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Date : 06/09/2021

Venture Minerals

ASX :

VMS

Market Cap : $104.07 Million

Buy

52 Week Range : $0.029 - $0.160

Share Price : $0.078

Tin is a high potential commodity in the battery technology space, and Venture Minerals presents a tremendous opportunity. A "Buy" from us.

Company Analysis

Venture Minerals (ASX: VMS) is entering an exciting phase as it looks to move from explorer to producer with production at the Riley Iron Ore Mine in northwest Tasmania, and that means we could expect earnings growth and capital appreciation for the firm in the very near-term. Furthermore, at the neighbouring Mount Lindsay, Venture is also exploiting a Tin-Tungsten Project in North‐West Tasmania. With higher tin prices and the recognition of tin as a fundamental metal to the battery revolution, Venture has refocused its approach to developing Mount Lindsay, which is already one of the world’s largest undeveloped tin deposits. Recently, the company has commissioned an underground scoping study on Mount Lindsay that we believe will leverage off the previously completed feasibility work. Announced last year, in Western Australia, Chalice Gold Mines (ASX: CHN) committed to spending up to $3.7 million in Venture’s Southwest Project, to advance the previous exploration completed by Venture to test a Julimar lookalike Nickel-Copper-PGE target. Along with the promising available resources of Iron Ore, and the vast potential offered by its massive tin deposits, Venture has also added to its pipeline four new priority “Volcanogenic Massive Sulphide” drill targets along strike to its world-class Golden Grove Zinc-Copper-Gold Mine. Venture Minerals is also starting a low-cost drill program designed to bring forward a potential new gold discovery at the Kulin Project.

In a nutshell, Venture owns a few high potential projects across the country:

  1. Iron Ore: The Riley Iron Ore Mine in northwest Tasmania
  2. Copper, Zinc, Lithium: The Southwest Project with a potentially huge quantity of Copper, Zinc and eventually Lithium.
  3. Tin-Tungsten: The Mount Lindsay Project may be one of the world’s largest Tin-Tungsten deposits.
  4. Nickel-Copper-PGE: The Nickel-Copper-PGE Kulin Project in Western Australia
  5. Zinc-Copper-Gold: The Zinc-Copper-Gold Golden Grove North Project in Western Australia

Source: Venture Minerals

If you are looking for diversified mining business, do not look any further, Venture could be the one. VMS owns a diversified portfolio of high potential assets. Moreover, the company is on the verge of generating substantial income from its Iron Ore production which already started last month with its first shipment expected to be achieved during this month of September. But the main key differentiation Venture has compared to dozens of other mining and exploration firms, is that the company owns the Mount Lindsay Tin-Tungsten Project. Tin is a critical mineral and has often been overlooked for other minerals such as lithium, cobalt, or nickel. However, ongoing analysis of industry trends and progress in research and development by the International Tin Association has demonstrated that tin has an important role to play in advanced lithium-ion, and even “post lithium”, battery technologies that could be used in the EVs of the future. It is worth noting that Tin and Tungsten are being recognised by the British Geological Surveys, the US Department of Defence, the European Commission, Japan, Russia, and Australia as “critical” minerals. Hence, Tin and tungsten are expected to play an important role in the world’s economic activities and represent a supply risk due to the dominance of China in this market. It is also assumed that there is no alternative to these minerals. Hence, tin and tungsten are key inputs to industries and vital to national security. The US and the European Union are committed to reducing their dependence on Chinese production. Tin and tungsten present several advantages in diverse commercial, industrial, and military applications such as steel hardening, aeronautical and automobile manufacturing, armaments, semiconductors, and other high technologies. As such, it goes without saying that Venture with its relatively large prospective Tin-Tungsten deposits represents a tremendous opportunity that could lead the firm to become a leading global producer of these essential resources of the future.

Tin: the future of energy storage among a wide array of industrial use

Tin is increasingly being used as a sustainable alternative to other materials and for innovative technologies. Tin is a vital ingredient in a wide range of manufacturing sectors, including consumer goods, packaging, construction, vehicles, and other forms of transport. The most important alloy compositions of tin are those required to support the ever-growing electronics sector, providing a wide range of highly specialised solders of higher or lower melting temperature, and physical properties that allow all new product designs to be manufactured successfully. Solder is necessary for conductive joints in almost every electronic product, and the material also maintains its use for traditional industrial applications such as joining copper water pipes. Tinplate which is steel with a thin tin coating is used in packaging for food and beverages, for product containers and various other items. Tin coatings provide the essential corrosion protection vital to these applications and that, together with other benefits, allow this important method of food preservation to remain successful and favoured even in today’s competitive world of modern packaging. Tin chemicals are also used in a huge number of everyday applications:

  • Tin as a chemical for coating: The biggest use is of organic tin chemicals in PVC for construction products such as doors and windows, to stop them degrading in heat and sunlight. The most important applications for inorganic tin chemicals are as catalysts for a wide range of industrial processes, glass coatings, electroplating baths, fire retardants, and in the ceramics and cement industries.
  • A key element in the development of sustainability: Energy conservation has become a major technological driver and significant growth is expected in the use of tin catalysts for the production of polyurethane foam thermal insulation and in tin oxide coatings for low emissivity “e-glass”, widely used in modern ‘green’ buildings.
  • Tin in other industrial applications: Other alloys of tin include bronze and brass, bearing metals, pewter and even superconductors, each of which might be found as components in a multitude of consumer and industrial products. Tin is also essential for the process of making float glass, in which molten glass is floated on the surface of molten tin, thereby creating a sheet of uniform thickness and with a very flat surface.

But the most important is how tin has become a crucial material in the race for the development of sustainable energy and for the electric vehicles (EV) market. Thus, the proliferation of electronics in vehicles, and the growth in electricity generation and storage infrastructure, will need to accompany the growth of EVs. Energy storage and EV present exciting opportunities for future tin demand growth.

The fourth Industrial Revolution

The energy storage in batteries is a key focus for commodity investors today, with an expected surge in metals used for both stationary applications and EV markets. As energy demands spiral and electricity replaces fossil fuels in a bid to slow climate change, there will need to be a massive new capacity to store electric charge. The battery market in general is expected to grow by a CAGR of 12.3% from 2021 to 2030. Currently, lead-acid batteries are the major technology used in vehicles, and this will continue until around 2025 when lithium-ion and other more efficient technologies will start to have a significant impact. Tin is used at up to 1.5% in lead-acid battery grids, boosting performance, and already lead-acid batteries have grown to be the fourth largest use of tin, representing 28 thousand tonnes per annum of tin, five years ago, and it is forecasted to peak at 36 thousand tonnes annually in 2025. Other markets in 4G telecoms, grid storage and electric forklifts, for example, are also significant opportunities. But it is lithium-ion batteries that are attracting the most attention from investors now, notably in the context of the introduction of EVs, driven by pressure on governments to combat climate change. Norway and Netherlands want to completely ban petrol and diesel vehicles by 2025, while China has launched an ambitious series of quotas and credits to become completely “electric” by the next ten years. We have seen in recent years, major car industry announcements which are rushing to deliver hybrid and full EV options.

Source: Venture Minerals

The focus for tin is on the positive anode electrode of lithium-ion batteries, usually made today from graphite on a copper foil. Next-generation products are already adding silicon into the graphite to increase capacity. Some will probably use tin, either as an alternative or in addition to enhancing silicon performance. For example, China’s largest electric vehicle producer, BYD, recently patented a tin cobalt-carbon technology for anodes. Tin oxide, tin-phosphorus, tin-sulphur, and similar combinations have also been shown to be capable of replacing graphite altogether with performance gains through higher capacity. Already, the next generation of pure metal anodes is under development, scheduled for 2023, including tin and tin alloys. Beyond 2023, it is expected that pure lithium or silicon anodes will take battery capacities to ten times what is possible today and alloying both with some tin has been shown to enhance performance. Cutting across all these developments is the development of solid-state lithium-ion technologies that radically redesign the basic battery cell, replacing the liquid electrolyte with safer solid materials, including yet another potential use for tin. Despite the intense focus on lithium-ion technologies, so-called “post lithium” battery chemistries are already advancing rapidly. Sodium-ion is in the lead, with magnesium and even potassium-ion coming up behind. This is good news for tin, as both tin compounds and tin alloys feature even more prominently in anode technologies for this type of battery.

One spin-off effect of the rapid growth in new energy technologies is expected to be a boost to tin use in solders. Already, there has been some measurable impact of solar photovoltaics growth through the increased use of solder ribbon to join solar panels. If technology remains the same, this market could be set to grow to 14 thousand tonnes per annum by 2030. Electric vehicles will require greater electronics and electrical systems in the future, in addition to the electronic proliferation from more infotainment and self-driving technologies on board. At the same time, it is expected that much more solder will be used in electronics’ control systems and associated renewable energy infrastructure, both locally and regionally, for solar photovoltaics, as well as wind energy, new utility energy networks and eventually the hydrogen economy. Much other tin energy uses are in research and development around the world, including liquid metal batteries, fuel cells, and even hydrogen technologies. So far, we think that the future of tin in energy uses seems pretty bright.

Source: Venture Minerals. Tin wide array of industrial and technology applications

FY22 Outlook: First Iron Ore Shipment expected for September along with great progress on a few projects

Venture Minerals has been well progressed during the period through four different fronts:

  1. The first Iron Ore shipment expected throughout this month
  2. New EM or Electronic Magnetics anomalies that reveal highly prospective Ni-Cu-PGE with Chalice
  3. Drilling resumed at Mount Lindsay with target into high-grade Tin-Tungsten deposits
  4. Significant expansion of its Ni-Cu-PGE through the highly prospective Kulin Project.

During the quarter Venture commenced commissioning of the Wet Screening Plant at the Riley Iron Ore Mine. The progressive equipment commissioning phase began earlier this year during the month of May after various stages of the installation phase of the plant construction were completed. Likewise, the electrical installation and piping were near completion, and the Power Station was operational. As of the end of this period, the commissioning of the Wet Screening Plant was well advanced with ore mining having restarted. The venture is expected to achieve rapidly steady-state production and the next phase of the commissioning process which will include continuous ore haulage and the delivery of the saleable product to the Port of Burnie, followed by the final phase of loading the first ore shipment.

During the period, Chalice Mining Limited (ASX: CHN) has generated new EM anomalies from the early stages of the ground-based moving loop EM and fixed loop EM program at Venture’s Southwest Ni-Cu-PGE Project. The new anomalies were defined over selected areas of the Julimar lookalike magnetic feature as well as other interpreted mafic-ultramafic intrusions. The program is part of the first stage of the joint venture earn-in which Chalice may earn up to 70% by spending $3.7 million on exploration over four years.

Drilling resumed at Mount Lindsay Tin-Tungsten Project during the quarter on the High Priority Renison Style Tin Target delineated along strike to the High-Grade Renison Bell Tin Mine, one of the world’s largest and highest-grade tin mines. The target is supported by a significant historic alluvial tin field and coincidental EM, magnetic and geochemical anomalies.

After quarter’s end, Venture significantly expanded its Ni-Cu-PGE portfolio through the recent acquisition of highly prospective tenure at the Company’s Kulin Project. Within the acquired tenure, Venture has secured two highly prospective twenty kilometres long interpreted mafic-ultramafic intrusive complexes sitting along strike of the Jimperding Metamorphic belt which hosts Chalice’s Julimar Ni-Cu-PGE discovery.

Venture exhibits a comfortable level of cash to support the continuous development and exploration activities

We could say that Venture is attracting quite some attention from the investors’ community, hence, the company has significantly raised capital during the recent years, with the last one on June 28 where Venture received $10 million after firm commitments from sophisticated, professional, and institutional investors through the placement of 118+ millions of shares at 5.5 cents each. This fund will be directly utilised to ramp up capacity for the Riley Iron Ore Mine, clearing the pathway to production.

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Venture has now in the bank more than $9,4 million in cash. We can surely say that the company has a comfortable level of liquidity to support its development and exploration activities. Exploration activities cost a bit more than $1 million during the period and relate to field activities costs, tenement fees, rates, and geological staff costs at Mt Lindsay and Golden Grove North. Furthermore, Venture spent about $1,7 million on development activities relating to wet screening plant construction such as concrete foundations, road upgrades, site works, and other support costs for the Riley Iron Ore Mine.

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During the last four years, Venture expenses for its exploration and development activities sky-rocketed with cash to expense ratio ranging from 64% to 230%. With the recent fundraising of $10 million, Venture is now back to a comfortable level of cash which is more than sufficient in our opinion to support the ongoing development of the Iron Ore business and the beginning of production. Furthermore, the upcoming earnings from the first Iron Ore shipment will provide additional cash to further solidify the company’s balance sheet and help along with the exploration of the high-potential Tin-Tungsten deposits at Mount Lindsay. We have projected the cash expense ratio onward FY21 to remain stable at an optimum rate below 35%. We also believe that Venture has reached a sweet spot for growth with its available cash balance and the expected earnings growth onward FY22. Moreover, the company is managed by an experienced team with a solid track record in the exploration and mining business which give us confidence in a great execution to achieve Venture’s goal to become one of the key players in the resources produced for the global shift toward green energy.

Technical Analysis

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VMS exhibited a terrific bull-run since the beginning of this year and at its peak, VMS appreciated by three-fold reaching 16 cents per share before heading back to the 7 cents area in just two months. The high potential of the company has been reflected by the recent surge in volatility, and we think that as the VMS market price has stabilised below 10 cents per share, it might present an opportunity to capture at a fair value the next bullish momentum. In our view, the 7 cents psychological level could be a good candidate for a rebound as we have seen volume rising at this level and the beginning of a possible consolidation in the 5.5 cents – 7 cents price zone. We are conservatively targeting the recent high above 15 cents per share.

Volume and momentum

Volume increases since the last 200-day with the 20-day volume average up by 77%. The price action remains bullish in the near term, evolving in a range between 5.5 cents and 15 cents per share.

Trade consideration

  • Market participants might be interested to enter at key support levels: 7.0 cents and 5.5 cents.
  • Primary target price above 15 cents per share
  • It is recommended exiting the trade below 4.5 cents

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Recommendation

If you are looking for diversified mining business, do not look any further, Venture could be the one. VMS owns a diversified portfolio of high potential assets. Moreover, the company is on the verge of generating substantial income from its Iron Ore production which already started last month with its first shipment expected to be achieved during this month of September. But the main key differentiation Venture has compared to dozens of other mining and exploration firms, is that the company owns the Mount Lindsay Tin-Tungsten Project. Tin is a critical mineral and has often been overlooked for other minerals such as lithium, cobalt, or nickel. However, ongoing analysis of industry trends and progress in research and development have demonstrated that tin has an important role to play in advanced lithium-ion, and even “post lithium”, battery technologies that could be used in the EVs of the future. It is worth noting that Tin and Tungsten are being recognised by the Western Powers as “critical” minerals. China is currently dominating this market. The US and the E.U. are committed to reducing their dependence on Chinese production. As such, VMS with its relatively large prospective Tin-Tungsten deposits represents a tremendous opportunity that could lead the firm to become a leading global producer of these essential resources of the future. We also believe that Venture has reached a sweet spot for growth with its available cash balance and the expected earnings growth onward FY22. Therefore, a “Buy” recommendation from us.

 

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