Sovereign, Helix, Power & Blencowe
Good news all round?
Good Morning once again - there were some decent RNS’s worth looking at today, so I wanted to have a quick roundup.
But first - what are your views?
Let’s start with Sovereign Metals; up from 22p when I first started coverage this time last year to 37p today. And really, it’s just getting started.
Last year, there were two technical concerns:
Was the graphite good enough?
Could the rutile be processed in practice given the unique nature of Kasiya?
Question one has been comprehensively positively answered over 2024.
Question two has been answered today with a CAPS LOCK RNS:
‘MINING TRIALS CONCLUDE SUCCESSFULLY’
Fraser Alexander conducted the trial at Kasiya (which began in August) - and land rehabilitation with backfilling of the test pit is now ongoing and expected to be completed next month. The findings are:
Hydraulic mining trials were successfully concluded as part of the Optimisation Study.
Prior to the hydraulic mining trials, a dry mining trial successfully excavated a test pit to a depth of 20 metres using conventional dry mining techniques and a simple mobile excavator fleet.
The mining trials confirm that the soft, friable Kasiya ore can be efficiently mined.
Land rehabilitation should demonstrate the land can be used for agriculture post-mining (SVML has put in some superlative work to help local farmers already) - and provide critical information for Kasiya's ESIA.
Managing Director and CEO, Frank Eagar enthused:
‘I am pleased with the results of the mining trials at the test pit and now look forward to the rehabilitation demonstration stage, with backfilling of the pit already underway. Our findings from this Pilot Phase are constantly improving our understanding of Kasiya and how to optimise operations at this genuine Tier 1 project.’
The test pit was excavated using conventional dry mining techniques and a simple mobile excavator fleet - and covered an area of 120 metres by 110 metres to a depth of 20 metres.
This is roughly 5% size of the size of the real thing. Look at that hole!
Kasiya, when it gets started, will be the lowest cost AND largest global producer of both graphite and titanium. It has a 25 year mine life, leaving 70% of the mineral resource unmined. It has a NPV of $2.4 billion and a market cap of $300 million.
Rio will write a big cheque. It’s only a matter of time.
Arguably, what’s left to convince them is results from the infill campaign, and for somebody at SVML to put the optimisation study findings into a nice PowerPoint so the major’s bean counters can tick all the right boxes.
For those who doubt there’s more rutile, I have composed a visual interpretation:
Remember, Rio recently bid for Arcadium Lithium, offering shareholders a 90% premium to the closing price before the deal was announced.
Of course, if you’re long lithium you must be long graphite. And not only is the major a 19.9% shareholder, Rio is also the largest producer of titanium in the world.
Helix Exploration: another good start
Drilling is complete at Darwin #1 at project lieutenant Rudyard:
TD of 5,488ft
Significant helium gas-shows in multiple horizons, up to 1,312ppm in drilling mud
Over 330ft of potential gross pay
Bo noted that ‘Helium gas shows measured by mass spectrometer reached a peak of 1,312 ppm, approximately 250 times the concentration found in ambient air….We are proceeding with a triple-combo wireline to further delineate our potential reservoir. With testing also ongoing at Ingomar, we are poised to evaluate our second well concurrently, marking an exceptionally active and promising period for the Company.’
Helium anomalies over multiple intervals include:
Souris River (5,062ft) up to 893ppm (170x background)
Red River (5,192ft) up to 1,312ppm (250x background)
Dry Creek (5,258ft) up to 1,006ppm (190x background)
Upper Cambrian (5,340ft) up to 573ppm (110x background)
Target horizons have come in higher than predicted compared to historic drilling to the west. This indicates that Darwin #1 was drilled close to the apex of a broader domal anticline with a larger closure extent than previously modelled.
In layman’s terms, this could mean a more extensive structural trap, enhancing the chances of higher helium concentrations and broader reservoir extent.
HEX also noted that ‘Testing remains ongoing at Clink #1 with results from first gas analysis to be announced shortly.’
The share price reaction has been fairly muted - the reality is that both projects (while promising) are not yet classed as commercial and so little has changed.
I would expect that results from Ingomar (Clink #1) should be released next week based on standard timelines - some investors perhaps do not appreciate the complexity/time commitment of analysing helium and hydrogen.
This is not a bullish or bearish statement; it’s just important to note that these things take time and results are not delayed.
A bull might point to HEX’s plans to go to the H-NAT 2024 conference in Paris on Nov 25 & 26 - hard to imagine Helix bothering to show up at the world’s leading natural hydrogen showcase with nothing to show for it.
I remain of the view that HEX is the an excellent helium play for 2024 - though Pulsar is definitely running the same race.
For perspective, we will know if either/both HEX wells are commercial by the time Pulsar re-enters Jetstream #1, so at that point (assuming success), Helix would move into a pre-production story and comparisons between the two would likely cease.
Blencowe & Power: Drill, Baby Drill
The days when a company could coast along on surface exploration are over. The market is unforgiving, and demands hard data in the form of assays. It seems to be the only thing moving market caps right now.
As we wait for Arc and Rome to finally deliver the goods, it’s worth pointing to Blencowe and Power Metal: both stocks are very cheap compared to their fundamentals, and both have the right idea to correct the ship.
Blencowe is using its recently raised capital to start up a 6,700m drilling programme at Orom-Cross, ‘marking the final major workstream required for the completion of the Definitive Feasibility Study.’
The drill programme will:
target extensions to the existing Northern Syncline and Camp Lode deposits, upgrading the overall Resource classification.
include a step-out campaign to outline additional resources in a nearby target zone which would add a new high grade deposit into the Orom-Cross Resource.
The additional reserves would allow Blencowe to extend the life of mine, but more importantly, increase the scale of production tonnage earlier in the mine life.
This has obvious implications for getting a plant funded - with this drilling also providing extra data for geotechnical design confirmation for pit designs, in addition to material strength characteristics data for crushing and milling designs within the DFS.
Orom-Cross’s resource is already estimated at a whopping 2-3 billion tonnes, with a JORC 24.5Mt at 6.0%. It’s also worth noting that the stock has a £9 million market cap - there is plenty of upside for those with the risk appetite.
The drilling will only take two to three months, with an updated JORC to follow and plans to start construction in H2 2025. Ergo, one hopes project level funding will be agreed enext year.
Executive Chairman Cameron Pearce enthuses:
‘We are confident this programme will significantly extend our JORC Resource and Reserve base and we will be working closely with our technical partners to deliver the best results possible in the shortest timeframe, feeding directly into the DFS. We are especially excited to be drilling a new deposit which may ultimately deliver further higher grade tonnes into our project. Higher production volumes will make a substantial difference to the NPV within the DFS modelling…we can now expect sell more product than we originally believed was possible within the PFS.’
Get this over the line Mike & Cameron. We’re all behind you.
On Power Metal, the company’s uranium JV is engaging in surface exploration, geos, surveying etc…this is good news but will not lift the share price.
But I think it will recover soon. This is the low.
Drilling will start in late Q1 2025, and is fully funded through the Joint Venture -with CEO Sean Wade noting that the Athabasca portfolio is ‘in fact, the second largest currently being deployed in the Athabasca Basin area.’
The key target appears to be Badger Lake, 35km from the World Class Arrow and Triple R uranium deposits. Airborne geophysical surveying and a groundbreaking Ambient Noise Tomography ground geophysics survey are getting started now - but it’s also worth noting that the combined radon, soil and biogeochemical sampling program on the property was already completed last month, with assays pending.
I am reasonably confident of a recovery when drilling gets started - it’s what the market wants to see.
Then there’s the substantial GMET holding: grant funding, China tungsten export bans, and 13F filings must now all be in the offing. Add in activity and financing in Saudi Arabia and I remain convinced Power Metal will deliver in the end.
As a bonus, I want to highlight Panther Metals’ drilling programme. The company is worth two carrots and a potato, but may well be sitting on a lucrative opportunity. Drilling is ongoing, funded by the recent sale of Panther Australia shares - and to Darren, I say:
Only assays will move your market cap. GO BIG OR GO HOME.
Have a great day.