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ASX:HAR

Haranga Resources Ltd

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ASX:HAR
- Haranga Resources Ltd
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$0.095

Last Price

Investment Memo:

Haranga Resources Ltd (ASX:HAR)

- LIVE

Opened: 27-Sep-2023

Shares Held at Open: 3,410,000


What does HAR do?

Haranga Resources (ASX: HAR) is a junior explorer defining a uranium project in Senegal, Africa.

HAR owns 70% of its Saraya project, which has an existing JORC resource of 16m Lbs uranium.

What is the macro theme?

Nuclear power has the lowest carbon footprint and highest utility rate of all renewable energy technologies.

Uranium is the primary fuel source for nuclear power, which makes it a critical mineral for a green energy future.

We expect to see uranium production increase across the world, buoyed by the transitions away from highly pollutive base-load energy generation like coal and oil.

Why did we invest in HAR?

Uranium prices trading at decade highs

Uranium spot prices are recently trading at the highest level in over a decade. Uranium price runs don’t happen often (decades in between) and when they do happen they usually last a few years. The current Uranium run has just started.

HAR has a giant 1,650km2 uranium exploration land holding

HAR’s project is in Senegal, West Africa. While Africa comes with risks, it is one of the rare places where massive new resources can be discovered and deliver multi-hundred million market caps uranium companies (like Paladin Energy, Lotus, Bannerman, Deep Yellow, Aura Energy).

Nuclear giant and reactor builder Areva used to own HAR’s project… twice

The French Nuclear giant owned HAR’s project in the 70’s and ’80s, then again in 2009 to 2011 - they relinquished the project after the uranium price crashed post the Fukushima disaster. Areva did ~62,000m of drilling on HAR’s project.

Existing 16m lbs JORC uranium resource with plenty of exploration upside

HAR’s initial resource released last week is only scratching the surface on its project. Mostly using Areva’s historical 62,000m of drilling, HAR has a further 6 anomalies covering far more ground than the initial resource yet to be tested.

Peter Batten (Ex-Bannerman) just appointed as HAR Managing Director

Peter was one of the founding managing directors for Uranium company Bannerman Energy. In 2006, while Peter was MD, Bannerman was the best performing company on the ASX.

Re-applying Bannerman’s African playbook, HAR to become Bannerman 2.0?

Peter was responsible for taking Bannerman’s African uranium projects from exploration into the feasibility stage. We are hoping he can do it all again with HAR.

HAR has a tiny market cap

HAR seems to have been overlooked by the market at the start of this current uranium run, at ~15c HAR where it last traded, HAR has ~$9M market.

What do we expect HAR to deliver?

Objective #1: Geophysical/Geochemical surveys across exploration prospects

HAR has six exploration prospects, one of which has a footprint ~5x the size of HAR’s existing JORC resource. We want to see HAR samples and run geophysics over the prospects to work out the best spots to drill.

Milestones

complete Geophysics/Geochemical surveys

complete Permitting/planning

complete Define drill targets

Objective #2: Drilling across exploration prospects

We want to see HAR drill at least two of its exploration prospects.

Objective #3: Increase JORC resource

We want to see HAR multiply its existing 16m lb JORC resource.

Milestones

in-progress JORC resource upgrade commenced

not done JORC resource upgrade delivered

What could go wrong?

Country Risk

West Africa, where HAR’s project is located, is a high-risk region of the world.

Most recently in the region there was a coup in Niger (2023), which coups in Mali (2021) and Burkina Faso (2022) in recent years.

Political instability in the region could disrupt HAR’s ability to operate or commercialise its project.

Exploration risk

HAR is planning to drill exploration targets to grow its uranium resource.

Exploration activities may or may not return any uranium mineralisation or low-grade uranium resource that is uneconomic.

Commodity risk

In recent decades, governments have shunned uranium because of the issues related waste removal and accidents like Chernobyl and Fukushima.

If the adoption of nuclear power is slower than expected then it may impact the future demand for uranium.

Uranium price risk

Share prices of junior explorers like HAR are dependent on strong spot prices for the commodity they are exploring for.

The uranium price has started running at the moment but any retracements in spot prices could lead to capital withdrawing from the sector and a fall in share prices.

Funding risk

HAR is a junior explorer with no revenues to fund exploration and ongoing costs. This means the company is reliant on capital raises to fund exploration programs.

Market risk

If the broader market sells off, investors may shy away from high-risk investment opportunities like junior explorers. During market downturns, investors will look to pull capital away from the high risk investments. HAR is a junior explorer and may be impacted by these market wide sell offs.

What is our investment plan?

As with all our exploration investments, if the share price runs in the lead up to material drilling results, or due to macro or external factors, we may de-risk by Top Slicing 20% of our position.

The rest of the Investment plan depends on the outcomes of the company’s drill campaign and will be updated accordingly, and be governed by the 2 to 3 year holding periods as defined in our trading and hold policy disclosure.


Disclosure: Disclosure: S3 Consortium Pty Ltd (the Company) and Associated Entities own 3,410,000 HAR shares at the time of publishing this article. The Company has been engaged by HAR to share our commentary on the progress of our Investment in HAR over time. Some shares may be subject to shareholder approval.

Our Investment Summary

Date of Initial Coverage

27-Sep-23

Inital Entry Price

$0.110

Returns from Initial Entry

-14%

High Point

159%