FireFly super-charges Canadian copper hunt as China stimulus fuels optimism

Last week it was the ASX-listed silver stocks that found the market ready and willing to top up their coffers, against a backdrop of rising prices and a developing thematic around a looming supply deficit in response to growth in the metal’s new energy applications.

This week it was the turn of the copper stocks, pretty much for the same reasons.

Steve Parson’s FireFly Metals (ASX: FFM) led the way, pulling in $65 million from a placement at 95c a share or a 9.1% discount to the last sale price, with another $5 million to come in from a Share Purchase Plan at the same price.

At the other end of the scale, Coda Minerals (ASX: COD) is raising $2 million from a 1-for-6 entitlement issue at 7c per share, with attached free options on a 1-for-2 basis exercisable at 15c each, to keep up the pace of work on a scoping study on its Elizabeth Creek copper-cobalt project in South Australia.

In the case of FireFly, the raising was a bit of surprise given the company was already holding $40 million for resource growth, discovery and pre-development work at its Green Bay copper-gold project in Canada.

But Parsons wants to accelerate things at the project, where four drill rigs are operating (in addition to making the final payment for the acquisition). Projects with Green Bay’s growth potential are rare in the copper space, at a time when investors are lining up for increased exposure to the metal.

Hitting the button now for a big capital raise meets the ambitions and desires of both FireFly and investors, with the latter no doubt keen to participate ahead of next month’s resource upgrade at the project, and those to follow in quick fashion.

The copper price has been doing its bit recently to support capital raisings. After falling away from a record $US4.92/lb in May to below $US4/lb on economic growth concerns in China, the red metal has rebuilt to $US4.45/lb in response to Beijing’s stimulus package, unveiled this week.

That copper is within sight of its all-time highs is somewhat remarkable given expectations of modest supply surpluses this year and next.

But investors now positioning themselves in copper exploration/development stories like FireFly and Coda are banking on the fly-up in prices BHP and others anticipate is coming in the back third of the decade to encourage the new production needed to meet the demand coming from global electrification.

URANIUM:

Talking about electrification, ASX-uranium stocks have been on fire in recent days in response to a couple of supportive moves in the US highlighting nuclear power as the green solution to surging demand from electric vehicles/data centres/artificial intelligence/robotics and so on.

Microsoft has signed up to pay premium prices for power from a restart of a unit at the Three Mile Island nuclear power plant in Pennsylvania, and 14 of the world’s biggest banks and investment groups have pledged support for a tripling in nuclear power capacity by 2050 to ensure net zero is met.

In the past week, Paladin (ASX: PDN) has risen 15.8% to $11.45, and Boss (ASX: BOE) has jumped 19.5% to $3.32. The gains recover a good chunk of ground lost after spot uranium prices did not go on with things after reaching more than $US100/lb in January.

Prices averaged $US78.50/lb in August but, on a more positive note, the more representative contract price continued to climb to reach $US81/lb.

It is that price that matters in the long-run, and it is that price that is charting the growing acceptance of nuclear power’s role in meeting growing electricity demand from low emission sources.

SPARTAN (ASX: SPR)

No one uses exclamation marks in ASX announcements to the same extent that Spartan Resources’ (ASX: SPR) boss Simon Lawson does.

It goes to him being unashamedly excited by ongoing high-grade drilling results from Spartan’s Dalgaranga gold project in WA’s Murchison region.

The latest results confirmed that the newish Pepper discovery (438,100oz at 7.66g/t), adjacent to the February 2022 Never Never discovery (1.48Moz at 8.07g/t), is growing in scale.

Both deposits are within 2km of the 2.5Mtpa treatment plant, which was put on care and maintenance in November 2022, when making money from 1g/t dirt got too hard, and the bigger and higher-grade future based on Never Never was starting to emerge.

The latest drilling also demonstrated that drilling along a 6km corridor of interest was yielding new discoveries that point to Dalgaranga’s “belt-scale’’ potential for eventual multi-million million ounces of gold.

The market has got excited along with Lawson. What was a $110 million company at 12.5c a share in May last year is now valued by the market at $1.55 billion or $1.40 a share. That is up $200 million this month alone, with the rise in the gold price helping things along in addition to the ongoing exploration excitement.

Lawson’s excitement with the growing story at Dalgaranga (3Moz seems to be achievable, with the current global resource standing at 2.48Moz at 4.79g/t from Never Never, Pepper and other underground resource positions) is much to the chagrin of Ramelius (ASX: RMS) boss Mark Zeptner.

The $2.5 billion Ramelius owns 18.35% of Spartan, acquired in June/July at sub-$1 a share prices and would dearly love to incorporate Dalgaranga into its mainstay Mt Magnet hub, some 65km to the south-east.

But having missed the opportunity to act when Spartan was trading at less a $1 a share, Ramelius would now have to cough up at least $450 million more (ignoring a premium) than would have been the case back in June/July.

In his recent presentation to the Gold Forum Americas conference in Colorado, Zeptner gave a feel of what could be by including Dalgaranga in a slide demonstrating the ‘’hub-and-spoke’’ operating model of Mt Magnet.

But making Dalgaranga part of the centralised operating model would require $1.26 billion, plus a premium, for the 81.65% of Spartan not already owned. That seems too big a bite for Ramelius, leaving an agreed scrip merger as an alternative.

Having said that though, speculation previously reported here continues that Ramelius wanted to see confirmation of Dalgaranga’s high-grade belt potential before taking the plunge with a $2 billion or $1.85-a- share bid before the end of the year.

That upside has just been delivered by Lawson.

RAIDEN (ASX: RDN):

The company’s WA exploration focus switches in coming days to lithium, of all things.

In one of the most anticipated programs of recent times, Raiden (ASX: RDN) is kicking off an initial 5,000m drilling program at its Andover South project in the Pilbara.

The company – trading at 4.3c for a market cap of $120 million – has spent the best part of 12 months doing all of the things needed to be done to define priority targets at the project.

But now it’s down to the drill bit.

Interest in the project is due to its location adjacent and to the south of the Andover lithium discovery by Azure, the company that went from $100 million in February 2023 to the $1.7 billion company taken over in May this year by Chile’s SQM and Gina Rinehart.

Azure owned 60% of the discovery, with Mark Creasy owning 40%. On a 100% basis, the Azure takeover valued Andover at $2.8 billion. Remarkably, Azure never got to the stage of announcing a maiden resource estimate.

But clearly the find is of Tier-1 scale in both tonnage and grade.

First results from Raiden’s initial drill program are likely in mid-November. Not many sleeps now.