Time for Landore Resources to Land the Jackpot?
“…Fully-funded for its activities this year, Landore has made significant progress over the past few years. It’s dual focus on gold and battery metals could make it an interesting play for investors seeking multiple exposure…”
With the price of gold showing signs of picking up over the past few weeks, and demand for the battery-critical metals used in electric vehicles (EVs) surging, Landore Resources (AIM:LND), prospective for gold, nickel, copper and PGE metals, looks like an interesting bet for investors seeking exposure to both trends.
Landore’s primary focus is its 100pc owned Junior Lake Project and adjoining Lamaune Iron property (90.2pc owned), covering 30,507 hectares in the province of Ontario, Canada, some 235 kilometres north-northeast of Thunder Bay, the main supply hub for the mining centres of northern Ontario. The Property is host to a host of sites prospective for a variety of minerals, including the BAM Gold Deposit, the B4-7 Nickel-Copper-Cobalt-Platinum-Palladium-Gold Deposit, the VW Nickel-Copper-Cobalt Deposit, the Lamaune Gold Prospect, the Lamaune Iron Prospect, and several other precious and base metal prospects.
Though some way north of Thunder Bay, Junior Lake is well served by local infrastructure, connected to the city by national and local highways, and the Canadian National Railway, which also provides access to a nickel smelting centre at Sudbury. Junior Lake is the company’s overwhelming focus, but Landore owns or has the mineral rights to a further eight properties with 99 claims in the US state of Nevada.
The BAM Gold Deposit
The Property’s known mineral resources and prospects are harboured within an Archean-age greenstone belt ranging from 0.5 to 1.5 kilometres in width, running for approximately 31 kilometres. The BAM Gold Deposit, situated within a 2.7 kilometre geophysical anomaly midway along the belt, was discovered little more than five years ago. But Landore has rapidly elaborated its potential through waves of exploration programmes and studies.
The most recent Mineral Resource Estimate (MRE), published last January, reported a resource of 31,083,000 tonnes at 1.02 grams/tonne (g/t) for 1,015,000 ounces of gold, including 21,930,000 tonnes at 1.06g/t for 747,000 ounces gold in the Indicated category. Target areas adjacent to the current delineated deposits offer a possible 14,761,000 tonnes at 0.93g/t ounces gold, and a further 441,000 ounces gold in the ‘Unclassified’ material category. The Deposit remains open in several directions, and metallurgical test work has indicated that gold recoveries may run between 97pc and 99pc, a rate that would facilitate efficient operating conditions.
The company’s latest drilling programme, which began in October, seeks to extend the defined resource of 1,015,000 ounces of gold, and to test the depth potential of the previously delineated mineralisation. A March drilling update reported that 14,970 of the planned 23,000 metres have been completed, the results so far confirming the expected depth and length extensions of the BAM west pit, and reporting widths and grades consistent with the defined resource. 65 holes have been drilled with all holes intersecting typical BAM Gold lithology and mineralisation, some showing visible gold. Results are pending for the depth drilling below the east pit. The programme will pave the way for an updated Mineral Resource Estimate (MRE) and Preliminary Economic Assessment (PEA).
Nickel, copper, cobalt, lithium and PGE prospects
Prior to switching its focus to the BAM Gold Deposit, Landore was principally interested in Junior Lake’s nickel, copper, cobalt, lithium and PGE prospects, which the company had been working to bring to pre-feasibility level. That work was placed on hold after the 2012 commodities price crash, and the subsequent gold discovery. But in another update last month Landore said that in light of the increasing demand for nickel, cobalt and lithium driven for their use as electric vehicles (EVs) batter metals ‘the Board considers these projects to be viable once again’.
A series of drilling campaigns from 2005 to 2015 at the B4-7 Nickel-Copper-Cobalt-PGE Deposit and Alpha Zone, some 600 metres southwest of the BAM Gold Deposit, found magmatic sulphide hosted, polymetallic nickel-copper-cobalt-platinum-palladium-gold mineralisation, the resource estimate putting 3,292,000 tonnes at 1.20pc Nickel Equivalent (NiEq) in the Indicated category and 568,000 tonnes at 1.26pc NiEq in the Inferred category, a total of 46,661 tonnes of contained metal.
The Alpha Zone has been intersected at depth returning high metal values up to 1.54g/t Pd and 0.64g/t Pt over 20.15 metres in one drill-hole. The open pit component of the B4-7 Deposit is 1,772,000 tonnes at 1.20% NiEq in the Indicated category for 21,264 tonnes of contained metal. Another exploration target has been identified down dip from the B4-7 resource which may contain a potential 1.5 Mt to 2.0 Mt of sulphide mineralisation of similar grade range to that which has been outlined to-date, a potential 18,000 to 24,000 tonnes of contained metal.
The VW Nickel-Copper-Cobalt Deposit, discovered in 2005, is a nickel-copper-cobalt-gold-bearing prospect possibly also with PGE metals. A 2018 resource estimate put 1,084,000 tonnes at 0.71%NiEq in the indicated category and 180,000 tonnes at 0.68%NiEq in the inferred category for a total of 8,920 tonnes of contained metal. Junior Lake has several other polymetallic prospects, including three known lithium occurrences, encouraging results from past drilling including 1.12% Li2O over 3.1m and 1.14% Li2O over 8.8 metres from one drill-hole.
The surging battery-critical metals market
The global surge in demand for battery-critical metals continues to gather pace as record numbers of EVs are sold in Europe and China. An unprecedented 1.3 million electric cars were sold in China last year, and sales of electric cars in Europe more than doubled as tougher new emissions targets for new cars began to be introduced. The UK, Germany and other countries have committed to a ban on new petrol and diesel cars from 2030. Electric cars are still about a third more expensive than conventional petrol vehicles, but that gap is closing, analysts at UBS estimating price parity is now just three years away.
Demand for lithium continues to increase, the price of lithium carbonate rising 126pc since the end of July to almost $13,000 per tonne. Though an abundant resource, it cannot be easily refined for battery manufacturing – a new lithium mine can take up to 10 years to build. But the spike in demand for nickel has been yet more striking, as manufacturers scramble to use more of the metal in batteries to cut down on cobalt, which costs twice as much.
On average, an electric passenger car needs around 20kg of nickel in its battery (a Tesla Model 3 needs 30kg), up to 20kg of cobalt in the cathode plus roughly 60kg of lithium compounds. Over the past year the price of nickel on the London Metal Exchange has risen by about 70pc to $18,410 a tonne as speculators bet it will benefit from rising sales of electric vehicles. At present only 8pc of refined nickel demand comes from batteries, with more than two-thirds coming from the stainless steel industry, but batteries’ share could reach 32pc over the next 20 years. Tesla alone used more than half of all the European EV industry’s metal last year. The company’s plans to produce batteries storing three terawatt-hours by 2030 would exhaust most of the world’s nickel production at current levels, prompting Elon Musk to identify nickel shortage as one of Tesla’s primary concerns. Indeed, less than half of the world’s nickel supply is suitable for use in batteries. That’s actually good news for Landore: the company’s nickel is precisely the highly sought-after Grade 1 sulphide nickel suitable for battery metals.
Fully funded for the year ahead
Landore is fully funded for its current round of exploration, having raised £2.8m last July. This February the company raised a further £3.5m to cover all its capital requirements this year, including 9,000 metres of follow-up drilling on identified gold targets, ground geophysics and soil sampling, and a refreshed PEA and Resource Report, which the company hopes will advance the Inferred mineralisation in the current resource to Indicated status. Landore also intends to use the fundraise to identify ‘a strategic investor or alternative corporate transaction’. Earlier this month the company raised a further CAN$250,000 after disposing of 30pc interest in a non-priority property.
Fully-funded for its activities this year, Landore has made significant progress over the past few years in delineating its promising BAM Gold Project. It’s dual focus on gold and battery metals could make it an interesting play for investors seeking multiple exposure. Landore’s share price has risen to 32p from 21p at the beginning of the year, and it looks like it may have further mileage if the company can keep its positive news flow rolling.
