Join our daily newsletter At The Bell to receive exclusive market insights
Chalice Mining (ASX:CHN) has announced its execution of an MOU with Mitsubishi Corporation to develop the much-watched WA Gonneville PGE-nickel-copper-cobalt project in WA
The memorandum – which is non-binding – sees Chalice and Mitsubishi working together through an ongoing Pre-Feasibility Study (PFS) process “with the intention of forming a potential strategic partnership,” which would presumably see a binding MOU, all things in order.
Once the PFS is complete, there’ll be a 90 day period where Chalice and Mitsubishi have that conversation, Chalice wrote on Wednesday. With that said, the MOU is non-exclusive and allows Chalice to keep window shopping for partners.
Currently, the two companies intend to tap each others’ knowledgebase on geotechnicalities, financing, marketing and looking further down the road, offtake potential.
Worth noting, Chalice CEO Alex Dorsch’s language on Wednesday did suggest he’d like to team up with Mitsubishi for the long run.
“We are very pleased to have executed the MOU with Mitsubishi, which marks the beginning of a foundational, long-term relationship,” Dorsch said.
“Mitsubishi’s involvement in the Gonneville Project follows extensive due diligence and discussions over the past ~12 months and highlights the longer-term strategic nature and value of the Project as a potential large-scale, long-life and low-carbon source of critical minerals for Western markets.”
If anything could revive the intense enthusiasm traders once had for Gonneville, geopolitical-facing domestic critical mineral supply chain initiatives just could do the trick.
In late 2021, shares in Chalice Mining were close to $10.00. That’s what happens when you boast what was the second biggest nickel sulphide resource in Australia at the time – a claim it’s still in the running for.
This time a year ago, they were closer to $7; however, as of pre-trade on Wednesday July 3 2024, shares are now worth $1.51.
That brings Chalice’s 1Y declines to -75.4%. The culprit tanking sentiment was an orbital cost for the project cited around August of 2023 which put Gonneville’s price tag at anywhere from A$1.6B – A$2.3B. Not exactly a small discrepancy.
The company was also perceived by some to have had too rosy an outlook on metals prices. That appears to have been true, looking back from the midpoint of 2024, given we’ve seen nickel prices crash (though, not copper.) Lucky the project wasn’t exposed to lithium.
Another issue long-making this finance journalist, at least, risk-off: the project sits uncomfortably close to state forest, and, a largely well-off township with a significant cohort opposed to the project.
The headlong march towards a world where critical minerals come free of Chinese processing, however, could override those concerns. Overall CapEx still remains an issue, for now, though Canberra did recently throw just short of a billion at Arafura.
CHN last traded at $1.51.
