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Emerging Discovery: Can the $90M Capped LRS Eclipse its $656M Capped Halloysite Peer?


Published 24-FEB-2021 12:41 P.M.


5 minute read

Latin Resources (ASX:LRS) has today released the first results from its maiden air-core drilling program at its 100% owned Noombenberry Halloysite-Kaolin Project in WA.

LRS has confirmed high grade and ultra bright halloysite, and has moved swiftly to formally engage an independent consulting group to undertake a maiden mineral resource estimate.

Today’s results from the initial batch of 100 samples submitted for detailed test work have confirmed very high-grade halloysite, with grades of up to 37% Halloysite, and multiple intersections over 20% Halloysite.

As investors in LRS, we are hoping that the resource estimate can match and potentially surpass the $656M capped Andromeda Metals results.

Halloysite is a hard mineral to find, and is valued highly by downstream buyers. That’s why the market appears to value Andromeda Metal and its halloysite resource so highly.

Andromeda Metals has delivered investors a more than 500% return in recent months and set the early pace for halloysite exploration in Australia.

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In September last year, Andromeda reported an inaugural JORC mineral resource estimate at deposit of 51.5 million tonnes.

It’s important to note that LRS’ exploration drilling is over an area of 18 square kilometres as opposed to Andromeda’s 1.2 square kilometres - which paints a picture of the potential upside here for LRS.

Assuming LRS can deliver on a JORC resource, we are anticipating similar on-market performance from LRS.

LRS’ Noombenberry Project has the potential to unlock significant value for investors due to the sheer scale and quality of the material discovered.

As we reported last week, the price of pure halloysite is rising: it now sells for up to US$4,000/t, compared to A$600/t for commercial grade kaolin and draws attractive profit margins. So it’s a great time to be delivering exceptional halloysite results.

Today’s drill results will lead into LRS’ next major catalyst: a maiden JORC mineral resource estimate for the Noombenberry project, which LRS intends to release as soon as possible.

The resource is due in the March quarter, not long from now, and it will allow the market to truly compare LRS’s resource against Andromeda’s.

Shareholders have been waiting for these results for some time, but it’s clear that LRS didn’t want to jump the gun here. They wanted to confirm what they were sitting on.

As part of that strategy, and due to the nature of kaolinite and halloysite mineralisation being very similar, detailed and time-consuming test work was carried out to gain accurate and reliable results.

In fact, Latin is working closely with the various groups undertaking the test work of the Noombenberry samples, including Bureau Veritas Laboratories, CSIRO, and the University of South Australia to streamline this process and enable a steady throughput of samples.

The result of this collaboration is that Latin now expects to receive regular results consistently from all groups on a weekly basis.

Consistent delivery of results means plenty of news flow to keep shareholders (like us) engaged during this time.

With that in mind, let’s have a look at how good LRS’ first lot of results actually are.

LRS release ‘extremely pleasing’ assay results

Latin Resource has released the initial batch of samples from air-core drilling at its 100% owned Noombenberry Project.

Results from the first 100 samples submitted for test work, have confirmed the project contains very- high grade halloysite, with individual composite sample grades of up to 37% halloysite.

You can see the full results here. The best of these results are:

  • NBAC022: 17m @ 15.0% halloysite, 79.2% Kaolinite, 77 ISO-B from 9m Inc: 7m @ 27.3% halloysite, 66.6% Kaolinite, 72 ISO-B from 9m
  • NBAC017: 18m @ 13.5% halloysite, 68.0% Kaolinite, 79 ISO-B from 2m Inc: 8m @ 20.1% halloysite, 68.2% Kaolinite, 81 ISO-B from 2m
  • NBAC015: 32m @ 11.8% halloysite, 75.6% Kaolinite, 81 ISO-B from 13m Inc: 13m @ 28.9% halloysite, 46.4% Kaolinite, 79 ISO-B from 32m
  • NBAC012: 16m @ 12.2% halloysite, 66.2% Kaolinite, 74 ISO-B from 8m

These results have also confirmed bright white (>75 ISO Brightness) to ultra-bright white (>84 ISO Brightness) kaolinite development across broad zones with a maximum reported intersection of 32 metres and average of 13m.

The average depth to the top of the kaolinite zone in these holes is just 8 metres below surface, which is an important factor in terms of the economic viability of extracting resources as near surface mining is much cheaper than large open pit or underground mining.

With further assays due from the lab in coming weeks, we could see more impressive numbers delivered in the lead up to the resource estimate.

This first batch of results represents >15% of the total number of holes drilled and are extremely encouraging.

These results greenlight LRS to move forward to undertake its maiden JORC resource on the Project.

Maiden JORC mineral resource estimate: the next catalyst

LRS has engaged an independent consulting group to undertake a maiden mineral resource estimate for the Noombenberry Project.

Geological domaining and the construction of wireframes is well underway with the LRS geological team working closely with the independent consultants to enable the fast tracking of the estimation once all results from test work have been returned.

The maiden JORC mineral resource estimate for the Noombenberry project is likely to be another possible share price catalyst now in sight for LRS.

The Resource is due in the March quarter this year and will, as stated above, allow the market to truly compare LRS’s resource against Andromeda’s.

In September last year, Andromeda reported an inaugural JORC mineral resource estimate at its Hammerhead Kaolin Deposit of 51.5 million tonnes.

Note that LRS’ exploration drilling is over an area of 18 square kilometres as opposed to Andromeda’s 1.2 square kilometres, which also works to LRS’s shareholders’ advantage.

A larger resource from LRS’s halloysite project could see the company gain significant leverage off its current still sub-$100M market cap.

What’s next?

Latin Resources will re-commence drilling once all statutory approvals have been received to extend the current drill coverage into its adjacent 100% owned tenement (E77/2624).

Initial results from this area demonstrate the bright-white kaolin and high grade halloysite mineralisation is open to the north (see below).

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Initial results confirming the bright white nature of the kaolinite material, and halloysite development in a high proportion of the holes where results have been received, has given LRS high confidence in the potential of this emerging discovery.

With further results to come on a weekly basis and the fast tracking of the estimation process, there are plenty of near term catalysts to come in 2021.

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