LYN’s West Arunta peer trading up by almost 200%

Published 09-JUL-2024 10:04 A.M.

2 min read

Shares Held: 1,705,914

Options Held: 300,000

West Arunta explorer Encounter Resources just hit what looks like its second niobium/rare earths discovery…

And Encounter’s share price is already up by almost 200%.

That makes it the second company in the region to hit a discovery - the first being WA1 Resources which has gone from ~13c to $20 over the last ~18 months.

Our exposure in the West Arunta is Lycaon Resources (ASX:LYN).

We are Invested in LYN to see the company permit and eventually drill its project in the West Arunta, WA.

What happened to Encounter Resources:

A few weeks back Encounter put out drill results from its first target and hit over 50m of niobium:

Post results, the company’s share price rallied relatively hard - up from ~30c to 60c

Yesterday the company put out some more results, hitting more niobium at its first target and another one of its targets.

The market seemed to like the news taking Encounter’s share price to a brief high of ~92c.

Now Encounter trades with a market cap of $372M and is the second company to re-rate off the back of a discovery in the West Arunta.

The first was WA1 Resources which had that ridiculous re-rate from a market cap <$10M to >$1BN.

WA1’s share price is up from 13c to $20 over the last ~18 months.

How the Encounter news relates to our LYN Investment Memo:

Ground pegged before a region opening discovery
LYN holds a GRANTED Exploration licence in an emerging rare earths/critical minerals region.

This means LYN can start firming up a drilling program over the project area immediately.

LYN’s project is ~94km north of WA1 Resources and Encounter Resources.

Source: “Why did we invest in LYN?” Section - LYN Investment Memo 30 Nov 2022.

One of the key reasons we Invested in LYN was because the company’s project had been picked up way before WA1 Resources’ OR Encounter Resources’ discovery.

We think the discoveries from other explorers has increased the look through value of LYN’s ground.

Encounters discovery recently has kicked off a rally in smaller explorers in the region which we expect to continue as long as the strong drill results continue from both Encounter and WA1 Resources.