGO isn't on the list. Anglo seems a logical fit given their ground is nearby.
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When I saw West Yilgarn I thought they joined up with West Yilgarn Resources (WYX). See prev straw.
Instead it is Northam Resources and their 1600 sq km holding east of Gonneville
Northam has been trying to do an IPO recently as October 2022. Bit of a surprise they have not made progress. Looks like they may be throwing in the towel.
Would be interesting to see what could be uncovered in that 1600 km2 area.
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Continually impressed by Capital IQ Pro. Only found out tonight how to overlay claims between 2 companies Western Yilgarn and Chalice which is very useful.
Bit of competition here. Chalice in Red. Western Yilgarn in Blue
While Western Yilgarn has applied for E70/5111, Chalice has applied for E70/6255 which overlaps the former when I remove Western.
Western Yilgarn claims that E70/5111 has some lithium but won't know until they drill also implying E70/6255 has that too. Even then the application is still pending so a risk there for Western Yilgarn than Chalice.
Another note is I think Chalice is delaying the study because they know the resource can only get bigger. I think releasing a study now will undervalue the project. On the other hand it is disappointing we don't know the economics yet.
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Capital raising for retail fell short of target.
But good to see directors including the CEO Alex Dorsch putting some money into the raising. That is better than some of the other recent raisings where the CEO did not subscribe to any shares (but will not mention any names here for now).
Source: marketindex
On another note, UBS put a sell rating on CHN citing concerns on palladium demand forecasts
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Raising more cash at $7.30. Timed the raising perfectly with the share price at current levels.
This time opening the raise also to existing investors.
Not doubting that the deposit is "unique" but would be good to see some PFS numbers soon.
So SPP seems to be fair value here. If they used the lower of the VWAP or $7.30 between now and 19 may then that would be better.
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Old news but Chalice released news of 50% increase in resource.
Share price has held up surprisingly well for now.
When are we going to see the FS released?
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Chalice Mining up 13% today on promising discovery and a big boost to my real life portfolio.
Given the skepticism towards mining shares overall and especially with the Julimar polymetallic deposits approaching orphan stage on the Lausanne curve curve, I never thought Chalice would suddenly outperform my non mining holdings today.
Although I sold some in Strawman, I haven't sold any in real life although thinking about it now
- Significant PGE-dominant sulphide mineralisation intersected in initial drilling at the greenfield Hooley Prospect, ~5km north of the current Gonneville Resource at the 100%-owned Julimar Ni-Cu-PGE Project in WA.
- Sulphide mineralisation intersected in all five reconnaissance holes from three drill sites over ~1.8km of strike length, with significant assay results including
- 69m @ 0.9g/t 3E, 0.1% Ni, 0.1% Cu, 0.01% Co (0.6% NiEq) from 312m (HD050), incl:
- 3.4m @ 11.5g/t 3E, 0.1% Ni, 0.2% Cu, 0.01% Co (4.0% NiEq) from 370.6m; and
- 4.4m @ 0.5g/t 3E, 0.3% Ni, 0.2% Cu, 0.03% Co (0.7% NiEq) from 317m.
- 40m @ 1.6g/t 3E, 0.2% Ni, 0.2% Cu, 0.02% Co (0.9% NiEq) from 142m (HD055), incl:
- 28m @ 2.1g/t 3E, 0.2% Ni, 0.3% Cu, 0.02% Co (1.1% NiEq) from 151m
- 14m @ 1.2g/t 3E, 0.1% Ni, 0.1% Cu, 0.01% Co (0.6% NiEq) from 224m (HD055), incl:
- 5.3m @ 1.9g/t 3E, 0.2% Ni, 0.2% Cu, 0.02% Co (1.0% NiEq) from 225m
- 12m @ 1.2g/t 3E, 0.1% Ni, 0.1% Cu, 0.01% Co (0.6% NiEq) from 283m (HD050), incl:
- 6m @ 1.8g/t 3E, 0.1% Ni, 0.2% Cu, 0.01% Co (0.9% NiEq) from 283m (HD050).
- 5.7m @ 1.1g/t 3E, 0.1% Ni, 0.2% Cu, 0.01% Co (0.7% NiEq) from 255.3m (HD047), incl:
- 3.7m @ 1.3g/t 3E, 0.2% Ni, 0.2% Cu, 0.01% Co (0.8% NiEq) from 255.3m.
- Assays are pending for a further nine holes and downhole EM is currently underway, after which a more definitive interpretation can be made regarding the scale and significance of the newly-discovered mineralisation.
- The mineralised intervals have varying precious metal ratios and assays are pending for all other PGEs (rhodium, iridium and osmium).
- Whilst the geology and mineralisation at Hooley is quite variable, the high-grade mineralisation encountered so far in initial reconnaissance drilling is considered highly encouraging and highlights the prospectivity of this section of the Julimar Complex.
- Wide-spaced reconnaissance and step-out drilling is continuing at the Hooley, Dampier and Hartog Prospects over ~10km of strike length
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New mineralised zone intersected at Dampier Target - 10km north of Gonneville Deposit
Shares spiked this morning at one stage up over 10% to $4.35 but now settled to $4.
Dampier target is situated right in the Julimar State Forest.
As I'm not a geologist, I can't comment on the results. But I did find the price movements "interesting" when price spiked early before settling back down to the open. Given the drill target was well within the forest boundary, not to mention the downtrend from the ATH, the selling off in the afternoon didn't surprise me.
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Putting out a note that Chalice has now fallen below the $3.75 capital raising price in December 2020.
Basically bargain territory right now for anyone brave enough to punt on a developer in an environment full of macro headwinds. I didn't participate in the capital raise.
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After an anticlimax with environmental groups, Chalice secured approvals for drilling of Hartog in the Julimar State forest
https://www.afr.com/companies/mining/chalice-wins-permission-to-drill-in-wa-state-forest-20220519-p5amvy
Shares rallied 19%
For those that want background information on the opposition groups and a map of Hartog, there is a great article in AFR (behind a paywall)
https://www.afr.com/companies/mining/chalice-asks-opponents-to-see-the-forest-for-the-trees-20220502-p5ahop
Further drilling on the farmland since November has suggested the resource contains even more platinum, palladium, nickel and copper than was understood in November.
But the big hope for Chalice shareholders – and the big concern for opponents such as Kinsella – lies in what a helicopter found just six kilometres north of Gonneville in September 2020.
As it surveyed terrain inside the forest boundary for the type of magnetic signals that bounce off underground metal deposits, the helicopter received signals from several spots inside the forest boundary.
One of those signals was “significantly stronger” than Gonneville had produced when it was the subject of aerial surveys, and the location of that signal has since been dubbed “Hartog”.
The magnetic signals picked up by aerial surveys do not guarantee the presence of valuable minerals, but where there is smoke there is often fire, and Hartog is now one of Australia’s most eagerly anticipated exploration targets.
The investment community swiftly formed the view that if Chalice could get inside the forest to drill Hartog, it would likely prove that Gonneville was the tip of an iceberg whose richest parts were buried inside the forest boundary.
It’s a hypothesis that has turned pre-revenue Chalice into a $2.5 billion company and elevated its managing director Alex Dorsch onto the Financial Review Young Rich List.
But it’s also a hypothesis that will remain unproven until Hartog is drilled.
“We don’t know if anything is there yet.” stressed Dorsch, when asked about Hartog.
“I know the public is quick to associate exploration effort with mining and typically the mind goes straight to big, open-cut type of mining.
“We are many years away from knowing what sort of mineralisation is there, if any, as well as what style of mining it would be.”
The WA government has given Chalice permission to drill on the existing dirt tracks that firefighters and recreational users have carved through the forest.
But those tracks are nowhere near Hartog, nor the other targets identified by the helicopter surveys.
Permission to leave the tracks and push through the forest vegetation to drill the centre of the Hartog target looked to have been secured by Chalice in January, but the WA government permit has since been held up by five appeals from members of the public.
Community appeals
One of those five appeals was lodged by the Avon and Hills Mining Awareness Group, a community activist group that was formed to fight bauxite mining proponents in the region long before Chalice found Gonneville.
Kinsella was not one of the five, preferring to fight the project through other means.
Dorsch says it is not yet possible to judge whether the economic and environmental benefits of mining within the forest would justify the environmental impacts of the project, because the size and contents of the geology remains a mystery.
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