BUY12 Nov 2019 10:56
Alien Metals (UFO.L) this morning revealed encouraging results from on the ground due diligence work being undertaken on two potential new projects over iron ore prospective areas in the Pilbara region of Western Australia.
A total of 17 rock samples were analysed over the Han**** Ranges and Brockman Iron projects. The fieldwork results revealed that 7 of the 17 rock samples returned from the independent laboratory analysis showed readings of over 60% iron ore, indicating “direct shipping ore quality” potential, as Alien Metals Technical Director Bill Brodie Good pointed out in the announcement.
Comment and Recommendation.
As today’s results eluded, Alien Metals appears to be moving towards exercising its option to acquire 51% of the two projects, the details of which were first announced in late September. Assuming no further extension to its option agreement, we would expect a final decision and announcement to be made very soon, and by no later than 18th November.
A perusal of the map shown on Fig 1 in the RNS, shows the projects are clearly in a target rich area, given that they are surrounded by major iron-ore deposits or mines, along with infrastructure, which includes blue chip international mining majors BHP Billiton and Rio Tinto, along with Australian iron ore producers Fortescue Metals Group and Han**** Prospecting Pty Ltd.
In our opinion, one of the key highlights from today, is the high grades obtained from three samples on the ‘Sirius Extension’ prospect in the ‘Han**** Ranges’ project. The prospect is on strike with Brockman Mining’s Sirius deposit, upon which a JORC resource of 124mt tonnes at 60.32% iron ore is defined, 85% of which is delineated in the ‘Indicated’ category. Drilling work undertaken by Volta Mining Limited in 2013 confirmed an economic strike extension to the Sirius deposit, and two areas of potential high-grade iron ore mineralisation at both the ‘Sirius Extension’ and ‘Kalgan’ prospects.
Along with the impending prospect of news-flow from a project decision in Western Australia, we also await further exploration results from Alien’s extensive portfolio of silver and gold prospective projects in Mexico, and possible news of JV deals.
The current modest market cap of around £2m does not reflect the expanding story and target rich environment of these licences, which are now a lot nearer to becoming Alien Metal flagship projects. To this end, we recommend the shares as a ‘Buy
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