Goyder hits back the way he knows best as DevEx unveils bumper uranium hits

Combining the hot uranium price and high-grade exploration hits for nuclear fuel has given Tim Goyder something to smile about.

His 16.2 per cent-owned DevEx (ASX: DEV) galloped 24% higher to 33.5c during the week after reporting some hits at its Nabarlek project in the Northern Territory’s famed region for big and high-grade uranium deposits (Ranger and Jabiluka), the Alligator River uranium province (ARUP).

When Goyder’s main investments in the resources space - Chalice Mining (ASX: CHN) and Liontown (ASX: LTR) - were running hot, his portfolio climbed to a $1 billion-plus value. Chalice and Liontown have come crashing back down to earth since so suffice to say the portfolio is now a fraction of what it was.

Still, Goyder’s long-held interest in uranium exploration in the ARUP through DevEx has being doing some repair work, albeit in a small way. His DevEx stake is now worth $23.5 million, up some $4.64 million for the week.

This week’s run-up for DevEx was in response to the release of assay results from its 2023 drilling program. In a high-grade province like the ARUP, the tradition has been to report hits in percentage terms.

But because there has been so little uranium exploration in the ARUP this century, investors are on a learning curve as to what a reported percentage hit means in pounds. To make things easier, DevEx is now reporting in both.

So the best of the latest hits of 5m at 0.54% uranium oxide from 257m from the East Zone at the U450 prospect to the northeast of the historic Nabarlek mine can be re-pitched as 5m at 11.9lbs of uranium oxide a tonne.

The drill intersection included a 3m section grading 0.82% or 18.08/lbs a tonne.

With the uranium price now sitting at $US101/lb (Numerco) – more than double its $43/lb level of 13 months ago – the beauty of high-grade uranium hits comes into view.

There is no surprise that DeVex’s exploration in and around the old Nabarlek mine is producing high hits. Discovered in 1970 and campaign mined over a couple of years from 1979, Nabarlek was a small but sweet operation, producing 24 million pounds from a pod grading a spectacular 1.84% (40.4/lbs) uranium oxide.

DevEx managing director Brendan Bradley put the latest results into context.

“These drilling results continue to clarify the open-ended geological controls on the uranium mineralisation at U40. Knowing high-grade uranium mineralisation continues to be defined well below the traditional unconformity provides a major shift in exploration scale and will be an immediate priority for us when we resume drilling this year,’’ Bradley said.

“Meanwhile, at Nabarlek North we have reported a series of significant assay results that are strongly suggestive of the presence of a Nabarlek-type structure nearby. Encouragingly, these results trend into the nearby Nabarlek mining lease,’’ he said.

DevEx is well funded to keep up the pace in the ARUP. It was holding cash of $21.8 million at the end of the December quarter.

Alliance Nickel:

Alliance Nickel (ASX: AXN) has given the WA nickel scene a much-needed boost by striking a (non-binding) offtake agreement with South Korean battery giant Samsung for its proposed NiWest nickel-cobalt project near Leonora.

The size of the potential offtake was not disclosed but it does follow on from last year’s strategic alliance with Big 3 US automaker Stellantis (Jeep, RAM, Chrysler, Maserati, Alfa Romeo, Fiat and Peugeot).

The Stellantis alliance envisaged the group would be taking 40% of NiWest’s future production, and it was cemented by Stellantis taking up a $15 million placement at a premium to the then market.

NiWest is of the laterite type like Glencore’s Murrin Murrin operation some 30km up the road. It is not built and was last priced at more than $880 million for a 25-year project life.

So there is a long way to go for Alliance. But the Stellantis/Samsung entry says a couple of important things.

The first is that there is clear interest in securing long-life nickel supplies with the right sort of ESG credentials. Sourcing material from the China-backed Indonesian industry with its dubious ESG credentials is not for everyone.

Then there is the preference to source material that complies with the US Inflation Reduction Act which Australian nickel does while Indonesian material doesn’t.

Alliance popped 36% higher to 4.1c on the Samsung news for a market cap of $30.5 million. A year ago it was a 10.5c stock, so the pain of the nickel price crash in response to surging Indonesian output is well and truly present.

But at least there is a growing recognition that the big resources of laterite deposits in WA owned by Alliance and others are of real interest to the world’s biggest battery and automakers for the long run, even if investors are turned off at the moment.

The EV and stationary batter revolution has not gone away.

Avebury:

A good day for WA laterites perhaps, but a bad day for the Avebury nickel mine near Zeehan in Tasmania.

A couple of hundred workers will be looking for a new job after receivers KordaMentha gave up on trying to sell the operation in the face of the slide in nickel prices, placing the mine in to care and maintenance.

Most recently owned by the once listed Malele Resources, Avebury was originally a CRA discovery in 1997. Junior company Allegiance took it on in 2002 and was later acquired by Zinifex (later merged with Oxiana to become OZ Minerals) for $852 million. Ouch.

It has been nothing but heartbreak for the variety of owners since. This space does not normally bother with unlisted companies/mining assets.

But what KordaMentha’s Scott Langdon had to say about the closure was interesting in a broader nickel market context.

“As a number of other Australian miners have recently experienced, without a structural change in the market to properly value low carbon, battery-grade nickel, local mine operations will continue to be disadvantaged compared to their competitors,” he said.

“It is disappointing that despite interest from global participants, current market conditions have presented challenges to finding the right path for a sale.”

That structural change is the rise of the Indonesian nickel industry with its dubious ESG credentials. Lower-carbon nickel producers need to capture a premium. Some say it will never happen.

But the interest of Stellantis/Samsung in Alliance’s NiWest’s project suggests the wheels are in motion.