12 Mining Companies to follow in 2022
As we have highlighted in many articles this year a paradox of the transition to a green economy is that it will depend on the mining industry, a sector that still has a relatively poor environmental image.
The mass rollout of solar panels, wind turbines, fuel cell and flow batteries, green hydrogen, electric vehicles, and the rest of the infrastructure necessary for a low-carbon economy, will place huge stress on the supply of the materials needed to make them.
Energy consultants Wood Mackenzie estimate copper and aluminium demand will increase by about a third by 2040, nickel by two-thirds, and cobalt and lithium by 200pc and 600pc respectively. Demand for copper, the most important of the world’s industrial metals due to its use as wiring for electrical appliances, is forecast to double by 2050, with its application in renewables and electric vehicles expected to grow more than seven times over the next 30 years.
Supply fundamentals continue to outweigh concerns about an economic slowdown forced by Omicron: the price of copper rose above $10,000 a tonne earlier this month to reach a 10-year high, zinc traded close to a 15-year high, and aluminium at levels last seen during the financial crisis. Inventories of physical copper on the London Metal Exchange recently fell to their lowest levels since 1974.
Wood Mackenzie suggest that producers of the five essential energy transition metals will need to commit at least $1tn of investment over the next 15 years to meet demand for green infrastructure. But miners cannot easily ramp up production in response. The low commodity prices that preceded the pandemic and Covid lockdowns forced producers to curb spending on expensive new projects. And it is getting tougher to gain regulatory permission to mine: prospective miners must pay ever greater attention to the ecological impact of mining and the concerns of local communities. COP26 sharpened restrictions further on mining in forests.
Demand for recycled materials, therefore, which have much smaller carbon footprints, is surging. Some recycled materials are now even more expensive than newly mined materials as companies compete for them to green their supply chains. Conditions for western miners are being made tougher still by China’s accumulation of licences in highly prospective territories.
As ever, the gold market is subject to its own set of circumstances. Gold has come off the highs it reached last year when equities crashed at the outset of the pandemic, but increasing market acceptance that higher inflation is here to stay for a while has pushed prices up again lately. Gold hit a five-month high of over $1,870 an ounce earlier this month after the US Federal Reserve reported a 30-year high for inflation for October, and European central banks warned that prices will not fall for some time. The metal continues to prove its worth as a hard store of value when the money supply is high.
The picture for small cap miners, then, is far from clear. But with prices for many metals surging, those that have secured prospective licences and – crucially – permission to mine, would seem to have good prospects for 2022. We have picked out a dozen companies we think worth watching next year.
Companies covered include :
#CMET #CGH #CHF #CGO #EEE #HE1 #JAN #LND #LEX #PALM #POW #SRES
Capital Metals
Capital Metals (AIM:CMET) aspires to help address a looming shortfall in the supply of mineral sands such as zircon, rutile, ilmenite, and garnet that form a substantial part of the backbone of the world’s infrastructure.
The company is focused on the development of the Eastern Minerals Project, a strip of shoreline on Sri Lanka’s eastern seaboard some 220 km east of capital city Colombo and 30 km from the commercial port of Oluvil. The 84 km2 licence area has a JORC Resource of 17.2 Mt, with an average grade of 17.6pc Total Heavy Minerals (THM) from surface down to a depth of three metres, making it one of the highest-grade deposits in its peer group.
The company expects operating costs to be low given the presence of near-surface high grade minerals, which can be accessed without blasting or chemicals. And it believes the Project has considerable further potential: less than 10pc of the licence area has so far been explored, and the limited drilling that has probed depths below three metres indicates grades of up to 26pc THM. Applications have been submitted for nine additional exploration licenses covering a further 623 km2.
The company’s primary focus this year has been to pass an Environmental Impact Assessment (EIA) to pave the way for the granting of an Industrial Mining License (IML). In anticipation of getting the green light the company has discussed field access arrangements with local land owners, and commissioned a development study and economic analysis intended to delineate the path to a mining operation targeting yearly production of an estimated 1.65Mt. Once the IML is secured Capital plans to reach agreements with potential offtake partners that involve some form of prepayment or financing arrangement. The company will seek fresh funding for the estimated $35m cost of constructing onsite facilities capable of processing around 1.65Mt per annum. Capital expects funding for the plants to comprise a mixture of debt finance, equity and advance payments from off-take customers.
Capital got the breakthrough it has been working towards with the approval of its EIA by the Sri Lankan Geographical Survey and Mines Bureau (GSMB). The EIA was granted on condition of the company’s commitment to an environmentally sensitive mining procedure that will integrate land rehabilitation into the mining process. The shallow depth of the Project’s mineral sands deposits will allow them to be mined using relatively unobtrusive surface mining methods, and topsoil, subsoil and clay will be removed, stockpiled, and relayered after mining.
The granting of the EIA has allowed Capital to advance third-party offtake discussions, engineering design and project finance plans, and to revise its Project timelines. Discussions with the GSMB will now be focused on obtaining the IML in Q1 2022. A development plan refining the Project’s strategy will presage commencement of commercial production ‘in less than 12 months’ time’.
Capital has also begun exploring the full scope of the Project’s potential resource. This autumn the company commissioned the GSMB to undertake a drilling programme at the Project’s southern exploration license EL199 to identify promising locations for future mining license applications. Drill samples from some 500 auger holes are currently being analysed with initial results expected next month.
Capital is seeking to join a relatively narrow group of mineral sands producers. The three main suppliers, Rio Tinto, Tronox and Iluka Resources, produce some two thirds of the world’s zircon, ilmenite and rutile, most of it mined in Australia and South Africa. The company has much work to do to turn its roadmap into built infrastructure, steady production and ready customers. But with the granting of the EIA the way ahead is now visible. Capital is funded for its current programme and held cash of $1,199,612 as at 30 September 2021.
The company’s share price spiked up to around 20p at the start of the year when commodities stocks were booming, but has fallen back to just under 10p at the time of writing. If it can obtain its IML early next year, and publish a convincing development plan Capital Metals would seem well placed to secure the customers and attendant funding the company needs to build out its infrastructure.
Chaarat Gold Holdings
Chaarat Gold Holdings (AIM:CGH) has two development assets set in the spectacular mountain ranges of the Kyrgyz Republic in central Asia, and a producing gold, silver, copper and zinc mine in southern Armenia
The company believes its wholly owned interests in the Republic’s Tulkubash oxide and Kyzyltash sulphide deposits have the collective potential to produce 300,000 to 400,000 ounces of gold per annum for at least five years. Its 100pc-owned Kapan Mine and Processing Company has produced copper and zinc concentrate since 2003, and is expected to produce at least 50,000 ounces of gold per year over the next decade.
A primary focus for Chaarat is the near term development of the Tulkubash Oxide Gold Project from a cluster of highly prospective pits to an open-pit mining heap leach operation. Though much of the asset is still to be extensively explored the company’s most recent JORC compliant bankable feasibility study, published in May, estimates a Mineral Resource of 49.9 Mt grading 0.73g/t gold containing 1,177 koz of gold, and an initial CAPEX requirement for first gold of $115m.
Ongoing exploration at Tulkubash is seeking to convert the Inferred JORC estimate to Measured and Indicated. This year’s programme intersected consistent oxide gold intercepts as expected: an MRE update is planned for 2022. A geophysical survey next year will seek to delineate further prospective zones.
Chaarat has a long road to secure the $115m needed to fund the mine’s construction. Significant progress was made in February when the company raised the $30m equity portion of the funds. It says it is ‘in advanced discussions with financing counterparties who are completing their due diligence requirements and financing documentation’ regarding the $80m debt finance element of the project. But it is working under the shadow of the well publicised and bitter conflict between the Kyrgyz government and Canadian mining company Centerra Gold. The Kyrgyz administration that took office earlier this year under strongman president Sadyr Japarov is pursuing an aggressive agenda to nationalise Centerra’s Kumtor gold mine. Japarov’s room for manoeuvre is limited by the Republic’s economic dependence on companies precisely like Centerra: gold production is Kyrgyzstan’s biggest source of economic revenue, and Kumtor is the largest single contributor to its gross domestic product. But the saga continues to impede Chaarat’s efforts to secure project funding. The company is exploring options to fund the project itself through a standalone financing or a comprehensive refinancing of its current debt.
Chaarat’s other Kyrgyz project, the Kyzyltash sulphide deposit, is a longer term and rather more speculative venture. The company estimates that Kyzyltash, with the potential to produce 200,000 to 300,000 ounces of gold per annum, has scope to overshadow Tulkubash, but would only be viable as a more expensive refractory extraction operation. A drilling programme to obtain Kyzyltash ore for metallurgical testing is underway.
Production at Kapan has encountered challenges in recent months due to pandemic induced operational restrictions and equipment supply issues, but Chaarat is on track to meet its target of gold equivalent 57 Koz for the year. Strong commodity prices continue to support revenues and work is progressing to define the next phase of mining at Kapan.
Chaarat carries debt: a financing deal earlier this year helped, reducing it from $70.5m to $46m. The company’s interim results showed revenue up 61pc in H1 2021 to $48.1m from $29.9m reflecting strong commodity prices. Operating profit was $7.8m, up from a loss of $5.2m. As at August 2021 the company had approximately $23m cash.
Chaarat Gold Holdings is something of a speculative bet, working in fragile jurisdictions with much work to do to secure financing for its flagship project. But a Tulkubash deal would be transformative. The company’s share price is currently just under 20p, having touched 30p earlier in the year.
Chesterfield Resources
Chesterfield Resources (AIM:CHF) expanded its focus in 2021 through a new acquisition in Canada, complementing its existing Cyprus holdings.
The Adeline copper project in the Labrador region of eastern Canada, acquired in May encompasses a geological basin sharing geographical features with copper-rich basins in Zambia, Michigan and Siberia. Adeline extends for 300 km2, and covers 1,189 claims. Chesterfield is analysing and re-modelling exploration data going back 70 years, has undertaken a field survey with a view to designing a diamond drill programme to test for extents of high-grade copper-silver mineralised grey beds. The company is pursuing an investor relations and share promotion programme in Canada.
Until last year Chesterfield’s exclusive focus was a portfolio of 100pc-owned licences running across the dramatic Troodos Mountains that range along Cyprus’s southern spine. The 100 km asset makes the company the island’s largest minerals rights holder. Chesterfield has undertaken remote sensing, mapping, archive, geochemical and geophysics programmes to uncover Volcanognic Massive Sulphide (VMS) deposits that older exploration techniques had not been able to access, which it hopes will serve as the foundation for a mining project with a centralised planning unit. The project received a major boost late last year when Polymetal International, the FTSE 100 precious metals mining group, invested £2.1m to take a 22.5pc strategic stake in the company, picking Chesterfield as a primary strategic partner for its ambitions to increase its exposure to copper.
Diamond drilling got underway in June, targeting a promising North-South trending structure similar to those tapped by a nearby mine at Limni, which has produced around 8.1 million tonnes of ore yielding approximately 90,000 tonnes of copper. Earlier this month the company reported assay returns from recent diamond drilling establishing the discovery of a significant gold-mineralised system at the project’s Westline target, covering approximately 220m by 300m in area, and open on three sides. 15 contiguous drill holes have outlined a continuous, thick, shallowly dipping and tabular body of gold mineralization, that is also strongly anomalous in copper and zinc. The most recent hole has recorded the thickest and highest-grade intersections to date, suggesting that the body is increasing in size and grade towards the south. A test work programme of detailed geophysics and further step-out drilling is planned to enlarge the zone.
Chesterfield is funded for its initial work in Canada, and the continuation of its Cyprus campaign. The company raised £800,000 in July, and its most recent interims stated a net cash balance as at 30 June 2021 of £1,504,973.
Much now rides on successful surveying and initial drilling work at Adeline, but the company has moved quickly to advance the project to the point of drilling within the space of a few months. Chesterfield’s share price is currently just under 10p, having been over 15p at the start of the year: with opportunities in Canada as well as Cyprus the company continues to be worth watching in 2022.
Contango Holdings
Contango Holdings (LON:CGO) is moving into 2022 flush with funds to advance its coal and gold prospects in Zimbabwe and Mali, after completing £2.5m placing earlier this year.
Contango has a 70pc interest in the Lubu Coal Project, covering 19,236 hectares of the Karroo Mid Zambezi coal basin in Zimbabwe’s Hwange mining district. The licence came with a Resource of more than 1.3bn tonnes, 702Mt Indicated and 510Mt Inferred. Contango wants to sell the Project’s high grade 28CV metallurgical coal – which can be ‘cooked’ to produce the coke used by steel makers – to industrial consumers across southern Africa.
Last autumn Contango also acquired the Garalo-Ntiela Gold Project in Mali, coverivng an area of 161.5 km2 within the Sikasso region, about 200 km south-east of the Malian capital Bamako. Surrounded by several producing multi-million ounce gold deposits, Garalo-Ntiela had been extensively explored prior to acquisition, with its resource estimated at 2 Moz gold, with structures similar to the nearby 2.8 Moz Kalana deposit operated by Endeavour Mining. Initial plans are to produce a 20-30,000oz per annum heap leach oxide operation targeting margins of $1,000/oz or more.
Contango’s focus this year has been to fine-tune development strategies for both projects, and to undertake fundraising to support future work. 2021 began with the company in discussion with the Zimbabwean subsidiary of a major Chinese industrial company – described by Contango as ‘one of the world’s largest stainless steel producers’ – regarding a potential long-term offtake agreement. But after results from sample analysis ‘exceeded the company’s expectations’ Contango is now fast-tracking plans to manufacture its own coke at Lubu. Samples extracted from the Project’s 1A Lower and MSU metallurgical seams, including ash, sulphur and phosphorous contents have ‘demonstrated the commercial characteristics’ of its metallurgical coal, and indicated the potential for producing 96Mt of high-quality coking coal, with low ash and sulphur and with high yields and swelling indices. Last month Contango raised £2.5m to allow it to bring Lubu into production ‘towards the end of Q1 2022’. The company intends to install a coke battery by the end of the year with initial production of 150 Ktpa.
Contango has undertaken exploration campaigns at Garalo-Ntiela to clarify the prospect’s geological structures and resource expansion potential, with a view to establishing a large standalone gold mine with multiple open pit operations across both permit areas. Analysis continues to support the company’s long term objective of constructing a processing hub capable of supporting multiple open pit operations, but have encouraged it to formulate a near term plan to establish a smaller standalone 30,000 oz per year heap leach gold operation promising to generate significant cashflow in return for a modest capex requirement. An update on further drilling to clarify the resource is expected soon.
Contango has done much work this year to define a credible production and sales strategy for both Projects. The company has not lost sight of its ultimate objective of developing substantial full resource production at Lubu and Garalo-Ntiela, it is planning near term operations at both projects to start generating revenue as soon as possible. The company’s share price has oscillated between 6p and 10p this year, as investors weigh its prospects, and is currently at the lower end of that spectrum, hovering around 6p at the time of writing. It was as high as 8.75p as recently as October, and may be set to rise again shortly if the company can continue to report positive near term progress at Lubu.
Empire Metals
Empire Metals (AIM:EEE) has embarked on a tough journey of transformation over the past 18 months as it has attempted to pivot from a long-time focus on Georgia to fresh assets in Western Australia.
The company has moved away from its previous flagship asset, a 50pc interest in the Bolnisi Copper and Gold Project in the Caucasus mountains, after a long running dispute with the Georgian National Agency of Mines over the extent of the licence, taking a big step on its new path with the acquisition of a 75pc interest in the Eclipse Gold Project. The Project is centred on a historic mine located 55 km north-east of Kalgoorlie, which has recorded historic production of 954 tonnes at 24.6 g/t gold for 754.25 oz gold. A 2014 drilling programme identified high-grade mineralisation within a 30 metre zone either side of the main Eclipse shaft, and soil surveys have indicated elevated gold concentrations in portions of the Project’s mineralised system.
Empire doubled down on Australia in May, taking a 75pc interest in the Central Menzies Gold Project 90 km north-west of Eclipse. The Project, comprising four exploration licences covering a granite-greenstone belt within the Menzies Shear Zone, is circled by the 320,000oz @ 2.1g/t gold Menzies Gold Project operated by ASX-listed Kingswest Resources, and is directly south along the strike of the 15 kilometre Yunndaga line of workings, which has a historic metal inventory of 1.1 Moz of gold. Historic drilling has encountered several high-grade intercepts including 5 metres @ 19.59 g/t gold from 30 metres, and 3 metres @ 5.15 g/t gold from 35 metres. Under the agreement Empire will spend AUD$0.5m on exploration at Central Menzies within a nine-month option period, with the right to exercise the option for AUD$1.75m in cash and AUD$1.25m worth of shares.
The company has made progress at both Eclipse and Central Menzies this year. It started exploring Central Menzies, aiming to verify the drilling data it inherited, and to acquire fresh geophysical survey data. Two phases of reverse circulation drilling at the prospect over the past few months have indicated a significant gold anomaly identified along a 500 metre strike length, which is currently being evaluated to inform the company’s decision whether to extend its option on the licence.
This summer’s drilling at Eclipse has sought to test the extent of previously identified mineralised systems, particularly around historic workings at Jack’s Dream. In July Empire announced that 19 holes had been drilled for a total of 1,893 metres, and three core diameter drill holes for a total of 201.1 metres, discovering ‘several parallel veins in addition to the main Eclipse vein’, and confirming intercepts from previous drilling.
In August the company changed its Eclipse drilling strategy after finding the main gold mineralisation at the mine to be more prevalent at depth and ‘perhaps orders of magnitude larger than originally anticipated.’ Rather than moving ahead directly to a small-scale open pit operation Empire would take time to recalibrate its programme ‘with the objective of delivering a larger mineralised inventory’.
Earlier this week Empire announced that a new series of drilling programmes is scheduled to commence Q1 2022 designed to gather further geological and structural information around the prospect’s Eclipse and Jack’s Dream shafts, and to prove the extent of gold mineralisation. An exploration programme is also underway to test gold targets to the north and northwest areas of the licence area.
Empire’s share price has been battered over the past few years as its Georgian venture has run aground, and investors wait to see if it can successfully engineer its shift in focus. Riding high at 25p four years ago, the company’s stock price has fallen all the way to 1p. But the company has taken action to extricate itself from its Georgian difficulties, staking out a new position in one of the world’s most prospective gold regions. Empire may still be one to watch next year if it can record good progress at at least one of the new opportunities it has given itself.
Helium One
Helium One (AIM:HE1) offers something a little different: the prospect of turning ‘the largest listed primary helium deposit in the world’ into a significant source of the international economy’s most enigmatic and valuable elements.
Helium has a wide range of exceptional qualities that make it essential for many of today’s most advanced technologies. It is extremely light, colourless, odourless, and inert, one of the ‘noble’ gases that does not react with other substances. It has the lowest boiling point of any element, only changing from a liquid to a gas at a temperature close to absolute zero. It is best known for its use for powering airships, as a breathing gas for deep sea divers, and, of course, for inflating balloons. But it is also essential for a wide range of cryogenic, scientific and manufacturing processes. These and other specialist applications make helium one of the world’s most critical elements, generating a global market estimated to be worth more than $6bn a year. Like other critical materials, such as lithium, cobalt, and vanadium, its supply depends on a few key producers.
Helium One has 18 prospecting licences in Tanzania, covering more than 4,512 km2 in three project areas at Rukwa, Balangida and Eyasi. Rukwa is currently by far the most significant, with an estimated Helium P50 resource of 138 bcf, with potential outcomes ranging from 30 bcf to 521 bcf. Helium concentrations of up to 10.6pc have been recorded in the field’s surface seeps: the helium grade associated with hydrocarbon byproduct production is typically around 0.1 to 0.3pc.
Eyasi and Balangida are at much earlier stages of development. The 804 km2 Eyasi Project is some 600 km to the north of Rukwa, but has numerous geological similarities. High-grade helium has been measured at surface and structural leads have been identified from surface geochemical exploration carried out early this year. Balangida is a single prospecting licence covering an area of approximately 260 km2 that has not yet been explored.
A seismic campaign at Rukwa early in the year defined a multi-well exploration programme targeting shallow trap structures to a maximum depth of 1,200 metres. The programme got off to a positive start, chromatograph data showing helium concentrations of up to 22,084ppm (2.2pc) in drilling mud encountered while drilling the first well, Tai-1, and further helium shows were reported in zones from 552 metres to 561 metres above the well’s primary targets. Subsequent updates were much more mixed, however, the campaign concluding ‘without identifying helium gas’ at Tai-2. The company insists nonetheless that drilling has ‘significantly de-risked the Rukwa Basin by demonstrating a working helium system’, allowing the team to identify ‘Shallow’ and ‘Deep’ target types for a second phase of exploration.
Helium One commenced data acquisition of its 200 line kilometre Phase II 2D Seismic Campaign at Rukwa in November. The campaign is ongoing with the late arrival of rains to Rukwa resulting in favourable ground conditions for data acquisition. A December update said the company had so far completed 188.5 line kilometres, or 94pc of the originally planned 200 line kilometre survey. Following encouraging early results, the company has decided to extend the survey with an additional 20 line kilometres of 2D Seismic to secure additional data over promising targets within a previously unsurveyed area. It is also shooting an experimental line to test the suitability of high resolution seismic to gather data to understand stratigraphic and structural variation within poorly resolved shallow and ultra-shallow zones, facilitating the identification of deep targets.
Helium One intends this work to provide additional drill ready targets ahead of a planned 2022 conventional drilling campaign. The company is funded for current exploration activities and in negotiation with rig contractors for mobilisation of a conventional rig to target commencement of drilling in Q3 2022. Cash reserves available for Phase II exploration as of 31 October 2021 stood at $11,506,914.75.
Ambiguous results from Rukwa in the summer cost the company the market’s trust: its share price is down from nearly 30p in August to around 6p at the time of writing. Perhaps that will prove an overreaction: the company is still funded for ongoing exploration. It has much work to do to prove up its extravagant assessments of Rukwa’s potential, but, with money in the banks, it’s worth keeping an eye on Helium One’s progress.
Jangada Mines
Jangada Mines (AIM:JAN) has spent 2021 working to bring its fully-owned Pitombeiras Vanadium Project into production.
The Project, which covers 1,093 hectares about 300 kilometres inland from the port city of Fortaleza in north-eastern Brazil, is prospective for the vanadium titanomagnetite (VTM) mineralisation increasingly in demand for use in flow batteries. Early this year Jangada supplemented its Pitombeiras interest by taking a 3.6pc stake in Fodere Titanium Limited, a UK green tech startup seeking to commercialise the production of titanium dioxide and vanadium from waste materials. Fodere has secured capital to begin building its first industrial production facility, with a capacity of more than 22,000 tonnes, and is currently in discussion with industrial offtakers.
Before this year’s work Pitombeiras had a NI 43-101 compliant resource estimate of 5.70Mt at an average grade of 0.51pc vanadium pentoxide (V2O5), 10.09pc titanium dioxide (TiO2) and 50.42pc of ferric oxide (Fe2O3). Exploratory work over the spring and summer focused on evaluating VTM mineralisation over a structural trend underlying three targets, Pitombeiras North and South, and Goela. By July Jangada was was able to announce that drilling had allowed it to upgrade the Project’s Total Mineral Resource Estimate (MRE) by 45pc to 8.26Mt, with 62pc of the resource now classified at the higher confidence Measured & Indicated Mineral Resources category. The Mineral Resource classification stated Measured & Indicated Resources of 5.10Mt at 0.46pc V2O5, 9.04pc TiO2 and 46.06pc of Fe2O3, and an Inferred Resource of 3.16Mt at 0.44pc V2O5, 9.00pc TiO2 and 45.86pc of Fe2O3. VTM mineralisation continues to be open, with drilling to date limited to three of eight known targets.
In light of the positive MRE Jangada said it would move directly to a Feasibility Study (FS) rather than an upgraded Preliminary Economic Assessment (PEA). The company had completed an initial PEA at the start of the year which offered promising evidence for the Project’s robust economics, forecasting a post-tax Net Present Value of $106.5m, a 317.8pc post-tax Internal Rate of Return, and three-month payback. The company said it was hopeful of proceeding to mine development and first production ‘as early as H1 2022’. A trial mining license, allowing for the extraction of up to 300,000 tonnes of Ferrovanadium (FeV) bearing material per year from Jangada’s exploration licenses for evaluation purposes, was granted in June.
The company went on to announce that metallurgical test results on ferrovanadium-bearing titanomagnetite samples had yielded ‘excellent results’. Bench and pilot scale test works using magnetic separation had produced a ferrovanadium-rich concentrate containing a minimum of 62pc Fe, the benchmark for saleable FeV-rich magnetite concentrate. Jangada expects the FS to be completed in Q4 2021. An update on the study’s progress earlier this week said it would identify ‘an opportunity for Jangada to potentially benefit from extracting additional value from the titanium dioxide present at the Project’. The FS is expected to highlight ‘no technical or geological impediments to proceeding’.
The company’s most recent interim results, published in September, confirmed that subject to a satisfactory DFS it ‘intends to proceed to mine development, with first production mid 2022’. The sell down of its investment in ValOre had allowed it to record a Total Comprehensive Profit of $0.605m against a 2020 loss of $0.925m.
Jangada’s stock entered 2021 on a strong upward curve, soaring from less than 5p to a high of 11.25p in February after the publication of its positive PEA that month. The price slipped back to around 8p in subsequent weeks, and hovered around that value though the spring and summer until dipping in the autumn back down to just below 6p. A busy 2022, however, would seem to be on the horizon. The completed Pitombeiras FS is due in Q1, paving the way for production. Prospective investors should also look out for news of deals with potential customers. If Jangada can meet the targets it has set itself its share price may be about to resume its upward path.
Landore Resources
Exploration this year at the Junior Lake Property fully owned by Landore Resources (AIM:LND) has highlighted the licence’s prospectivity for nickel, copper, cobalt and PGE metals as well as gold.
Junior Lake, which together with the contiguous Lamaune Iron Prospect (90.2pc owned), covers a 30,507 hectare site in the Canadian province of Ontario, with access to Thunder Bay, the main supply hub for the region’s miners. The company’s current drilling programme is focused on the Property’s key asset, the BAM Gold Deposit, the most recent Mineral Resource Estimate (MRE) for which reported a resource of 31,083,000 tonnes at 1.02 g/t for 1,015,000 oz gold, including 21,930,000 tonnes at 1.06 g/t for 747,000 oz gold in the Indicated category. Target areas adjacent to the current delineated deposits offer a possible 14,761,000 tonnes at 0.93 g/t oz gold, and a further 441,000 oz in the ‘Unclassified’ material category.
But though till recently the company’s overwhelming focus has been on gold, Junior Lake has always been prospective for other metals. Historic drilling at the Property’s B4-7 Nickel-Copper-Cobalt-PGE Deposit and Alpha Zone, some 600 metres southwest of the BAM Gold Deposit, has found polymetallic nickel-copper-cobalt-platinum-palladium-gold mineralisation, the most recent resource estimate stating 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 for a total of 46,661 tonnes of contained metal. The VW Nickel-Copper-Cobalt Deposit is estimated to offer 1,084,000 tonnes at 0.71pc NiEq in the Indicated category, and 180,000 tonnes at 0.68pc NiEq in the Inferred category for a total of 8,920 tonnes of contained metal. An 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.
Exploration of the Property’s nickel, cobalt, copper and PGE metals potential was put on hold following the 2012 commodities crash – and after the possible extent of the BAM Gold Deposit became clear – but earlier this year Landore said that in light of the global economy’s runaway demand for battery metals ‘the Board considers these projects to be viable once again’. The company’s most recent operations update, published in October, said that while ‘Landore continues to be focused on advancing the BAM Gold Deposit towards a multi-million ounce target, the increasing interest in Battery Metals worldwide, accompanied by rapidly escalating prices, is encouraging the Company to re-evaluate its highly prospective B4-7 and VW Nickel-Copper-Cobalt-PGEs Deposits together with … numerous identified prospects’.
The company raised £2.8m last summer and a further £3.5m this February to fund its current drilling programme, which began last October with the aim of expanding the BAM Gold Resource and exploring westwards along strike for several kilometres to identify new gold trends. Exploration will inform updated MRE and Preliminary Economic Assessment (PEA) reports the company hopes will upgrade the resource’s Inferred mineralisation to Indicated status.
Landore made waves in April when it reported that ‘bonanza grade gold’ of 432.0 g/t over 0.32 metres had been intersected in drill hole 0421-785, in the footwall below the currently defined East pit of the BAM Gold Deposit. Subsequent updates have been somewhat less spectacular, but have reported steady solid progress. Landore has sufficient funding to complete its current drilling and exploration programme and to meet the company’s working capital requirements to the end of June 2022.
Landore’s share price rose sharply at the start of the year as its drilling programme gained momentum, doubling from 20p to 40p in January, and revisiting those heights in the spring on the bonanza gold news. It has since drifted down to the 20p to 30p region, standing at just under 26p at the time of writing. With refreshed MRE and PEA reports due soon for which Landore’s many positive updates this year bode well, this is a company worth watching in 2022.
Lexington Gold
Lexington Gold (AIM:LEX) continues its work to open up some of the historic mines of the US gold rush with modern drilling technology.
Lexington is seeking to realise the potential of four gold projects across a 1,675 acre slice of the Carolina Super Terrane geological feature in North and South Carolina, location of the OceanaGold Corporation’s world class Haile Mine. Lexington has a 51pc membership interest in each project, with the rest owned by joint venture partner Uwharrie Resources. Lexington has the option to take an 80pc stake after four years should Uwharrie drop out.
The 179.66 acre JKL Project combines the Jones-Keystone and Loflin Properties that small prospectors mined till the outbreak of the Civil War, and then again up to the Great Depression. Pits, trenches, shafts and glory holes at several workings offer evidence of widespread gold mineralisation, with grades ranging between 0.5 and 2.5 g/t. The Carolina Belle Project, in Montgomery County, just north of Candor, North Carolina, has rarely been mined since it was discovered at the turn of the last century, when it produced 50,000 ounces of gold until a 1916 dispute between the neighbouring mines ending further exploration and production. The Jennings-Pioneer Project, part of the Barite Hill Gold district in South Carolina, offers several greenfield exploration prospects with well-defined and potentially continuous zones of gold and base metal mineralisation already identified from historic mines and surface workings. The Argo Project in the northwest corner of Nash County, just north of Nashville, was last mined in 1894. Lexington believes the Project offers potential for systematic surface prospecting and extensions to known mineralisation.
The JKL campaign began in March with the drilling of six diamond holes on the south-western Loflin side of the Project. Assay results for the first six drill holes received in May and June all recorded gold intersects. In July Lexington reported positive assay results from a maiden surface exploration sampling programme at the Carolina Belle Project undertaken earlier in the year. Soil, rock chip, and grab samples conducted on a 50 by 100 metre grid covering the entire 391.98 project acre identified new areas of alteration and mineralisation, and additional drill targets. A subsequent update said that modelling and interpretation of the geophysical data gathered this year would allow drilling programmes to begin at both the Carolina Belle and JKL Projects in September, with some 5,000 metres of Reverse Circulation (RC) drilling to be carried out by Canada-based operator FTE Drilling, which has a track record of operations at the Haile Mine.
The JKL Project drilling programme was designed to establish a maiden resource estimate for location’s Jones-Keystone side. At the outset of drilling an MRE for the Loflin side was announced, specifying an Inferred Resource of 2,064,000t @ 0.99 g/t gold for 65,056 oz of contained gold. Earlier this month drilling at the Carolina Belle Project was completed, with assay results expected to be received between mid-December 2021 and mid-January 2022. A further update said that drilling continues at the Loflin side of the JKL Project with seven drill holes for a total of 645 metres completed to date. Significant sulphide mineralisation has been intersected on the southern side and outside of the current known Loflin resource.
With results from JKL and Carolina Belle expected in the new year Lexingston’s story is worth following. The company’s share price, currently just under 3p, may return to the levels of around 6p reached in the summer should the results meet expectations.
Panther Metals
With two drilling programmes underway in Canada and consolidation of its Australian assets into a new ASX-listed subsidiary Panther Australia, Panther Metals plc (LON:PALM) is seeking to maintain the momentum it has established over the past two years.
On joining the LSE last January Panther had two prospects in Western Australia, the Marrakai and Annaburroo Gold Projects, covering a total area of 160 km2 some 70km to the southeast of Darwin, in the region’s Northern Territory. The projects are situated within the Palaeoproterozoic Pine Creek Orogen, which hosts over 250 gold occurrences and several operating gold mines, including the Rustlers Roost deposit containing 51 Mt @ 1.0 g/t Au.
After IPO Panther went on to acquire the Merolia Gold Project, its first post-discovery opportunity in the region, a 145 km2 tenement package close to the prolific Granny Smith, Sunrise Dam and Wallaby gold mines, which together have produced nearly 20 Moz gold. The region’s Archaean greenstone belts are particularly prospective for gold and nickel mineralisation. The Project hosts a series of gold prospects, notably Burtville East, Comet Well and Ironstone, and the Red Flag Project, where previous exploration has identified a WNW-trending gold anomalous zone coinciding with a distinct magnetic low. Merolia is also prospective for nickel-cobalt sulphide mineralisation.
On going public Panther also had a significant Canadian asset, the Big Bear Gold Project in Ontario, expanded last summer through the acquisition of the Dotted Lake Property, comprising 174 contiguous claims located approximately 18 km north-northeast of the Hemlo mine owned by Barrick Gold, which has produced more than 22 Moz of gold over the past 30 years. Located on the northern limb of the Schreiber-Hemlo Greenstone belt, Dotted Lake covers 7 km of the prospective geological contact between the Dotted Lake Batholith plutonic intrusive and mafic volcanic and metavolcanic ‘greenstone’ rocks. This summer Panther significantly extended the company’s Canadian portfolio by taking a near exclusive exploration holding over the Obonga Greenstone Belt, also in the Thunder Bay region, prospective for gold, copper, lead, zinc, silver, and PGM deposits.
The company has been busy this year preparing for and launching drilling campaigns in both Canada and Australia.
An airborne geophysics survey over Dotted Lake in February identified 138 geophysical anomalies, and after further investigation of high priority targets a diamond drilling programme to test intrusive contact shear-zone hosted gold mineralisation got underway in September. Last month Panther announced that analysis of Dotted Lake soil assay data sampled during the summer had delineated a 1.3km long shear-related gold anomaly, and a further four distinct gold anomalies associated with interpreted intrusive contacts or other structural features. A work programme is being planned to follow-up on these new findings.
In October Panther commenced diamond drilling on the Obonga Project’s Wishbone volcanogenic massive sulphide (VMS) prospect, ‘a strong electromagnetic geophysical anomaly’ that could be indicative of copper, lead, zinc, silver and gold. Wishbone is situated in a similar geological environment to the nearby Sturgeon Lake area, which hosted five commercially viable VMS mining operations that produced from the 1970s to the 1990s.
In Australia, Panther has defined a JORC Exploration Target for nickel and cobalt at the Coglia Project on the southernmost area encompassed by the Merolia project tenements, which provides a tonnage range of 30 to 50 Mt at 0.6 to 0.8pc nickel and 400 to 600 ppm cobalt. The mineralisation is developed along a lateritic horizon lying above largely ultramafic host rocks which are themselves mineralised with sulphides in places. Drilling at Coglia got underway earlier this month, a two-year work programme aiming to convert existing nickel, cobalt and gold prospects into JORC compliant targets.
The company’s most significant news this year regarding its Australian assets was its decision, announced in the spring, to list the company’s Australian operations as Panther Metals Ltd – to be referred to for everyday purposes as ‘Panther Australia’ – on the Australian Securities Exchange (the ASX), a move designed to more clearly distinguish the company’s Australian and Canadian operations with a view to improving organisational efficiency, and allowing investors to channel their investments more precisely. Panther Metals plc – the parent company – will continue to hold a 36.6pc stake. The listing, which went ahead on 10 December, raised A$5m.
Panther undertook a £630,000 fundraise in September in support of its Dotted Lake and Obonga drill programmes. The raise followed placings through 2020 that brought in £1.37m. The company is keen to avoid the classic natural resources small cap trap of undercapitalisation and over extension, seeking to calibrate its risk/reward profile through the careful accumulation of promising assets likely to yield near term revenue generating discoveries.
As a small cap start-up the company has been and will continue to be dependent for the time being on placings to sustain momentum, opening the share price to periodic dilution. But though the value of Panther’s stock has subsided somewhat this year, dipping from a high of 17p in February to around 12p at the time of writing, its overall vector since IPO has been upwards. With so much activity underway we continue to highlight the company as one to watch in 2022.
Power Metal Resources
Power Metal Resources (AIM:POW) continues to build a global portfolio including precious, base and strategic metal exploration projects in North America, Africa and Australia, ranging from early-stage greenfield exploration ventures to later-stage prospects currently subject to drill programmes.
The company’s philosophy is to develop projects internally or through strategic joint ventures until ready for disposal through outright sale or separate listing. Value generated through disposals will be deployed internally to drive the company’s growth or returned to shareholders.
Prospective investors should consult Power Metal’s fast moving news service for updates on their many projects, but the company’s quarterly operational updates offer useful summaries. Space doesn’t allow us to summarise all of them, but here are four giving a sense of the range of the company’s interests:
Assay results are pending at the Silver Peak Project (30pc interest) in British Columbia, Canada, where work continues towards a potential IPO. A drill programme is underway at the Haneti Project (35pc) in Tanzania, prospective for nickel sulphide and PGE mineralisation. Work continues on technical analysis following a drill programme at the Molopo Farms Complex Project (50.8pc) in Botswana, where significant nickel sulphides have been identified in drill core. Some 241 km2 of ground has been staked surrounding the Athabasca Basin (100pc) in Saskatchewan, Canada, encompassing seven property packages prospective for uranium mineralisation. Work is being undertaken to assemble detailed project information and to determine next steps for the newly acquired properties.
Other projects include the Authier North Lithium Project (100pc) in Canada; the Tati Gold/Nickel Project (100pc) in Botswana); the Ditau Project in Botswana targeting rare earth elements and base metals; the Kalahari Copper Belt in Botswana where drilling of copper-silver targets is planned; the Wallal Gold/Copper Project in Australia; and the Victoria Goldfields, Australia, where drilling for gold is planned.
Power Metal currently has working capital comprising cash and listed investments of some £3m, boosted by a £1.05m November fundraise. The new capital will be used to expand the company’s exploration budgets, accelerate corporate work and complete on a number of new initiatives. Its next set of financial results for the year ended 30 September 2021 are expected in February 2022.
Power Metal’s share price has hovered between 3p and 2p for much of the year, but has lately drifted down to 1.35p. As we note above, potential investors should review the company’s many interests carefully: there is a lot to process. But Power Metal’s investments are underpinned by a coherent philosophy, which promises to continue to generate value in 2022
Sunrise Resources
Sunrise Resources (AIM:SRES) has continued to work this year towards establishing itself as a producer of pozzolan and perlite, materials sourced from naturally occurring volcanic ash and pumice that have a much lower carbon footprint than industry standard portland cement, offering the promise of greening the construction industry.
Pozzolan can be used as an alternative cement to carbon-heavy portland: If the cement industry were a country, it would emit more CO2 than any other nation than China and the US. Perlite is a light glassy volcanic raw material more suitable for household and industrial applications, including garden pots that aid water retention and aeration, insulation and fire proofing, paint texturing, plaster and concrete fillers, and industrial cryogenic storage vessels.
Sunrise’s flagship asset is its 100pc owned CS Project in Nevada, permitted for the annual production of 500,000 tons of pozzolan and 100,000 tons of perlite. Preparations are well advanced for a drilling campaign: drill holes and trenches have been completed, extensive analysis of a range of samples has confirmed their commercial quality, an environmental assessment has been undertaken, and the necessary permits have been secured from US regulators.
Earlier this year a 500 ton pozzolan sample for commercial trials was delivered to a prospective client, an established US cement company seeking alternatives to the coal-derived fly ash it has previously used for its concrete mixes. Perlite samples have also been sent to interested companies. Sunrise has published a 27-year mine plan that includes a four-phase pit design targeting production of 14.5 million tons of pozzolan, starting at rate of 100,000 tons per year rising to 500,000, and 1.3 million tons of perlite starting at an annual 20,000 tons rising to 100,000. The company is working to divest or farm-out a legacy portfolio of drill-ready precious and base metal projects to allow it to concentrate its resources on advancing the CS Project through to production.
A test grind on the bulk sample sent to a prospective client – a cement manufacturer and ready-mix concrete company (CMRC) – was completed in May, with the material successfully ground to the target size, and in August the CMRC confirmed progress in its due diligence process, preliminary test results from two commercial concrete pours demonstrating the samples were sufficiently strong to serve as concretes. Sunrise expects ongoing progress will provide the basis for a more structured arrangement with the CMRC, noting that the bleak long-term outlook for fly ash supplies in the US had prompted a number of additional companies to request its natural pozzolan samples. Earlier this month Sunrise said that commercial discussions with the client ‘have progressed to the point where the CRMC now has the support of its Board to enter into a joint development of the CS Project’. A second major building materials producer’ has also been testing Sunrise’s materials this year though discussions are at an early stage.
Perlite trials are being undertaken by another prospective client which have confirmed ‘a good low density expanded product with good rates and attractive appearance’ that would be ‘a premium product for the US market’. Sunrise is working to fine tune the density of its perlite to ensure it is calibrated to the right grade for prospective clients, whether horticultural or industrial.
While progressing the CS Project trials Sunrise has staked additional claims covering a deposit of natural pozzolan near the historic settlement of Hazen in northern Nevada, and has identified an opportunity for the rare industrial mineral sepiolite near Pioche in Nevada. Sepiolite is a clay used as a viscosity modifier in a number of industrial materials, as well as an absorbent. Claims have been staked and positive initial tests by a European industrial minerals producer have been completed.
Sunrise is financed through periodic fundraisings until such time as cashflow can be derived either from sale of assets or future operations. The company raised money for its current programmes last year through a series of placings worth £1.3m.
Sunrise has a clear strategy to serve a well defined market, offering building materials that will become ever more important as the global economy takes on the challenge of greening one of its most carbon intensive sectors. The company is positioned to take advantage of the particular conditions that apply in the western US construction sector, where fly ash supplies are under pressure. Sunrise’s share price has drifted down to around 0.2p since touching a high of 0.33p in January. The company is having to pass through a drawn out trials process before it can move to commercial production. Slowly but surely, however, the boxes are being ticked. Offering an innovative solution to one of the toughest green economy challenges, Sunrise Resources is a story worth following in 2022.
