Lycaon price surges on heritage tick for WA niobium drilling

Lycaon Resources’ share price has surged 31 per cent to 31.5c on significant trading volume after it secured the crucial heritage clearance that will enable a maiden drilling campaign at its Stansmore niobium-rare earths project in Western Australia’s West Arunta region.

The company now has a clear line of sight for its long-awaited drilling campaign at the site and hopes to start plunging into its West Arunta ground by the end of next month. It will use a $180,000 exploration incentive scheme grant (EIS) from the WA Government to fund the program that will include its Volt and Ions targets within the same tenement package.

Recent modelling by geophysical expert Terry Hoschke has identified the Stansmore anomaly as a promising pipelike magnetic structure almost 500m in diameter. According to management, the geophysical results are not unlike other notable niobium discoveries made recently in the region by WA1 Resources and Encounter Resources.

It also bears the same geological hallmarks to other significant discoveries such as the 8 million-ounce Havieron gold-copper deposit and the massive Ernest Henry copper-gold mine.

We are extremely eager for the upcoming maiden drill program as we become the first-ever explorer to drill the Stansmore magnetic anomaly below the thin cover of sand. We aim to emulate the success of WA1 in making a major discovery in the West Arunta region.

The company’s upcoming drill campaign is expected to take between two and four weeks to complete now that the Central Desert Native Title Services and the Parna Ngururrpa traditional owners have granted access after facilitating the heritage survey. The project area, which spans 173 square kilometres and is 90km north of WA1’s Luni and P2 discoveries, includes two high-priority magnetic anomaly drill targets at Stansmore and Volt.

Southern Geoscience Consultants (SGC) conducted a geophysical review at the site and reprocessed magnetic data using 3D inversion techniques, targeting drilling locations.

The Stansmore anomaly is modelled as an ellipsoid 400m wide and 700m long, starting at 150m depth. The Volt anomaly is about 600m wide and 800m long, starting at 200m depth.

Along with three secondary targets – Edi, Earl and Menlo – all are considered to be prospective for niobium-rare earths carbonatite or iron oxide-copper-gold (IOCG) systems.

With a tiny annual global production of just 79,000 tonnes in 2022, niobium is considered a strategic metal and has enjoyed a stellar rise in price in the past two decades. It is currently trading at more than US$50,000 (AU$75,000) a tonne – up 400 per cent since 2000.

Ferroniobium, its primary saleable form, has been traditionally used as a key ingredient in making vehicle steel frames lighter, helping boost fossil fuel efficiency. The same application holds true for gas and wind turbines, where development in the past decade has greatly benefitted from the use of less-weighty steel alloys.

Additional uses for medical imaging, space travel, particle accelerators and ultra-rapid rechargeable batteries has made niobium an increasingly in-demand metal. However, with the green-energy transition in full flight, niobium usage is also increasingly being adopted by electrical vehicle (EV) manufacturers to combat “range anxiety” – one of the top prohibitors stalling potential EV consumer demand.

By making them less heavy, EVs can run on smaller batteries, which are currently the most expensive component, and go further before re-charging is required. It may reduce the required number of eventual charging points.

Part of the reason for the big boost in niobium prices in the past few years is because there are effectively only three operating mines around the world, with Brazil holding 88 per cent of global production.

In particular, Brazil’s CBMM, in the State of Minas Gerais, provides 84 per cent of global supply. The rest is made up by China Molybdenum’s Boa Vista Mine in Brazil, which was bought from Anglo American in 2016, and Canada’s Magris Resources’ Niobec Mine in Quebec.

More recently, however, St George Mining has also joined the hunt for niobium after acquiring the promising Araxa project, adjacent to CBMM’s Brazilian mine.

But it is the West Arunta region, which is on WA’s shared border with the Northern Territory, that has been the subject of intense investor interest, with Encounter and WA1 both vying for the slot as the biggest and best new producer. Now, with a bit of luck from the drilling gods, Lycaon could shortly be joining the pack.

Is your ASX-listed company doing something interesting? Contact: matt.birney@wanews.com.au