Encounter Resources share price moving, LYN drilling soon?
There was a big move for the Encounter Resources share price today, with the stock up ~70% in afternoon trading.
Encounter Resources is a West Arunta region explorer, which turned up some excellent shallow niobium hits from aircore drilling at the project, which sits just north of WA1 Resources’ Luni deposit.
Niobium is used in an increasing number of high tech applications and there are only 3 mines that produce it in the world - it’s listed as a critical mineral in Australia. (Source)
Some would say the ~$275M capped Encounter Resources is a younger brother/cousin to WA1 Resources, and we’re hoping our Investment Lycaon Resources (ASX: LYN) can also wedge itself into this family of niobium companies that is emerging in the West Arunta region.
WA1 resources is currently capped at $1BN after a stunning run as its Luni deposit continued to deliver big high grade hits of the refractory metal.
LYN is currently capped at $11M and sits just ~90 kms away from both WA1 Resources and Encounter Resources to the north:
Importantly, LYN had the land in West Arunta before WA1 had its share price run, but has been delayed for 18 months trying to get all the necessary approvals to begin drilling.
But last week, LYN announced their Aboriginal Heritage Survey has been scheduled at West Arunta for July 11, 2024.
The heritage survey will clear priority drill sites, areas for ground gravity surveys, and proposed access tracks into the project area.
Ground gravity surveys and drilling are then targeted to begin in Q3 2024, subject to approvals after the heritage survey.
More on LYN’s Stansmore Project…
The Stansmore Project covers 173 sq km and contains several high-priority magnetic anomaly targets prospective for niobium-REE carbonatite or iron oxide copper gold (IOCG) deposits
Targets include the prominent 700m long Stansmore magnetic anomaly and the larger 3 km wide Volt anomaly, modelled from geophysical data
Two initial proposed drill holes have been designed to test the central peaks of these anomalies, with plans for 5 additional holes across the main targets
LYN received a $180,000 government grant to drill test two of the proposed holes once approvals are in place
We covered the West Arunta’s status as one of the last major frontiers for exploration in our most recent note on LYN:
LYN drilling targets mid-year next to WA1's West Arunta discovery
How does this news from Encounter Resources impact our LYN Investment Memo?
For starters, the Encounter Resources share price move shows the Niobium macro theme is resonating with investors:
What’s the macro theme?
Niobium and rare earths exploration in the newly opened West Arunta region in WA. WA1 Resources recently made a discovery here, which saw it run from 13c to over $2. Niobium, rare earths, copper and nickel, are highly topical “energy transition metals”. New supplies are needed to move the world away from fossil fuels.
The market rewarding Encounter resources with a ~70% share price pop on its shallow niobium hits in the West Arunta region demonstrates to us that the West Arunta macro theme we listed in our LYN Investment Memo continues to resonate with investors.
Similar drill target to WA1 Resources
WA1 Resources discovery was made after the company drilled into a distinct geophysical anomaly. LYN’s project hosts a similar geophysical anomaly that warrants drill testing. We see this as a key drilling target for LYN.
The Encounter Resources successful, shallow niobium hits is encouraging that the geophysics surveys in the area are proving to be effective for companies with upcoming drill campaigns in the region.
Macro Theme Risk
The West Arunta province is hot right now after WA1’s discovery and incredible share price run, but it could cool off before LYN drills its West Arunta prospect in the second half of 2023.
Following Encounter Resources ~70% share price rise, the broader macro theme risk has not materialised at this point in time.
Click here to read our LYN Investment Memo in full
What’s next for LYN?
With the Heritage Surveys scheduled, we can expect to see the following from LYN:
