Wednesday, September 27th 2023

Metal Tiger

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Is Metal Tiger worth a look following post-placing decline?

Despite delivering several promising updates across its portfolio this year, resources firm Metal Tiger has seen its shares collapse since it completed a £6.2m placing in August. With the business preparing a new exploration JV in Botswana’s Kalahari Copper Belt and looking to set to progress its position in Thailand, could shares be worth a punt at 1.9p each as at writing?

Multiple assets

Metal Tiger aims to generate returns by investing in undervalued mineral exploration and development opportunities coinciding with a cyclical recovery in the resources market. Although it primarily focuses on Botswana, the business also has assets in Spain and Thailand.

In Spain, it is the 50pc owner of a joint venture (JV) that owns tungsten and gold interests in the country’s highly-mineralised Extremadura region. However, it has posted very few updates from these assets recently.

In Thailand, it owns an interest in two formerly producing lead-zinc-silver mines called Song Toh and Boh Yai. The sites have a combined NPV(10) of $45.9m with a payback period of 4.7 years and a scheduled LOM of 14 years with the significant potential to extend.

Metal Tiger originally planned to float the assets but decided to postpone the move earlier this year after struggling to get government designation as a mineral deposit area. This major hurdle had prevented it from developing the mines. The JV was finally awarded this classification in July, allowing it to formally progress all of its licence applications in the country.

Alongside these interests, Metal Tiger also claims to have access to a pipeline of global opportunities focused on the natural resources sector.

Botswana bonanza?

As mentioned, Metal Tiger’s primary focus has been on Botswana’s Kalahari Copper Belt (KCB), an under-explored emerging copper province containing over 4Mt of contained copper and 160Moz of contained silver. Its operations have centred around a 30pc-held JV with Australian copper miner MOD Resources, which owns a copper and silver project called T3 in the Kalahari.


Earlier this year, the companies completed a pre-feasibility study on T3’s open pit, which has a mineral reserve of 21.4Mt containing around 218kt of copper. The conservative PFS base case, which used a processing rate of 2.5Mtpa over a 9-year life of mine at a copper price of $3.20 for the first two years and $3 after that, gave the open pit an NPV(8) of $281m. It also gave it annual free cash flow of $77m from production, all-in sustaining costs of $1.36/lb and payback 2.7 years from production. Copper in concentrate over the life of mine is expected to come in at 203kt with average output of 23kt a year.

Since the release of this study, the partners have been working on a detailed feasibility study for the mine, due for completion in March next year ahead of applying for a mining licence. They have also been carrying out infill drilling to upgrade the ore body’s inferred resources, resource drilling to assess the potential for an underground ground, and have looked at drilling around the open pit. Finally, they have also been carrying out a sizeable airborne electromagnetic survey over the JV’s extensive acreage in the Kalahari beyond T3. This work has located widespread copper and zinc soil anomalies.

In June, Metal Tiger extended its position in the Kalahari even further by entering a binding investment agreement to acquire up to 50pc of Botswanan-focused explorer Kalahari Metals. The private business holds interests in seven exploration licences covering 4,063km2 in the belt. An initial exploration programme on the areas completed last month, with promising initial results.

Maintaining exposure

Metal Tiger’s Kalahari positioning underwent a significant change in July when it announced the sale of its 30pc interest in the T3 Project back to MOD Resources. The two firms said they expect MOD’s full ownership of the project to make it more attractive when it comes to development financing options moving forward.

In exchange for the sale, MOD Resources paid Metal Tiger A$27.7m in its shares. When combined with Metal Tiger’s existing stake in MOD, this payment provides shareholders with considerable ongoing exposure to the project without a continuing need for financing.

Interestingly, the firms also announced that they would transfer all of the remaining licences held by the JV into a new JV focused solely on exploration. The grants, in which Metal Tiger will retain a 30pc stake, cover around 7,978km2 of prospective land. This week saw the partners announce ministerial approval for the transfer of eight licences in the new JV. With approval for ten more permits still pending, the deal is expected to complete by mid-November.

Where next?

Metal Tiger has suffered a significant decline since it raised £6.2m at 2.8p a share in August, falling from highs of 3.4p to its current 1.9p. The fall has been very disappointing for existing investors, but for new entrants, the company’s freshly boosted cash balance is likely to be a positive as it looks to develop its assets.

The firm is placing a lot of emphasis on the Kalahari Copper Belt’s prospectivity, and if this turns out to be a good bet, then it will a great deal of lucrative exposure. Meanwhile, the recent removal of a major regulatory hurdle in Thailand could add further upside in another area of the world.

What is clear is that Metal Tiger’s diverse asset base should see it deliver plenty of newsflow over the coming months. Indeed, the completion of the T3 DFS, a new JV, further exploration work and possible progress in Thailand all sit on the horizon. It may be worth keeping an eye on how the market reacts.

CEO Michael McNeilly tells Proactive the assay results from hole MO-A4-003D on the A4 Dome

The author was remunerated but does not hold shares in the company