Chris Ellison’s Mineral Resources is continuing its buying spree for WA’s battery metal assets, signing a deal to acquire lithium and base metals rights at Pantoro’s flagship project in the Goldfields.
Pantoro has agreed to divest its lithium, nickel, copper and cobalt rights on the Norseman gold project in the Eastern Goldfields for up to $60 million in cash plus royalties.
Under the deal, MinRes will pay $30m upfront, with the other half payable upon a final investment decision to commence a nickel, copper or cobalt mining operation.
Pantoro will also receive a 2 per cent net smelter royalty on all nickel, copper and cobalt recovered, as well as a 0.75 per cent ‘free on board’ lithium royalty.
These commodities are all inputs for lithium-ion batteries.
The Pantoro deal also marks another chapter in MinRes’ endeavour to hoover up WA lithium assets, which culminated in a flurry of activity last week.
Last Tuesday MinRes was confirmed to be behind a share raid to acquire a 19.85 per cent stake in Pilbara-focused lithium hopeful Wildcat Resources.
A day later Alita Resources announced to the Singapore stock exchange that the MinRes was one step closer to acquiring the Bald Hill mine in the Goldfields after tabling a $123.9m deposit. Alita said MinRes had repaid the secured debt owed by Alita — totalling $73.9m — and a $50m equity payment.
The Bald Hill mine is roughly a two hour drive from the Norseman project.
“We look forward to expanding our footprint in the Goldfields, the world’s most prospective lithium region,” a MinRes spokesman told The West Australian.
Last week MinRes also confirmed it acquired a 12.3 per cent stake in takeover target Azure Minerals, acquiring around $195m worth of shares since the start of the week. Azure is developing the Andover lithium and nickel-copper-cobalt project in the Pilbara.
Pantoro managing director Paul Cmrlec said the comapny’s deal with MinRes gives the gold miner strong immediate value for minerals which have not yet been identified in economic quantities at Norseman.
“Realisation of value from the assets allows Pantoro to continue to concentrate on production and exploration of its gold assets, with potential value from platinum group elements retained for future consideration,” Mr Cmrlec said.
Ord Minnett analyst Paul Kaner told clients in a research note that the deal “helps shore up Pantoro’s balance sheet” as the miner ramps up production at Norseman.
“This would reduce [Pantoro’s] net debt position from our forecast of $42m as of 31 December 2023 to $12m, and further reduce net debt to -$9.5m by 30 June 2024,” Mr Kaner said.
Ord Minnett has a 7¢ price target on Pantoro, with its share price currently trading at below 5¢
The Norseman gold project has faced significant operational hurdles, driving a share price decline of around 72 per cent over the past year for Pantoro.
Shares in Pantoro leapt 23 per cent on news of the MinRes deal, finishing Friday’s trade at 4.8¢.