Sky’s no limit for Seckold’s NSW tin hunter

We’ve shares in the very best companies;

In tramways, tobacco and tin;

In brothels in Rio ‘Janeiro;

By god how the money rolls in.

It might well be time to sing the old campfire song with gusto, in relation to tin that is given the other investment options are not exactly de rigueur nowadays.

Identified way back in 2018 as the metal with the best exposure to new technologies (electric vehicles, advanced robotics, solar panels AI and IT) because of its electrical contact qualities in a study by MIT commissioned by Rio Tinto, the tin price has been on a bit of a tear this year.

Since the start of the year, when it was selling for $US25,700/t, tin has headed higher to $US31,594 for a gain of 25%. That compares with the 2023 average of $US25,938/t and the 2022 average of $US31,335/t.

From that it can be seen that the metal is as volatile as they come thanks to its relatively small market size and the surprises on the supply side that come out every now and then from the tin producers in China, Indonesia and Myanmar.

But the trend towards higher prices in the longer term, given the questions around an emerging supply deficit and tin’s strategic importance to the broad new energy thematic, is now clearly established.

That’s all good for the limited number of tin stocks on the ASX. On the whole, they have enjoyed a good year. One of the juniors that has put up its hand for attention lately is a little thing called Sky Metals, trading at 4c for a market cap of $24m.

It might be on the small side of things market cap-wise, but it has a heavyweight board. Veteran value creator in the resources sector Norm Seckold is chairman and another value creator, Rimas Kairaitis, is a non-exec director.

Seckold is currently best known for his chairmanship of the $3.5 billion Nickel Industries (ASX:NIC) and the $1.2 billion Alpha HPA (ASX:A4N) where Kairaitis is managing director.

They have given Sky’s chief executive Ollie Davies (a geologist ex Evolution and Alkane at their NSW operations) his head to return the historic Tallebung tin project in central NSW to production, growing it first with modern-day exploration tools, and then applying new-technology ore sorting techniques.

Davies has been kicking some goals of late, with not one but two potential game-changers emerging at Tallebung. It is why the stock has come up from the 3c a share level at the start of the month.

The first is on the exploration front where drilling has uncovered shallow and higher grade tin intersections in step-out holes to the south of the existing MRE of 15.6Mt at 0.15%. Best results reported earlier in the week included 7m at 0.58% (equivalent to about 2% copper) and 3m at 1.02% tin.

The results confirmed a coherent higher-grade zone of shallow mineralisation around the 11m at 1.02% tin hit (along with silver and tungsten counts) from the first of the step-outs to the south drilled three months ago.

As it is, the current the size of the MRE and the grade is a little underdone. But ongoing exploration looks to be well on its way of achieving an initial exploration target of 23Mt to 32Mt, with higher grade material for the early years of an operation being a game-changer.

The other game-changer is Tallebung being particularly amenable to TOMRA x-ray ore sorting technology.

Davies explained how it worked and its benefits on an investor call on Thursday.

“The X ray sensor senses how dense the material is. In our ore, the tin is in a mineral called cassiterite. It has a density of 7 tonnes per cubic metre, and the rest of the rock has a density of 2.7t per cubic metre,” he said.

“So this huge contrast is what the X rays measure and are then able to classify each rock. And the rocks that have tin in get fired off, and any other rocks drop off.

“That's where we see this 80% mass rejection and a five times increase in grade. But most recently, we've undertaken some test work, undergoing an aggressive sort where we do a high rejection sort, so any small bits of tin, we don't worry about.

“We just chase the big chunks of tin. And we've found with that that we actually get rid of about 98% of our mass. We increase the grade of the ore by 44 times, and we still get an 83% recovery of tin.

“So that's an exceptional result. It shows us that we can see a huge upgrade here which even further lowers our cost of production and makes us a very compelling case for future tin supply.”

As suggested, it is game-changing stuff.

Andean and Sun Silver

The North American market is of course where the weight of money is. And in the last couple of days, that market has sent a loud and clear message about ASX-listed silver stocks.

The market there can’t get enough of them, as evident in Andean Silver (ASL) apparently receiving as much in $60m in applications for the $25m placement it put away at $1.05 a share, a 10.3% discount to the last sale price but a 6.1% premium to the 15-day VWAP.

And before Andean there was Sun Silver (ASX:SS1) pulling in $13m from an $8m placement at 60c a share (a 10.43% discount to the 10-day VWAP) and $5m from a strategic cornerstone placement at 80c a share, a 10.3% premium to its last sale price.

Both stocks have taken off post the fund raisings, with Andean marching in Thursday’s market to $1.14 and Sun Silver to 87.5c in what is clearly a tilt by this market to the weight of money coming from North America for silver stocks.

The North American market has long had a love affair with silver where it is seen as the poor man’s alternative to gold with all of its haven/hedge qualities. Silver is same same but different to gold because of its dual investment/industrial metal status.

Its exposure to growth sectors like solar panels (it was number four of the metals impacted by the new technologies in the MIT report funded by Rio Tinto), and a supply deficit dragging down the last of the exchange held stockpiles, is adding to its investment appeal by the day.

The silver pice hit a decade high in May of $US32.50/oz and is currently $US30.34/oz. While down on the May high, the metal is comfortably ahead of is June half average of $US26/oz and the $US23/oz average in the previous corresponding period.

Just like gold, there are some crazy forecasts out there on where to next for silver. But at least it can be said that like gold, lower interest rates and a weaker US dollar are positives. The same factors are also positive for silver’s industrial use.