CONTENTS MARKET INSIGHTS Investors in their element as resources market matures

With demand for energy transition metals like lithium, nickel and copper remaining high, opportunity abounds for producers and investors alike

Welcome

RIU Explorers Conference open for business once again

JAXON CRABB

On behalf of the team at Vertical Events, we are thrilled to welcome delegates from across the nation to the 2023 RIU Explorers Conference – Australia’s pre-eminent forum for the junior resources sector.

This year marks 21 since the first RIU Explorers Conference in 2002, and the annual event at Fremantle’s Esplanade Hotel has grown and evolved in the years since.

The 2023 iteration of the RIU Explorers Conference looms as our biggest and best yet. For the first time in a few years the event will not be subject to strict COVID protocols, and with the Western Australian borders open, we are welcoming the return of interstate and overseas delegates to this must-attend event.

This freedom of movement coupled with an extremely strong resources investment environment driven by the global need for metals, and it’s little wonder Explorers is set to be as action-packed as ever.

Over three days starting February 14, delegates will hear from more than 90 presenters, mingle with 130 exhibitors, and gain valuable insight into junior companies at all stages of the mining exploration, development and production cycle.

Keynote speakers will provide invaluable insights into the resources space. This year’s speakers include Reg Spencer from Canaccord Genuity, Michael Boyce from Hamilton Locke, Nicholas Frappell from ABC Refinery, Daniel Hynes from ANZ, Jarra Smith from S&P Global Market Intelligence, Dr Andrew Scogings from CSA Global, and Stephen Wray from Noah’s Rule. So strong is the interest in this year’s Explorers conference that in addition to those already lined up for an appearance, more than 100 ASXlisted resources companies currently sit on the waitlist.

Unfortunately, not all will be able to participate at RIU Explorers 2023,

Market Insights

Companies

and 1600 delegates respectively. As Explorers 2023 draws nearer, we are on track to pass the 1800 delegate mark for the first time – an incredible result.

We invite you to find out more about the event through the pages of this guide and look forward to welcoming all delegates to the 2023 RIU Explorers Conference from February 14-16.

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The year opens into a more mature market phase where highly profitable producers of iron ore, lithium chemicals and nickel, including Fortescue (ASX:FMG), BHP, Hancock Prospecting, Mineral Resources (ASX:MIN) and IGO are active on the merger and acquisition front. This makes it an interesting time for small and mid-cap companies operating in prospective regions, like many of those set to appear at the RIU Explorers Conference this month. Following the popular resources narrative of the past few years, investment activity through 2023 is likely to remain focused on minerals that support energy transition away from fossil fuels. With this the case, lithium, graphite, nickel, copper, rare earth elements (REE), and counterintuitively, natural gas are all expected to be targeted commodities.

Copper To The Fore

Typically, rising commodity prices and exploration success drive investment dollars towards resource stocks. A flood of new capital following discovery boosts drilling activity, which inevitably leads to more exploration success, amplifying a self-fulfilling feedback loop that only halts when commodity pricing falls or exploration effort fails to deliver on early promise.

BHP set the ball rolling for copper with a timely $9.6 billion acquisition of OZ Minerals (ASX:OZL) in 2022. Meanwhile, the CSA copper mine’s new owner, Metals Acquisition Corp (ASX:MAC), will soon join Sandfire Resources (ASX:SFR) as the only significant ASX-listed pure copper producers.

SFR’s pending sale of the depleted DeGrussa copper project and risks associated with development of its deep, low-grade Motheo copper open pit operation in Botswana, along with capital spending on the recently acquired MATSA Cu-Zn mine in Spain, may dissuade some investors, meaning focus could naturally begin to move down the list of project developers in search of the next copper opportunity. With its OZL buy, BHP inherits an option to purchase Havilah Resources’ (ASX:HAV) large but low-grade Kalkaroo copper-gold project on South Australia’s Gawler Craton. This project has access to BHP’s birthplace, Broken Hill, and would offer synergies with its South Australian Cu-Au portfolio. MAC’s arrival in Cobar could also set the scene for further rationalisation of projects along the Lachlan Fold Belt. Aeris Resources (ASX:AIS), Aurelia Metals (ASX:AMI) and Peel Mining (ASX:PEX) may come into focus for potential consolidation as MAC tries to emulate Northern Star Resources’ (ASX:NST) growth model. The red metal will be a space to watch.

Lithium Market Consolidation

After a 10-fold price rise, spot pricing for lithium chemicals has begun to decline, while pricing for contracted lithium chemicals remains firm. Despite rising supply of lithium chemicals, the market is likely to remain in deficit for many years as battery demand expands.

Well-funded lithium producers are now active on the merger and acquisition front with more action likely as the year unfolds.

Pilbara Minerals (ASX:PLS) kicked things off with the acquisition of Altura, in 2021. IGO has also been active, selling its interest in the Tropicana gold project while buying a 49% interest in the Greenbushes lithium joint venture (TLEA), which has recently moved to diversify eastwards, adding the strategic Pioneer Dome lithium project north of Norseman to their portfolio with an agreed bid for underfunded Essential Metals (ASX:ESS). IGO has also expanded its nickel footprint via acquisition of Western Areas (ASX:WSA) and is now creeping up the share register of Mincor Resources (ASX:MCR).

GOLDEN TIMES AHEAD?

In the six years until mid-2020, the ASX Gold Index lifted fivefold. Star performer Northern Star achieved a 400-fold share price rise over a 10year run on the back of solid results from the drill bit, combined with value-accretive asset acquisitions and disposals that built a $13 billion gold producer from a penny stock. In the latter stages of this cycle in 2020/21, a Pilbara gold nugget mania attracted speculative capital, which resulted in De Grey Mining’s (ASX:DEG) multi-million-ounce Hemi gold discovery on its Mallina Gold project – highlighting the appetite for the precious metal when conditions are right. With prices seemingly on the rise as the wheel rolls into 2023, could we see a refreshed appetite for gold sector discovery and consolidation?

Rare Earth Action

The pace is also picking up for REE projects. Andrew Forrest’s Wyloo

“Well-funded lithium producers are now active on the merger and acquisition front with more action likely as the year unfolds”

Metals stumped up $150 million in the form of convertible notes to Hastings Technology Metals (ASX:HAS), supporting its move to gain access to downstream value adding. Not to be left out, Hancock Prospecting has taken a $60 million stake in Arafura Rare Earths (ASX:ARU).

MORE GAS PLEASE!

Perth Basin gas has become another hot topic as Hancock Energy and Strike Energy (ASX:STX) battle for control of West Erregulla JV partner, Warrego Energy (ASX:WGO), while Mineral Resources, which is bidding to take over its 20% partner in the Lockyer Deep gas field, Norwest Energy (ASX:NWE), wants low-cost energy to manufacture magnetite concentrate and upgrade lithium products.

Extreme gas pricing on Australia’s East Coast is likely to support further exploration in the Otway Basin, where Cooper Energy (ASX:COE), Beach Energy (ASX:BPT) and 3D Oil (ASX:TDO) have identified targets where success would support transition to rebuildable and battery-based power supply.

AWASH WITH M&A?

■ Miners see the benefit of project and corporate acquisition to access skills and growth opportunities in an environment of rising capital and operating costs.

■ Existing producers are flush with cash.

■ Copper, rare earth elements and possibly gold are set for a strong 2023, with natural gas also in demand.