Alien Metals: Pinderi Ponderings...
...while precious metals are soaring
Good Afternoon Team.
While I tend to use a stock image for headlines, I wanted to mix this up a bit for this piece.
The above native silver specimen is the Karratha Queen, on display at the Perth Mint in Australia. It weighs 145 kilograms and was discovered at Alien Metal’s very own Elizabeth Hill mine in 2000.
It contains 3,520 ounces of silver worth circa £100,000, but is realistically worth multiples for its beauty and importance as one of the largest silver nuggets ever discovered. It is displayed adjacent to the 93kg King Henry gold nugget - and together, the pair are well-known as part of the mining heritage of Australia.
It’s this silver nugget, the iron ore at Hancock, the PGMs, the potential lithium, and many other metals potentially in situ, which keep UFO investors in the company. Because while the drop has been precipitous, the payday could be equally sharp.
I’ve covered the wider investment case in depth before so for nwecomers, please click here.
I also had the opportunity to interview Technical Director Robert Mosig on Friday, the man who perhaps knows more about Pinderi than anyone else. If nothing else, he seems excited for what the company may uncover:
While some of the share price fall has been Alien’s fault, it’s also true that juniors in general - solid companies with decent investment cases - have suffered over the past three years.
Now look - that is not great share price action - but I consider that at around this level, Alien remains very good value. Commercial deals are being worked on for all assets - and it remains my assumption that at least one will be announced before year-end. The competitive tension, of course, is that the company made clear at the most recent placing on 1 August that:
‘The Company is advancing a number of initiatives and opportunities as previously announced which would provide capital to the Company and its key projects. However, and assuming receipt of the net proceeds of the Placing in full, as an exploration company the Company may be required to raise further funds towards the end of the calendar year to continue to progress its activities in circumstances where these initiatives do not come to fruition or provide the necessary funding sufficient for the Group's planned operations.’
So which comes first - JV or placing? In interims to 30 June 2024, Alien made an operating loss of $579,000 (a huge improvement compared to the $1.6 million loss of the same six months the year before) - and raised £1.23 million through placings pre and post statement. It also had AU$900,000 of a CLN left to use if needed.
Breaking this down to GBP: Alien made a loss of £449,000 in the six months to June 2024, which equates to £75,000 per month. At 1 November 2024, you can assume it has burnt through a further £300,000 of its cash pile.
At 30 June 2024, it had $697,000 (£540,000) in cash, but you can also add the £600,000 it raised post period to make £1.14 million. Then throw in the circa £460,000 from the CLN, and it had £1.6 million at 30 June - take away the £300k spent since and there should be around £1.3 million available (minus broker fees for placings).
Regardless, my bottom line is that a JV must come before a placing - unless the placing is cornerstoned by a big gun. It’s also worth noting that the recently announced programme of work for Pinderi will increase the cash burn, so the race is on to announce a deal.
In interims on 27 September 2024, the last official note on Hancock was that:
‘We have continued to explore all avenues for the further development of the Hancock Project, and continue to assess the alternatives of joint venture, off-take agreements and sole funding options. The Company has recently received further recent non-binding proposals, and thus we are deferring the previously disclosed joint venture discussions, while we assess all options for the project's development. A further update will be provided to the market upon a material development. Whilst the discussions have been ongoing we have continued to work on the necessary approvals to move the project towards production.’
Rob also made some positive soundings in the interview RE Hancock.
But we are also waiting for a JV on Pinderi, as noted in the corporate presentation.
On Pinderi, on 27 August 2024, Alien’s JV partner for lithium rights in the region (Errawarra) reported a six square kilometre lithium soil footprint, with lithium trends up to 2km strike highlighted by anomalous soil and stream samples.
Over 1,000 samples were analysed from Pinderi, with rock chip samples reporting back 288ppm Li2O with associated anomalous Cs, Ta and Nb - the grade itself is not overwhelming, but the associated elements suggests a lithium pegmatite may be within the tenements.
Perhaps most importantly, the data from the lithium exploration will be used to inform the wider exploration plans recently announced.
Munni Munni Anomaly
Reconnaissance samples:
Soil: 926 samples from Tenements M47/123, 124, 125, 126, and part of E47/3322
Stream sediment: 190 samples from entire tenement package
Rock chip: 37 samples collected from identified pegmatite areas during soil and stream sediment sampling
Soil sampling on a 400m x 100m grid identified several linear anomalous Li₂O trends within a 6km² area, indicative of lithium-bearing pegmatites. Preliminary on-ground investigations did not pinpoint a cause for anomalies, but one pegmatite rock chip sample reported 73 ppm Li₂O. Stream sediment samples also showed anomalous Li₂O levels, aligning with soil findings and highlighting area prospectivity.
Maitland Lithium Anomaly
Three stream sediment samples near the Maitland Mafic Intrusion (10 km northeast of Munni Munni)
All samples reported Li₂O > 50 ppm, marking them as anomalous for this region
Follow-up sampling planned for further stream and soil analysis in this area
Anomalous Rock Chip Sample
Pegmatite rock chip sample 6 km east of Munni Munni reported 288 ppm Li₂O and elevated Cs, Ta, and Nb, characteristic of LCT (Lithium-Cesium-Tantalum) pegmatites
Prioritised for follow-up investigation
Silver & Precious Metals Exploration Program
On 30 October, Alien announced its exploration plan for the next six months on Pinderi - including ground geophysics, downhole geophysics, soil sampling and detailed geological interpretation over two key high-grade areas of the Munni Munni +2Moz PGM resource.
Results will be announced within the next two months.
Further to this, the company also located 100 additional drill holes, both drill core and reverse circulation, for around 10,000m of extra drilling that was not previously known. These previously unknown cores will now be reviewed - and in a sense represents a significant drilling campaign, for free.
Alien also noted it had received ‘substantial corporate interest in the Elizabeth Hill Silver Mine, which at the time of its operation was Australia's highest-grade silver mine.’
As a reminder, Alien is exploring 180 square kilometres in the same region as SQM’s nearby Andover discovery - and De Grey’s 10 million ounces of gold Hemi.
The company will now focus on five key areas. with the exploration crew already on the ground:
Areas with yellow dots have been drilled and explored. Alien is now focusing on areas that haven’t been explored with no drill holes, meaning significant upside potential.
Cadgerina Dyke: Known for precious metal anomalies, interpreted as a feeder conduit for the Munni Munni ultramafic complex. Seen as a major exploration target due to its proximity to the main Munni Munni PGM resource and limited prior drilling. Located under alluvial cover, reducing surface mineralisation visibility.
Judy Reef: Extends from the high-grade Elizabeth Hill silver mine along the eastern edge of the ultramafic/granite contact. Contains PGM, copper, and silver anomalies, particularly in its lower, basal sections, which are most prospective.
Munni Munni Fault System: A mineralised corridor along the eastern Munni Munni fault, which hosts high-grade PGM resources and the Elizabeth Hill mine. Limited historical step-out exploration offers an opportunity for discovery.
PGM High Grade Zones 1 and 2: Zones with multiple intersections above 5g/t PGM3 in historic drilling, notable as Munni Munni's PGM resource averages 2.9g/t PGM3. Located along north-northeast faults, these zones will undergo further geological modeling for targeted exploration.
Elizabeth Hill Silver Mineralisation: Historic high-grade silver mine with over 1 million ounces produced. Further exploration will focus on extending silver resources, particularly along the underexplored Munni Munni Fault and the Judy Reef area.
The bottom line
There remains negotiations over both Hancock and Pinderi. In the Covid years, UFO rocketed from the current level to near 3p - a 30x return - and the company was picked up by the silver bugs on Wall Street Bets as a key one to watch.
For context, silver was only around $17 per ounce in the early days of the pandemic, and trades for circa $33 today.
Silver is due for a breakout. Gold is trending into new record highs every other day - and silver has not kept up with its historical pair pacing. Despite the tiny market cap, Alien retains one of the largest endowments of precious metals in Australia; new tech will unlock further opportunities and the site is about to begin further exploration.
How many AIM junior resource companies own such a large deposit? And to the Karratha Queen; how many own a silver mine which produced such a monster? The value of remaining silver in situ could well be in the hundreds of millions.
There are very few AIM companies with both silver and PGMs in the same tenure - or at all.
As rate cuts and China stimulus send metals demand higher (both precious and strategic), all this can only be good for Alien.
Add in the 10,000 metres of cores, the new exploration work over the next couple of months, and rising corporate interest….
And the fact that while the JV deal for Hancock has been delayed due to additional interest, the JV with Errawarra was completed this year - resulting an injection of A$1m ($500k cash and $500k in the ground).
Now we need to see the value unlock either via Joint Ventures, Corporate Transactions or exploration drilling.