Two Junior Miners up on ASX- RFR, NIC

S&P/ASX 200 settled the day’s trade at 6691.2 points, down by 0.1%, while the broader index All Ordinaries was also down at 6781.2, down 0.1%. However, S&P/ASX 200 Resources closed in green, settling 1.23% up at 5041.2 points.

Australia’s mining sector is currently riding, with the minerals fetching high and experiencing strong export volumes, especially iron ore and coal. It currently stands among top five global producers of key commodities including bauxite, uranium, lithium, iron ore, zinc, gold, coal, nickel, silver, copper and many more. With more than 300 operating mines producing more than 25 mineral commodities, Australia’s mining space is strongly positioned with one of the most favorable locations, garnering significant investor traction.

Let us look at 2 junior miners who soared high on ASX today on posting quarterly updates:

Rafaella Resources Limited

Junior miner Rafaella Resources Limited (ASX: RFR) released its outstanding quarterly activities updates to the market on 22 July 2019.  The company’s project portfolio includes Canada based McCleery (copper and cobalt) project and the Western Australia based Sandstone (gold) project.

The company has transformed from an explorer of Australian gold and copper to an advanced developer of tungsten in Spain by signing Binding HOA in May 2019 end for acquiring Galicia Tin & Tungsten, owner of the fully permitted brownfield Santa Comba project in north western Spain. As per the company, the Santa Comba project is an attractive tungsten opportunity with low entry costs, strong tin and tungsten fundamentals and committed project financing from a major consumer.

Transamine Trading SA has agreed to provide operational and financial assistance including buying 100% of tin and tungsten concentrate production from the Santa Comba project.

RFR intends to raise at least $2.6 million via equity route for the acquisition of tin project; Hong Kong based Transamine Holdings and Investments has shared its nod for ~ $1million financing, intending to further fund $500k on delivering positive feasibility study. Subject to a positive feasibility study, HC Starck will acquire the tungsten concentrate from Transamine Trading SA.

Subject to shareholder approval on 9 August 2019 meeting, RFR intends to begin the resource expansion drilling on Santa Comba to test the exploration target by Q3 CY19, to be followed by planned Feasibility study.

In its quarterly cashflow report, the company reported A$383k operating cash outflow with cash and cash equivalents of A$3.28 million at the quarter end. The company intends to spend A$765k on exploration and evaluation activities during next quarter.

RFR ended the day’s session at A$0.160, up by 10.345% as on 22 July 2019.

Nickel Mines Limited (ASX: NIC)

A listed entity, Nickel Mines Limited is concentrating on turning into a distinguished, economical nickel pig iron (NPI) producer. NPI is an important component utilised for manufacturing stainless steel.

On 22 July 2019, the company released a report on quarterly activities for the period ending 30 June 2019.

Quarterly Report Highlights

  • The commissioning on Hengjaya Nickel Project and ramp-up stage is over. The project has produced nickel units well beyond the nameplate capacity at costs lower than what was previously predicted. For June 2019 period, 4,386 tonnes nickel metal was generated with USD7,725 per tonne costs being incurred.
  • The Ranger Nickel Project began along with two kilns that have generated first NPI.
  • There was a rise in the ownership stake of the company in Ranger Nickel Project from the previously held 17 percent to 60 percent (as announced on 5 June 2019). Also, Shanghai Decent would give USD 80 million debt package to NIC. An AUD55 million at a price of AUD0.40 per share was raised via oversubscribed placement, via both new and old institutional investors. Besides, USD40 million of fully paid ordinary shares at AUD0.41 per share of NIC was issued to Shanghai Decent. As a result, Shanghai Decent’s ownership stake would rise to around 18.1 percent after the conclusion of the process (transaction approval and the issue of fresh shares to Shanghai Decent is dependent on the nod of the shareholder during the EGM to be held on 26 July 2019).
  • The initial redemption of finance from Hengjaya Nickel Project to Australia.

Rotary Kiln Electric Furnace (RKEF) Operations

Hengjaya Nickel Project: NIC and China based Tsinghshan, biggest stainless-steel manufacturer, during September 2017, entered into Collaboration and Subscription Agreement on the funding and building of 2 RKEF lines through Hengjaya Nickel to generate 150kt per year of NPI.

NIC has 60 percent stake in the Project; also, in addition to the solid initial quarter output during March 2019 quarter, June 2019 witnessed the ongoing smooth ramp-up in the project’s capacity. The present output, in the June quarter recorded the project generating- 4,386.3 tonnes of nickel metal at an average NPI grade of 14 percent at a weighted average cash cost of USD7,724 per tonne.

Hengjaya’s Commissioning Profile (Source: Company’s Report)

Ranger Nickel Project: During November last year, NIC notified a non-binding MoU with Shanghai Decent to procure ~80 percent stake in 2 further RKEF lines (Ranger Nickel). The Project has generated 311.2 tonnes of nickel metal at an average NPI grade of 12.6 percent during the June quarter. NIC’s attributable output stood at 52.9 tonnes.

Ranger Nickel’s Commissioning Profile (Source: Company’s Report)

On the financial front, NIC had USD49 million in cash, as noted on 30 June 2019.  Also, NIC has trade receivables of USD45.2 million along with the inventory of USD0.7 million.

The stock of NIC, by the end of the trading session on 22 July 2019, was trading at A$0.560, up by 4.673 percent from its prior closing price. The company has a market capitalisation of A$816.14 million with around 1.52 billion shares outstanding.


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