The long journey for Landore will reward
“…February’s update for Landore was the latest in a series of positive updates over the past year on progress towards clarifying the Deposit’s resource…”
Landore Resources (AIM:LND) continues to make solid progress this year in delineating the extent of its flagship gold resource at Junior Lake, which is also prospective for nickel, copper, cobalt and other ‘battery’ metals.
The company’s 100pc owned Junior Lake Property – 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.
An upgraded Mineral Resource Estimate
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. Earlier this month Landore published an upgraded NI 43-101 compliant Mineral Resource Estimate (MRE) for the Deposit, which increased its In-Situ resource to 49,231,000 tonnes at 1.0 grams/tonne (g/t) for 1,496,000 ounces of gold, an increase of 481,000 ounces of gold (47pc) compared with the 2019 MRE of 1,015,000 ounces of gold. The updated MRE includes 30,965,000 tonnes at 1.0 g/t for 1,029,000 ounces gold in the Indicated Category and 18,266,000 tonnes at 0.8 g/t for 467,000 ounces of gold in the Inferred Category.
The upgrade, which ‘further support[s] Landore’s belief that the highly prospective Junior Lake Property has the potential to host multi-million ounce gold resources’, was based on results from Landore’s 2020-21 infill and step out campaigns, which drilled of 102 holes for a total of 24,171 metres. A total of 353 diamond drill holes for approximately 69,857 metres have now been completed at the Deposit: a total of 309 holes for a total of 62,719 metres were used in the MRE. The Project now extends for 4,300 metres and remains open down dip and along strike to the east and the west. Soil sampling has identified widespread gold mineralisation along strike to the west for a further seven kilometres.
Landore is currently completing planning and preparation requirements for the continued expansion of the Deposit, including deeper drilling on several potential underground mining targets, together with infill and extension drilling. Drilling will re-commence ‘in early Q2’ on further delineation of the newly discovered western extension shoot together with commencement of drilling on ‘the highly prospective Felix area along strike and to the west of the BAM Gold Deposit’. The company is also planning to commence Pre-Feasibility studies in H2 2022 on the Project.
February’s update was the latest in a series of positive updates over the past year on progress towards clarifying the Deposit’s resource, the most eye-catching being an April update reporting that ‘bonanza grade gold’ of 432.0 g/t over 0.32 metres had been intersected one drill hole (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 followed a similar discovery four years ago, of 37.40 g/t gold over one metre, some 200 metres from the latest discovery.
Beyond gold
But though, as its name indicates, the Deposit is best known for its gold prospects, 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 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.
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 October operations update noted 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’.
Landore is fully funded for its current drilling and exploration programme, and its working capital requirements to the end of June 2022, having raised £2.8m in 2020 and a further £3.5m last February. The company’s 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 it had cash of £2,311,829, and no debt. Landore 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.
Rising gold and battery metals
Landore’s progress comes against the backdrop of a sharp increase in the price of gold, the value of which has risen this year as investors worry about the impact of tightening monetary and fiscal conditions on growth, and, now, the fallout from Russia’s declaration against Ukraine. Fulfilling its historic function as a store of value in uncertain times, gold is already up 5pc this month, at the time of writing hovering just under $1,900 a troy ounce. Gold held by ETFs has increased by 57.3 tonnes already this year.
The price of gold, of course, is cyclical, but the longer term picture for battery metals is bright, demand secured for their use as cathode materials for lithium-ion batteries in the automotive industry, and in the energy and electronics industries. According to Landore’s figures 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, and in TMS, most extensively in our commodities supercycle feature. An authoritative report by the International Energy Agency (IEA) last year 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.’
Outlook
Landore’s share price is around 24p at the time of writing, gradually subsiding from heights of 30p reached after February’s positive MRE update. The vector of the company’s share price has been positive over the past two years, rising from around 9p at the outset of 2020, but the robust progress made towards elaborating the BAM Gold Deposit now seems to be priced in to the share. So, right now, the company is perhaps best viewed as a longer term holding: developments at Junior Lake auger well for its eventual transformation into a productive, profitable mine. Fully funded for its next round of drilling, Landore Resources remains one to follow in 2022.
