MAN - early indications of a large scale lithium project in USA
Just last week our US lithium Investment Mandrake Resources (ASX: MAN) acquired 181km^2 of 3D seismic data.
After combining all of the existing data MAN remodelled its geological understanding of its project and now has what it considers “regional-scale lateral continuity and significant thickness of formations to be targeted for lithium brine sampling”.
Our key takeaways from today’s announcement are:
- Average thicknes of potential brine reservoirs >150m.
- Estimated lithium grades of ~340mg/L - result is based on sampling from a well drilled by Super Oil Co in 1959, the well is ~200m from MAN’s project area and ~6km from MAN’s B-912 priority well.
For some context on the grades, MAN’s neighbour Anson Resources’ project wide grades range between 83mg/L and 182mg/L.
Anson is capped at $203M and has a JORC lithium resource of ~1.04Mt lithium carbonate equivalent.
MAN is capped at $27M, has $18.3M in cash (at 30 March 2023) meaning it trades with an Enterprise Value of just $8.7M.
We are hoping MAN delivers intercepts confirming the ~340mg/L grades from the old well nearby and the news leads to a re-rate in MAN’s share price.
Ultimately MAN is looking to define a resource with size/scale potential comparable to Anson - this forms the basis for our MAN Big Bet which is as follows:
Our Man Big Bet:
“MAN returns 1,000%+ by making a lithium discovery significant enough to move into development studies, or attract a takeover offer.”
NOTE: our “Big Bet” is what we HOPE the ultimate success scenario looks like for this particular Investment over the long term (3+ years). There is a lot of work to be done, many risks involved, and it will require a significant amount of luck. There is no guarantee that it will ever come true. Some of these risks we list in our MAN Investment Memo.
What’s next for MAN?
Maiden exploration target 🔄
We are looking forward to MAN putting out an exploration target for its project.
Lithium sampling program 🔄
Once the exploration target is confirmed, it will be all about progressing the work needed to convert that exploration target into a maiden JORC resource estimate (e.g. sampling existing wells and potentially drilling a new well).
