New mineral exploration frontiers #1
Highlighting geographies and search spaces left unexplored due to anthropogenic reasons that are opening up!
Observing the world from Australia or some other geography where mineral exploration has been conducted uninterrupted for the past 150 years, utilizing and originating best practice and technology, can make one forget that this has not been the case everywhere.
The reasons for this are largely anthropogenic i.e. wars, command economies, absent or bad investment policies, populist politics, resource nationalism etc etc. Regardless of the causes, there are many areas that have gone significant periods of time without seeing any mineral exploration. This preserves their exploration search space. In such a scenario if one can predict a change in whatever circumstance has kept exploration investment out then they can also act boldly and get a first mover advantage on capturing prospective ground where easy discoveries are waiting.
This caries sovereign risk! Whatever kept explorers out previously can return. That is the price of exchanging political for technical risk, or at the very least taking more of one and less of the other.
I track such developments as they bring discoveries. Not every story is a fairy tale and some have been more complicated than others but in the end significant value is created. Take for example the case of Adriatic Resources ADT.AX. The first drillhole the company released from the Rupice prospect woke up the catatonic exploration scene of 2018 with this hit:
Rupice deposit cross section 2018
The market liked it and today they are in production.
In this particular example the country in question, Bosnia & Herzegovina had a bad time during the 90’s and saw little investment in mining subsequent to Adriatic’s entry despite having a strong, albeit command economy driven sector prior. Adriatic could take their pick of former mines (with resources!) and exploration ground provided they could navigate the local politics. This is that exchange of political and technical risk piece I mentioned. The deposit itself was already discovered, look at the holes up dip of the first reported hole after listing, the last number designates the year drilled, in this case 1986!
Other examples abound in places such as Serbia with several discoveries (Jadar and Cukaru Peki along with others), Dundee precious metals operations in Bulgaria, Terramin’s Tala Hamza deposit in Algeria and Centamin’s Sukari gold mine it Egypt. So with that preamble we observe that Australia’s northern neighbor, the half-island country of Timor-Leste or East Timor is open for business!
Timor-Leste location
Timor-Leste mineral exploration headline- Full article here
The countries geology is that of a fold and thrust belt of accreted seafloor sediments and ophiolites forming the outer Banda Arc. The deposits that one can hope to find here are manganese vis-a-vie South 32’s Groote Eylandt, Ophiolite hosted chromite, sedimentary phosphate deposits and Cypress type VMS Cu.
There are some reports published on the geology and CRA had a crack at some of the copper showings in the 80’s but pulled out. I did not study them in detail as I plan to buy the discoveries and not the explorers but more importantly the geology is very poorly known and as a result whatever I spot, someone else has already spotted and will be eager to tell me about in an announcement. This is a good time saving heuristic unless you are planning on pegging your own ground.
Of the 14 companies that applied for tender 9 received exploration licenses. I am interested in the listed ones or those that will potentially list. At the moment these are Beacon Minerals BCN and Estrella Resources ESR. BCN looks to be mostly interested in the VMS opportunity and ESR is chasing manganese that seems to be particularly abundant.
Both companies have more shares than I like to see in a speculative instrument.
I keep mentioning this across articles so I might as well make a small digression and explain myself. In my experience when a company has a low MC and a low SOI positive news translates into massive price rises. On the other hand when a company has a high SOI irrespective of MC then day traders can take control of it and set buy orders at lets say 1.5 c and sell orders at 1.6 c and then consume all the funds flowing into the company by simply clipping the ticket between those two levels 10-20 times in a day giving no reward to shareholders or new entrants. Too much liquidity can be a bad thing in this regard.
ESR has a good looking MC of 7 million and could do with a consolidation. Same for BCN with its 100 odd million dollar MC. In reality BCN is a small gold miner, not as much a explorer.
As far as their prospects are concerned BCN is doing ground work and will follow up with drilling in December 2024 on their VMS prospect. ESR on the other hand has found stacks of manganese all across the island developed through lateralization in what is called the Noni formation that is spread across the island. On the Indonesian side of the island the company makes clear that that manganese mines are already in operation.
ESR’s mapped prospective manganese formation
Working in favor of ESR, the Japanese Imperial Army of WW2 occupied the island and was in the process of mining the local manganese. They even left 40 tones of finished product that ESR looking to commandeer and send to potential customers to gauge their interest. Thank you Hirohito!
Remnant manganese product sitting on a beach in Timor-Leste leftover form WW2 Japanese imperial army mining and transport operation
In areas where the company has explored thus far, the manganese sits just below the surface where they expect to trench and drill.
Manganese mineralization in outcrop on the companies tenements
Concluding remarks
It is not clear if the Australian listed entities got the best ground here as the others aren’t reporting anything but is abundantly clear that this is as near virgin terrain as anyone could hope to find. I suspect that in the case of ESR the delineation of manganese resources, even the start of trial mining and processing will not be far away, given the ability to produce a coarse product as the Japanese did from rudimentary gravity processing techniques. They will need to work much more with the government to tick all the boxes, some of which have not been written yet. BCN’s exploration should be interesting as well although the road to production here is a little more complicated given they are dealing with Cu and Zn.
I will be watching and hope both take the time to consolidate the number of shares on issue and fix their registers.
Finally, a repeat of the disclaimer, nothing here is financial advice, comes with no warranty and I take no responsibility for anyone’s financial decisions.
Cheers,
CC