Latest news with #CycloneMetals
News.com.au
3 days ago
- Business
- News.com.au
Guy on Rocks: The monster of a project brewing at Iron Bear
Guy on Rocks' is a Stockhead series looking at the significant happenings of the resources market each week. Former geologist and experienced stockbroker Guy Le Page, director, and responsible executive at Perth-based financial services provider RM Corporate Finance, shares his high conviction views on the market and his 'hot stocks to watch'. This week on Guy on Rocks, host Guy Le Page dissects the major iron ore project brewing under Cyclone Metals in north Quebec. Tune in to hear more. While Cyclone Metals did not collaborate on this video, it is a Stockhead advertiser at the time of publishing. The views, information, or opinions expressed in this video are solely those of the author and do not represent the views of Stockhead. Stockhead has not provided, endorsed or otherwise assumed responsibility for any financial product advice contained in this article. Viewers should obtain independent advice based on their own circumstances before making any financial decisions.
News.com.au
3 days ago
- Business
- News.com.au
Bulk Buys: Calls for Aussie green iron grow, but we're missing the crucial ingredient
Green iron has become a major talking point in Australian political circles But the biggest handbrake on the nation-building industry could, ironically, be Australia's raw materials Cyclone Metals is blazing a trail in the space at Canada's Iron Bear project Recent weeks has seen a re-emergence of a long-running debate in Australian mining and the political landscape around it. Do we continue to dig it and ship it, selling our iron ore and coal to China in a network that makes us the quarry for the world's dominant steelmaker? Or can we revive a long crippled manufacturing sector at home, saving the world from an industry responsible for 8% of global carbon emissions by becoming producers of green iron at home. One barracker, the Rod Sims chaired Superpower Institute, claimed in a report last week that we could turn the $120bn iron ore export industry into a $386bn green iron export sector by 2060. They've called for government intervention to make it happen. That includes a production tax credit to supplement a proposed credit designed to make green hydrogen production $2/kg or below, equivalent to a carbon price of $170/t. Other recommendations are to support shared infrastructure, a green hydrogen certification scheme, grants that can support 15% of capital cost on top of an already announced $1bn green iron investment fund, up to $500m for projects producing 0.5Mt of steel or more a year, and a host of more general recommendations to support global carbon pricing initiatives. Industry backers The push for domestic green iron has come from business quarters as well, notably Andrew Forrest and his iron ore giant Fortescue (ASX:FMG), which is building a 1500tpa pilot plant at its green energy hub at Christmas Creek, at the same time as it dials back investments in its much touted hydrogen division amid a backdrop of economic uncertainty. Forrest himself has laid out warnings that Australia's iron ore exports could be at risk of losing their crown as ore grades slide and high-grade African deposits like Simandou come online. It's a curious position given Fortescue' own iron ore, sans its Iron Bridge magnetite mine, is among the lower grade products on the market, with some variations. Lower grade iron ore can work in concert with higher grade products in the blast furnaces that dominate the steel market in China and emerging player India, since it is typically blended to reach an optimal blend for the steel mill, based on market prices for steel and various inputs including iron ore and coal. China has stated its intention to reduce emissions from the steel sector, regularly promoting capacity swaps that involve the retirement of older factories for newer ones with better emissions profiles. It has largely done that via the development of electric arc furnace plants that need scrap steel to operate. There are some limitations there – recycled steel isn't great for high-end products like cars or high-tech equipment, while blast furnace lives remain relatively young. The plants, which use coal as the reductant to convert iron ore into crude steel, will remain in operation for decades yet. The easiest way to reduce steel emissions in billion tonne a year producer China is therefore higher iron ore grades with lower impurities, which require less coal and energy to produce the same steel tonne. To really curb emissions you need a direct reduced iron plant, which tends to operate with natural gas as the reducing agent. Theoretically, this process could be emissions free if that gas can be swapped out for hydrogen, something which has been studied for a while in Europe. But there's a bigger limitation. Australia has great stores of natural gas and abundant wind and solar resources to power a hypothetical hydrogen production process. However, it's the very specific grade of iron ore needed to produce DRI steel that will be the blocker. Australian iron. ore producers ship hematite, which has a high (but in the Pilbara's case declining) grade in the ground. But it is magnetite concentrates, which need to be beneficiated to deliver higher grades with lower impurities to the market, that are key for DRI. "With abundant high-grade iron ore resources and processing facilities, countries like Brazil, Canada and Sweden are better positioned for this transition. If it wants to remain competitive, Australia must focus on developing its magnetite iron ore sector," IEEFA energy finance analyst Sorough Basirat warned. "Over the past two decades, several large-scale concentrate plants have been launched to supply high-grade feedstock, along with two smaller-scale pelletising operations. Despite significant investment, however, these projects have often been plagued by delays, budget blowouts and operational setbacks. "Australia must act swiftly to remain competitive. Green iron is more critical to Australia than to any other country, given that iron ore is its leading export and that the country is the world's largest iron ore exporter. "The clock is ticking for Australia. Major miners must accelerate their efforts and adopt viable solutions quickly, or Australia risks missing out on this once-in-a-generation opportunity." Global potential That doesn't mean there aren't already Australian companies waking up to these changing tides. Cyclone Metals (ASX:CLE) this year sewed up a deal for Brazil's Vale, producer of around 60% of the iron ore globally suitable for DRI steelmaking. In recent times DR pellets assessed by Fastmarkets have nabbed a premium of around US$50/t over the prevailing price of 65% Fe iron ore, which itself runs a premium to the commonly quoted 62% Fe price – the latter is currently US$95.80/t. Cyclone Metals owns the 16Bt Iron Bear magnetite complex in Canada's Labrador Trough, one of the few places known to produce magnetite of the purity required to have DRI potential. With Vale in line to spend US$138m proving it up for an eventual 75% stake, it's one of the few deposits on the ASX with genuine potential to join the ~125Mtpa market for DR grade iron ore. "We've got a resource and we've done variability test work, so we've got results which for all intents and purposes is the easiest resource to upgrade to the DR grade that we're aware of," Cyclone CEO Paul Berend said. "(Rio Tinto's) IOC has got something a bit similar and they're about 250km from us, but they're much, much smaller in size and Vale is able to make DR pellets from much lower grade material from their southern system." That is proprietary to Vale, something Berend says shows developing DR grade iron ore projects in Australia is not outside the realm of possibility. But Iron Bear's mineralogy has given the project a leg up. Unlike blast furnaces, where impurities are extracted and separated in a slag, DRI plants need extremely low silica levels in their feedstocks. "When you see a silica floating below 1.5% you're getting into the zone. The Fe grade of a pellet is around 66% because you add things into pellets, you add bentonite and other stuff, binders," Berend said. "The Fe grade goes down, but it's misleading. It's the concentrate that you need to look at. "And even if you do get a concentrate, which has Fe and the silica which are the two things that you need to worry about, you still have to be able to get to the compression strength and the porosity, which not all orebodies, and enable you to do." Still an opportunity That doesn't mean Australia can't join the movement towards DRI. "Australia has a challenge with the ores, but has a huge advantage in terms of energy costs. So that's a very interesting situation for us to be in," Berend said, noting that Australia like other locations that host DR plants like the Middle East has its own sources of natural gas and renewable energy. "And I would invest very heavily in processing because there's lots and lots of iron ore in Australia, people haven't looked at the magnetite deposits in the way they should. And I'm sure there's clean magnetite deposits out there that we could find." Magnetite ores with higher grades and lower impurities will save emissions in traditional blast furnaces as well, Berend noted. "There's a challenge here Australia because if we don't interact together we're going to miss the boat for the next generation of ores," he said. "People get distracted by this siren of let's try and do zero carbon steel. It makes no difference to the footprint for the planet of steelmaking. "We can do green steel in Western Australia, but it will still be a very marginal thing for the next century or 50 years. And whilst it's interesting and we should do it, the bigger picture is decarbonise the steel industry by having cleaner raw material baskets, cleaner coal, cleaner iron ore. Immediate impact." Cyclone and Vale recently completed phase 4 of the met testwork at Iron Bear, producing 2.3t of DR grade concentrate at 71% Fe and 1.2% silica with low deleterious elements, along with 3.5t of blast furnace concentrate and, critically, 260kg of direct reduction pellets grading 68.4% Fe and 1.5% silica. A scoping study is due by the end of June. Elsewhere across the ASX there are a host of other magnetite hopefuls. In WA Gina Rinehart's Hancock Prospecting is still working on studies into a deposit in the Pilbara known as Hardey and in the Yilgarn in a partnership with Hawthorn Resources (ASX:HAW) and Indian-backed Legacy Iron Ore (ASX:LCY). In South Australia Magnetite Mines (ASX:MGT) continues to hold the Razorback project near the long-running but clouded SIMEC Mining operation. In the Pilbara and Mid West are the long-established Sino Iron and Karara Mining operations, while in Tasmania, Grange Resources (ASX:GRR) operates the small Savage River mine, where an underground development to extend its life is in the works. Falling iron ore prices appear to have scuttle the Southdown development proposed by Grange in WA's Great Southern region, while in Hawsons Iron (ASX:HIO) continues to plug away in NSW. In Africa, AKORA Resources (ASX:AKO) is targeting the development of its 2Mtpa Bekisopa project in Madagascar, which unlike most magnetite projects can be upgraded to grades similar to the iron ore produced in WA's Pilbara with simple beneficiation. That means it can be developed as a low-cost DSO operation, costing just US$60.6m to establish and with capital payback in 1.8 years according to a recent PFS. FID is expected in mid-2026 with the first shipment due in Q3 2027 if all goes to plan. MD Paul Bibby said on the release of the March PFS that further drilling could confirm additional mine life beyond the initial 6 years, with the long-term vision of building a high-grade concentrate operation beyond the initial DSO project. According to assessments of the port capacity at Toliara, minimal upgrades would be needed to support Bekisopa's anticipated Stage 2 green steel iron concentrate product handling of a nominal 5Mtpa rate. What about coal? While iron ore prices have been relatively stable this year in the face of weak steel industry profits and macroeconomic uncertainty, coal has suffered dearly. Prices of US$187/t for the top-grade Queensland coking coal don't seem too bad until you factor in the much higher cost base for incumbent miners since the pandemic, and the fact most producers don't actually realise that benchmark price. Thermal coal is even more sold off, down at around US$103/t after a couple of mild northern winters. Experts don't think met coal prices, in particular can stay so far into the cost curve forever. Speaking to Stockhead last week, Precision Funds Management's Dermot Woods said it was just a matter of time before the market moved for its key pick in the space, Whitehaven Coal (ASX:WHC). " If you take how hard it is to get a project off the ground in any commodity and then multiply that by all the green tape around getting a coal asset up anymore," he said. " We're sort of bemused that people aren't willing to pay more of an option premium for something like Whitehaven, which is making OK money at the moment. "If you can compare and contrast to lithium, which also isn't working at the moment, but the price is going down and down and the coal price is level. " People are pricing in this coal price forever, whereas they're pricing severe mean reversion back to sort of US$12-1500 ... on lithium. " I don't think that the average person understands how much costs have gone up in the coal space or what the real all in sustaining costs are there. " I don't think there's a lot of people making much money in coal at the moment, so it's a matter of time to – and you never know when these prices happen – but until coal runs really hard."
Yahoo
14-03-2025
- Business
- Yahoo
Here's Why We're Not Too Worried About Cyclone Metals' (ASX:CLE) Cash Burn Situation
We can readily understand why investors are attracted to unprofitable companies. For example, Cyclone Metals (ASX:CLE) shareholders have done very well over the last year, with the share price soaring by 155%. But while history lauds those rare successes, those that fail are often forgotten; who remembers So notwithstanding the buoyant share price, we think it's well worth asking whether Cyclone Metals' cash burn is too risky. For the purpose of this article, we'll define cash burn as the amount of cash the company is spending each year to fund its growth (also called its negative free cash flow). We'll start by comparing its cash burn with its cash reserves in order to calculate its cash runway. Check out our latest analysis for Cyclone Metals You can calculate a company's cash runway by dividing the amount of cash it has by the rate at which it is spending that cash. In December 2024, Cyclone Metals had AU$6.6m in cash, and was debt-free. In the last year, its cash burn was AU$3.7m. Therefore, from December 2024 it had roughly 21 months of cash runway. While that cash runway isn't too concerning, sensible holders would be peering into the distance, and considering what happens if the company runs out of cash. Depicted below, you can see how its cash holdings have changed over time. Whilst it's great to see that Cyclone Metals has already begun generating revenue from operations, last year it only produced AU$2.2k, so we don't think it is generating significant revenue, at this point. As a result, we think it's a bit early to focus on the revenue growth, so we'll limit ourselves to looking at how the cash burn is changing over time. With the cash burn rate up 16% in the last year, it seems that the company is ratcheting up investment in the business over time. However, the company's true cash runway will therefore be shorter than suggested above, if spending continues to increase. Admittedly, we're a bit cautious of Cyclone Metals due to its lack of significant operating revenues. So we'd generally prefer stocks from this list of stocks that have analysts forecasting growth. Given its cash burn trajectory, Cyclone Metals shareholders may wish to consider how easily it could raise more cash, despite its solid cash runway. Issuing new shares, or taking on debt, are the most common ways for a listed company to raise more money for its business. Many companies end up issuing new shares to fund future growth. By looking at a company's cash burn relative to its market capitalisation, we gain insight on how much shareholders would be diluted if the company needed to raise enough cash to cover another year's cash burn. Since it has a market capitalisation of AU$55m, Cyclone Metals' AU$3.7m in cash burn equates to about 6.7% of its market value. Given that is a rather small percentage, it would probably be really easy for the company to fund another year's growth by issuing some new shares to investors, or even by taking out a loan. On this analysis of Cyclone Metals' cash burn, we think its cash burn relative to its market cap was reassuring, while its increasing cash burn has us a bit worried. Considering all the factors discussed in this article, we're not overly concerned about the company's cash burn, although we do think shareholders should keep an eye on how it develops. On another note, we conducted an in-depth investigation of the company, and identified 5 warning signs for Cyclone Metals (4 can't be ignored!) that you should be aware of before investing here. Of course Cyclone Metals may not be the best stock to buy. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks with high insider ownership. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Sign in to access your portfolio
Yahoo
18-02-2025
- Business
- Yahoo
Vale, Cyclone Metals sign $138m development agreement for Canada's Iron Bear project
Australian miner Cyclone Metals has signed a binding commercial agreement with Brazilian mining giant Vale for a joint venture (JV) to advance the Iron Bear iron ore project in Canada. Under the agreement, Vale will provide up to $138m (789.36m reais) in funding in two phases and may earn a 75% interest in the project, with options to acquire the remaining stake or carry Cyclone to production without dilution. In the first phase, Vale will contribute $18m for preliminary studies and drilling, with the option to initiate the second phase upon completion. The second phase involves forming the Iron Bear JV, with Vale initially holding a 30% stake. Vale will provide funding of up to $120m for further development activities during this phase, potentially increasing its interest to 75% in the Iron Bear JV. Vale and Cyclone will each hold two board seats until Vale earns a 75% interest, after which Vale will nominate a majority of directors. Once the decision to mine is reached, Vale can either buy out Cyclone's remaining 25% interest at market value or arrange funding for Cyclone's share of production costs, allowing Cyclone to maintain its stake without dilution. Additionally, Vale has secured rights of first refusal and tag-along and drag-along rights concerning Cyclone's interest in the JV. Cyclone Metals CEO Paul Berend said: 'Project Iron Bear has now secured a clear pathway to get into production, and to become a world leader for the supply of low-cost and ultra-low carbon iron ore products. 'Vale dominates the rapidly growing market for low-carbon and direct reduction iron ore products and is an ideal partner and future operator for the Iron Bear project." The Iron Bear project has an iron ore mineral resource of 16.6 billion tonnes (bt) at 29.3% iron. It is strategically located near infrastructure including a heavy haul railway and the Pointe Noire export port. Pilot plant production at the project has already demonstrated high-quality direct reduction grade concentrate. The region around Iron Bear is well-supported, with nearby hydropower potential and established producers such as Champion Iron, Iron Ore Company of Canada, ArcelorMittal and Tata Steel contributing to a robust mining ecosystem. "Vale, Cyclone Metals sign $138m development agreement for Canada's Iron Bear project" was originally created and published by Mining Technology, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site.
