Think Landore Resources is just a Gold play? Think again…
“…The stock’s value has shown signs of spiking upwards in recent weeks. Updated MRE and PEA reports are due soon, with Landore’s many updates this year clearly indicating that they will confirm and upgrade what appears to be a highly prospective licence…”
Canada-focused miner Landore Resources (AIM:LND) has long been associated in the market’s mind with its promising gold deposit. But though this year’s ongoing drilling programme has continued to report solid progress in delineating the extent of that resource, investors should note the increasing attention the company is paying to the nickel, copper, cobalt and PGE metals it might hold.
Landore’s flagship interest is its 100pc owned Junior Lake Property, which together with the contiguous Lamaune Iron Prospect (90.2pc owned), covers a 30,507 hectare site in the Canadian province of Ontario, with ready access to Thunder Bay, the main supply hub for the region’s miners. The Property’s known mineral resources and prospects are located within an Archean-age greenstone belt some 0.5 to 1.5 kilometres wide and 31 kilometres long.
The company’s current drilling programme is focused on the Property’s key asset, the BAM Gold Deposit, situated within a 2.7 kilometre geophysical anomaly midway along the belt. The most recent Mineral Resource Estimate (MRE) for the Deposit, published last January, 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. The Deposit remains open in several directions, with metallurgical test work indicating that gold recoveries may run between 97pc and 99pc, sufficient to facilitate efficient operating conditions.
But though till recently the company’s overwhelming focus had 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 1.5Mt to 2.0Mt 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.
Landore notes that Junior Lake’s nickel is commercial Grade 1 sulphide quality, suitable for use in battery metals. 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’.
Continued progress at Junior Lake
As we noted in our most recent features on Landore in September and October, Landore’s Junior Lake programme has made solid progress this year. The company raised £2.8m last summer and a further £3.5m this February to fund the 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 an updated MRE and Preliminary Economic Assessment (PEA), which 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 – bonanza grade is an industry term for the discovery of more than 34 grams of gold per tonne or one troy ounce of gold per tonne. The intersection offered new evidence of the Deposit’s potential, which had yielded a bonanza grade discovery four years ago, of 37.40 g/t gold over one metre, some 200 metres from the latest discovery, and in the same deformation zone.
Subsequent updates have been somewhat less spectacular, but have reported steady solid progress. In May 20 holes covering 4,700 metres drilled to test for potential strike extension to the west of the Deposit intersected ‘typical BAM Gold Deposit lithology and mineralisation’. The following month 19 holes drilled to test for depth and length extension of the Deposit’s East pit had encountered visible gold, and a few weeks later drilling intersected high grade gold in the vicinity of the bonanza grade quartz vein, confirming wide and relatively shallow zones of ore grade gold mineralisation within the East pit’s hanging wall, ‘substantially enhancing the existing defined resource’. In September step-out drilling confirmed the extension of the Deposit along strike to the west, and the company’s October update said that multiple occurrences of visible gold had been encountered in a newly discovered ‘Western Extension’ to the Deposit, where core in high grade sections is being reviewed. Landore intends to test ‘numerous targets’ identified by previous exploration drilling and geochemistry programmes at the Felix Prospect, an exploration area to the west and along strike of the Deposit. The MRE and PEA update, to be undertaken by Perth-based consultants Cube Consulting, ‘is currently scheduled for completion in Q4 2021.’
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. Its financial results for the six months to 30 June 2021 reported a loss of £2,422,042, up from £695,406, due to increased exploration costs, but the company had cash of £2,311,829, and no debt. It also owns or has the mineral rights to eight properties covering 99 claims in Nevada, and is entitled to a 1pc net smelter returns royalty from a property located in the Sudbury Nickel Belt after selling its interest in the licence earlier this year.
Surging battery metals, subdued gold
Landore’s most recent update noted the continued surge in prices for battery metals, in demand for their use as cathode materials for lithium-ion batteries in the automotive industry, and in the energy and electronics industries. The value of nickel, copper, and palladium has risen 15.6pc, 36.6pc and 95.4pc respectively in the past three years. The mega trend has been covered exhaustively in the financial press, including several TMS articles this year, most extensively in our commodities supercycle feature. An authoritative report by the International Energy Agency (IEA) in May indicated that supply for copper, nickel, lithium and cobalt is forecast to fall ‘well short’ of what is needed for a ‘accelerated deployment’ of key energy transition technologies like wind, solar and electric vehicles, IEA executive director Fatih Birol commenting that ‘the data shows a looming mismatch between the world’s strengthened climate ambitions and the availability of critical minerals that are essential to realising those ambitions.’
The immediate prospects for gold are somewhat cloudier. The price of the yellow metal surged last summer as investors scrambled for safe havens at the height of the pandemic, but it has fallen back this year as economies have made a stuttering recovery, underpinned by central banks and government recovery programmes, and investors have shown tentative interest in cryptocurrencies as an alternative hedge. According to Bloomberg more than $10bn has been pulled from the biggest gold exchange traded fund this year, physical gold held by funds have been sold down, and bitcoin has doubled in price. But gold could be due to recover as markets continue to fret over inflationary pressures and the possible impact of the Omicron variant. Bitcoin’s usefulness as a store of value is, to say the least, limited by its extreme volatility.
Outlook
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 news of bonanza gold. It has since drifted down to the 20p to 30p region, standing at 26p at the time of writing, leaving the company’s market cap at around £27.5m.
The stock’s value has shown signs of spiking upwards in recent weeks. Updated MRE and PEA reports are due soon, with Landore’s many updates this year clearly indicating that they will confirm and upgrade what appears to be a highly prospective licence. Particularly close attention should be paid to Junior Lake’s battery metals potential, about which the company has been increasingly vocal in recent announcements. Fully funded for its current programme, Landore Resource is moving into 2022 as one of AIM’s more intriguing natural resources prospects.
