Latest on Mining Stocks – MMI, PMY

Two important mining stocks, Metro Mining Limited (ASX: MMI) and Pacifico Minerals Limited (ASX: PMY) have expertise in Bauxite and Lead segments, respectively. Let’s see how the recent updates in the companies are affecting their stock performances.

Metro Mining Limited (ASX: MMI)

Queensland-based Metro Mining Limited (ASX: MMI) is engaged in the exploration and mining of Bauxite around the Bauxite Hills mine. The company’s other assets include Bundi coal project in Surat Basin in Queensland and Mahar San Copper Project in Upper Myanmar.

The company recently published its June quarter activities report, highlighting Bauxite shipments of around 836k Wet Metric Tonnes (WMT) for the reported quarter, compared with 399k WMT in the previous corresponding period. The Bauxite mined during the period was reported at 880k WMT as compared to 445k WMT in the same period a year ago.

June Quarter Results (Source: Company’s Report)

The results reported were satisfactory, given the weather impact from ex Tropical Cyclone Trevor in early-April delayed the commencement of operations in 2019, and a disruption to shipping from late May to early June caused by unexpected large and sustained swell conditions.

MMI’s cash balance and receivables at the end of the June quarter was reported at $ 29.5 million as compared to $ 13.2 million in the previous quarter. During the period, the company had two fully drawn debt facilities, amounting to $ 42.1 million and including accrued interest. One debt facility worth $ 21.4 million is with Sprott Private Resources Lending. Principal repayments for the debt facility are scheduled to start in July 2019 at US$ 1.07 million per month until the final repayment date in August 2020. The second debt facility is worth $ 20.3 million with Ingatatus AG Pty Ltd, due for repayment in September 2020.

Bauxite Price Outlook: Despite the temporary closure of the Alumina refinery capacity in Shanxi province following environmental audits by Chinese authorities, the price and demand outlook for bauxite continued to be positive during the June quarter.

Chinese inland refineries have continued to diversify their bauxite supplies, with several of these refineries getting converted to the process imported product, which can be supported by the fact that China’s May bauxite imports exceeded 9.0 Mn WMT for the third consecutive month, bringing the first 5-month total to nearly 45 Mt.

Chinese Demand Outlook (Source: Company’s Report)

As per the company reports, Guinea is now the largest supplier to China, however 98% of exports are from the Chinese-controlled SMB-WAP. Australia’s supply is steadily growing, and reported at 29.6 Mt in 2018, which is a 4.1 Mt (16%) increase as compared to results in the previous year. As suppliers, Indonesia and Malaysia have become less relevant now. The 2019 Bauxite imports by China are estimated at 95.0 Mt.

MMI reported total revenue from customers at $ 93.23 million in 1HFY19.

Stock Performance:

On 18 July 2019, the stock of Metro Mining traded flat at $ 0.115. It made day’s high at $ 0.120 and day’s low at $ 0.115 with an average daily volume of 942,773. Its 52 weeks high was at $ 0.240 and 52 weeks low at $ 0.090. Its absolute return for the past 1 year, 6 months, and 3 months are -39.47%, -25.81%, and -23.33%, respectively. The company has a market capitalisation of ~$ 159.26 million and 1.38 billion outstanding shares.

Pacifico Minerals Limited (ASX: PMY)

Pacifico Minerals Limited (ASX: PMY) is an explorer of mineral tenements in Australia and Latin America. The company, on 17 July 2019, updated the market regarding the Phase I metallurgical testwork program results concerning Sorby Hills Lead Silver Zinc Project. The company holds a 75% stake in the project, which is located 50km northeast of Kununurra in Western Australia.

Mineral Resource Estimate (Source: Company’s report)

The positive result confirms that there is very high potential for good quality lead concentrate production, which is also expected to contain good amount of Silver (Ag) credits. The flotation recoveries were higher than the recent Pre-Feasibility Study assumptions, where rougher flotation testing with Sulphidisation indicates up to 96% Pb and 95% Ag recovery on Fresh composite (T70); and up to 91% Pb and 95% Ag recovery on Oxide composite (T76). Additionally, lead concentrate of grade 65% lead (Pb) can be produced as per the cleaner flotation testing.

Moreover, outstanding results from the heavy liquid separation testwork to upgrade the ores have depicted lead (Pb) losses lower than the 10% assumed in the recent Pre-Feasibility Study. As per the results, lead grade upgrade for fresh ore stands at 1.85x with lead losses of 3.3% at Specific Gravity 2.75; and 3.36x with lead losses of 6.6% at Specific Gravity 2.93, whereas the lead upgrade for oxide ore stands at 1.22x with lead losses of 4.1% at Specific Gravity 2.75; and 2.15x with lead losses of 9.1% at Specific Gravity 2.93. The initial ore sorting testwork has confirmed 1.4x and 1.3x upgrades for both Silver (Ag) and Lead (Pb), respectively, using XRT with lead losses of 2-3%. The additional testwork is expected to be carried out to support the Optimised Pre-Feasibility Study, with completion due by the end of Q4 2019.

Lead Outlook: As per the company reports, the global lead demand is forecast to grow by 1.2% to 11.87 Mn tonnes in 2019, driven by increased usage in Japan, India, and the Republic of Korea. It is expected that the global lead demand will grow at a CAGR of 6.74% between 2018 and 2022. The report also states that there may be ‘deficit’ for mined lead from 2023 without new mine supply.

Base Case Mined Lead Information (Source: Company’s Report)

PMY is exploring opportunities either to establish joint ventures or sell its non-core assets to deliver sustainable value to its customers and shareholders. Important ones are Borroloola West Joint Venture (Northern Territory), South Australia tenements and Colombian projects. The Borroloola West project is a joint venture project with Sandfire Resources NL (ASX: SFR) (PMY 51%, SFR 49%), in the McArthur Basin, and it has potential for Mt Isa style copper (Cu) – cobalt (Co) – zinc (Zn). The South Australia tenements have potential for prospective battery minerals such as cobalt, copper and manganese. The Colombian projects, which comprise Urrao, Natagaima, and Berrio projects, have high prospects for the discovery of economic copper (Cu) – gold (Au) deposits.

Stock Performance:

On 18 July 2019, the stock of Pacifico Minerals traded flat at $ 0.008 with a market capitalisation of ~$ 18.5 Mn. It made day’s high at $ 0.008 and day’s low at $ 0.008 with an average daily volume of 10,919,817. Its 52 weeks high was at $ 0.010 and 52 weeks low at $ 0.004. Its absolute return for the past 6 months, 3 months, and 1 month are 60.00%, 14.29%, and 14.29%, respectively.


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