Jim's Mining Letter - May 14, 2024

Anglo American (AAL.L AAUKF), currently the subject of a combination proposal from BHP (BHP.AX BHP BHP.L), announced it is accelerating delivery of a strategy to unlock significant value, resulting in a radically simplified portfolio of world-class assets in copper, premium iron ore and crop nutrients. Anglo American owns 3 of the top 10 producing copper mines in South America, with outstanding resource endowments. They are said to be set for multiple decades of competitive production and growth, with a defined pathway to over 1 million tons a year of copper production. The company also is a focused producer of 100% premium iron ore, ideally suited to support steel decarbonisation, and has what it describes as attractive resource endowments in Brazil and South Africa. Regarding crop nutrients, Anglo will slow down development to support balance sheet deleveraging, while critical technical studies are completed in 2025, to then support syndication. Capex will be reduced to $200 million in 2025 and no capex in 2026, thus preserving long term value from a high quality asset with multi-generational resource scale. This is said to provide a compelling value proposition exclusively for Anglo American's shareholders. Steelmaking coal is to be divested and the company is currently responding to strong buyer interest, nickel heads for care and maintenance and divestment, Anglo American Platinum is to be demerged and De Beers is to be divested or demerged.

Lifezone Metals (LZM) announced an overview of the company’s achievements during the past quarter and the Q1 2024 unaudited financial summary. Briefly, Lifezone is advancing its Kabanga Nickel Project (believed to be one of the world’s largest and highest-grade undeveloped nickel sulfide deposits), located in north-west Tanzania, through a strategic partnership with the Government of Tanzania and BHP (BHP.AX BHP BHP.L), and has a partnership with Glencore (GLEN.L GLCNF) to recycle platinum, palladium and rhodium in the United States. Highlights for the quarter were: the two-phased development plan for Kabanga (an initial 1.7 million tonne per year plus a 1.7 million tonne per year Phase 2 expansion for a base case 3.4 million tonne per year underground mining operation, concentrator and Hydromet refinery); results from 11 exploration drillholes completed at the Safari Link Area, of which 7 holes intercepted high-grade nickel, copper and cobalt mineralization; receipt of the Kahama Hydromet Refinery Licence from the Government of Tanzania (Kahama will be located within a newly promulgated Special Economic Zone); high recoveries through metallurgical test work, supporting the design of the Kabanga Concentrator and Kahama Refinery; connection of the Kabanga Nickel Project to the Tanzanian national power grid via a 33-kilovolt line; a fully funded Phase 1 partnership with Glencore for pilot plant and feasibility study to recycle platinum, palladium and rhodium from spent automotive catalytic converters in the United States; and a $50 million non-brokered private placement of unsecured convertible debentures. The company reported a cash position of $79.6 million as at March 31, 2024, not including final $4.9 million proceeds from the convertible debenture placement received on April 1, 2024. Basic and diluted loss per share was $0.05 for Q1 2024, compared to basic and diluted loss per share of $0.10 in Q1 2023.

New Gold (NGD.TO NGD) announced that it has entered into an agreement relating to its strategic partnership with the Ontario Teachers’ pension plan at the New Afton Mine, whereby New Gold will increase its effective free cash flow interest in New Afton to 80.1%. On closing of the transaction, Ontario Teachers’ free cash flow interest in New Afton will be reduced from 46.0% to 19.9% in exchange for an upfront cash payment of $255 million from New Gold. New Gold will fund the cash payment with cash on hand, borrowings from its existing revolving credit facility and net proceeds from a concurrent bought deal equity financing of common shares of New Gold for approximately $150 million. New Gold has entered into an agreement with a syndicate of underwriters led by CIBC Capital Markets, pursuant to which the underwriters have agreed to purchase, on a bought deal basis, 87,300,000 common shares at a price of $1.72 per share. The company has granted the underwriters an over-allotment option, exercisable in whole or in part at any time at the offering price up to 30 days after closing of the offering, to purchase up to an additional 15% of the number of common shares issued pursuant to the offering to cover over-allotments.

CleanTech Lithium (CTL.L CTLHF) announced results from the processing of brine from Laguna Verde at the company’s direct lithium extraction pilot plant in Copiapó, Chile. The plant is said to have produced high quality eluate with low impurities. A lithium grade in feed brine of 196mg/L was concentrated to 710mg/L in the eluate, or a 3.6X concentration factor. Lithium adsorption recovery rate was 94%, with rejection rates over 99% for key contaminants calcium, magnesium, potassium, sodium and sulphate. An initial 200L of concentrated eluate has been sent to a third-party processor in North America for test work to set up the process plant for conversion of eluate into battery grade lithium carbonate. CTL will ship batches of 24m3 of the concentrated eluate for conversion with the first batch scheduled for later this month. The pilot plant is said to have demonstrated that it can operate at the designed capacity of concentrated eluate production sufficient for conversion to 1 tonne per month of battery grade lithium carbonate, placing CleanTech Lithium at the forefront of exploration companies in Chile and the wider sector, in its ability to make available large samples of lithium carbonate product to potential strategic and offtake partners seeking to start product qualification.

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