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Chalice Mining Ltd shares skyrocketed in 2020 – here’s why

Snapshot

The company discovered significant zones of shallow high-grade platinum group elements (PGEs), nickel, copper, cobalt and gold in a new mineral province just outside Perth.

Chalice Mining Ltd - Chalice Mining Ltd shares skyrocketed in 2020 – here’s why

Quick facts: Chalice Mining Ltd

Price: 4.64 AUD

ASX:CHN
Market: ASX
Market Cap: $1.59 billion
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Chalice Mining Ltd (ASX:CHN) (OTCQB:CGMLF) was one of the ASX’s most successful companies in 2020 – its shares rose as much as 1,671 per cent across the year, and have ticked even higher less than a fortnight into 2021.

This is largely due to its 100%-owned Julimar Nickel-Copper-PGE Project in Western Australia, where earlier in 2020 it made a nickel-copper-PGE discovery in an emerging new resources province about an hour northeast of Perth.

The company was active even as things slowed down in the lead-up to Christmas – it launched a A$100 million placement targeting institutional investors, followed by a A$10 million share purchase plan for retail investors, both of which commanded significant interest.

In early December it changed its name to Chalice Mining Limited, to better reflect the multi-element discovery it made at Julimar.

Approval for new exploration areas

Just four days into the new year Chalice received approval to conduct initial non-ground-disturbing exploration activities within a previously untouched area of the greater Julimar Complex, immediately north of the discovery.

The new area hosts very large airborne EM anomalies, which have the potential to expand the discovery considerably.

Managing director Alex Dorsch said: “This access approval has been eagerly anticipated and is highly significant, as it allows us to finally start to understand the true scale of the Julimar discovery.

“We are pleased to be working together with the various state government departments and agencies to facilitate the first-ever ground-based nickel-copper-PGE exploration programs in the area.”

But it’s only the beginning

Dorsch said the company was well-placed to deliver further value for shareholders.

“The demand for our capital raise has been incredibly strong, and this is testament to the scale and quality of the discovery at Julimar, but also the potential of the region to become a new world-class base and precious metals mineral province,” he said.

“This rapid growth trajectory reflects the significance and ever-increasing scale of the Julimar discovery, as well as our rapid and successful de-risking activities on the project.”

Chalice’s market cap now sits at approximately A$1.45 billion, its share price last week hit a new record high of A$4.61 and, at the end of 2020, the company had circa A$140 million in cash and investments.

Gonneville Intrusion

A 6-rig drill program is underway across a ~1.6-kilometre-long section of the 26-kilometre-long Julimar Complex, called the Gonneville Intrusion. This intrusion is host to multiple zones of high-grade PGE, nickel, copper, cobalt and gold mineralisation.

The very first drill hole in March 2020 returned a staggering 33 metres at 6.5 g/t palladium, 0.7 g/t platinum, 0.1 g/t gold, 1.6% nickel, 0.7% copper and 0.1% cobalt from 44 metres depth.

Mineralised core from the Julimar project.

Another intersection in a deeper zone returned 25.7 metres at 3.9 g/t palladium, 2.3 g/t platinum, 0.7 g/t gold, 0.2% nickel, 0.8% copper and 0.02% cobalt from 418.7 metres depth.

Referring to Gonneville, Dorsch said “It is shaping up as a world-class discovery of critical metals on its own. Drill results have continued to surprise on the upside as our drill coverage has expanded.”

“We are also scoping out potential new high-grade zones, and we look forward to releasing more results.

“We remain on track to deliver a maiden mineral resource estimate at Gonneville by the middle of the year.”

Managing director Alex Dorsch.

Ongoing success

In November 2020 the company announced it had intersected its sixth and seventh high-grade zones of PGE-nickel-copper-cobalt-gold at the Gonneville Intrusion which continue to grow the Julimar discovery into a globally significant deposit. None of the seven high-grade zones are yet to be closed off.

On top of that, a high-grade PGE-gold oxide zone has been defined over an area of 1,700 metres by up to 750 metres and this is open to the north.

“Numerous growth opportunities”

Dorsch said: “The Gonneville PGE-nickel-copper-cobalt-gold discovery continues to grow on multiple fronts, with another round of exceptional drill results extending the known high-grade zones, defining new zones and further reinforcing the numerous growth opportunities across the project.

“Given the width and grade of the drill results we are continuing to see over a very large area, the scale of the Gonneville Intrusion itself, and the significant growth potential beyond the limits of the current resource drilling, it is clear that Julimar is emerging as a globally significant deposit of critical metals in Western Australia.”

Recently, Chalice secured three private properties at the Julimar project, covering a combined area of 945 hectares. One of these properties covers around 85 per cent of the Gonneville Intrusion.

Securing title to these properties is an indication of the confidence Chalice has in Julimar becoming a mining operation.

PGEs in demand

The platinum group elements are six precious metals clustered together in the periodic table - platinum, palladium, rhodium, iridium, osmium and ruthenium.

PGEs have many desirable properties and as such have a wide variety of applications. Most notably, they are used as auto-catalysts (pollution control devices for vehicles), but are also used in jewellery, electronics and hydrogen fuel cells.

Palladium is very rare and is currently one of the most valuable precious metals, with an acute supply shortage driving prices to a recent record high of US$2,856/ounce in February 2020. The current spot price is approximately US$2,400/ounce.

And while the Julimar Project has garnered the most headlines this year, it is far from Chalice’s only prospect.

Nine rigs active

There are nine rigs drilling in total across Chalice’s key projects, which also includes a >5,000 square kilometre holding in the exciting Victorian Goldfields.

This level of greenfield exploration activity is quite remarkable and speaks to the determination of the company to make significant scale discoveries and cement its status as one of the leading explorers in Australia.

- Daniel Paproth

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