Copper developer Argonaut Resources (ASX:ARE) has moved to bolster its investment case by pursuing a further diversified strategy focusing on a broader range of target commodities including graphite and lithium.
The company has flagged a robust long-term demand outlook for these sectors, which are driven much more by specific demand growth from energy storage applications than by overall GDP growth rates.
The rapid acceleration in the development of renewable energy projects on a global scale is being accompanied by rapidly growing interest and need for grid storage technologies.
Energy storage will be increasingly critical in smoothing out the intermittency of renewable power generation and improving renewables reliability by mitigating peak demand and maximising the value of on-site generation.
The grid-connected energy storage sector is therefore expected to surge from a level of only 0.3 gigawatts in 2013 to more than 40GW by 2022.
The market for storing power from solar panels alone has been projected to skyrocket from a value of US$200 in 2012 to $19 billion by 2017.
A more diversified approach to portfolio growth in this context will underpin Argonaut strategy in the coming year as the company leverages its geological skillsets to source new projects that offer significant potential for adding value.
Established portfolio
Acknowledging recent weakness in copper prices as well as compelling projections for the metal’s turnaround, Argonaut has resolved to keep a watching brief on its Zambian copper properties while remaining committed to its Torrens iron-oxide-copper-gold (IOCG) project in South Australia.
The prize at Torrens is potentially enormous, with an extremely large IOCG target boasting excellent juxtaposition of gravity highs and magnetic lows.
This is combined with a known presence of hematitic brecciation and red rock alteration – the same setting at BHP Billiton’s (ASX:BHP) gigantic Olympic Dam complex .
Torrens is located on the eastern margin of the Gawler Craton within 75 kilometres of Olympic Dam and 50 kilometres of OZ Minerals’ (ASX:OZL) Carrapateena IOCG deposit, which hosts 2.5 million tonnes of probable copper metal reserves and 3.5 million ounces of probable gold reserves.
Argonaut also benefits from upside at its Alford polymetal project, which lies near the southeastern margin of the Gawler Craton.
Argonaut and farm-in partner Sandfire Resources (ASX:SFR) intersected copper and silver mineralisation at the project earlier this year and a geological analysis is ongoing.
Two diamond drill holes at Alford’s Netherleigh Park area in June returned 10.4 metres at 66.6 grams per tonne silver and 0.28% copper from 217 metres as well as 3.9 metres at 1.19% copper from 287 metres.
Previous drill intercepts from Netherleigh Park include:
- 76 metres at 0.95% copper from 138 metres;
- 20 metres at 0.75% copper from 131 metres;
- 122 metres at 0.63% copper from 95 metres (including 14 metres at 2.26% from 111 metres); and
- 98 metres at 0.64% copper from 138 metres.
These relate to both copper oxide and copper sulphide mineralisation.
Analysis
Argonaut’s plan to embrace tech-related metals with growing end-segments such as graphite and lithium is an encouraging move by the company as it offers enhanced potential to commercialise the company’s project development skillsets.
This strategy may prove to be particularly savvy in light of the astronomical growth rates projected for the energy storage industry and its supporting raw material sectors.
Meanwhile, Argonaut maintains its exposure to a pending turnaround for copper, with a steady focus on its hugely prospective Torrens property, which has all the early-stage hallmarks of an Olympic Dam-style deposit.
Newsflow related to any future drilling of this project could represent an important price catalyst for Argonaut.
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