MAN - reviewing “precious and base metals” opportunities
Our Investment Mandrake Resources (ASX: MAN) just announced a general company update.
MAN is currently developing its lithium project in Utah, USA, the project has a current inferred 3.3Mt lithium carbonate equivalent JORC resource estimate.
Despite the large JORC resource, MAN is currently trading below cash backing (at today’s 1.9c share price).
MAN’s market cap is ~$12M with $13.5M cash in the bank (at 31 Dec 2024).
Three main points stood out to us from yesterday’s announcement:
- That MAN would be putting “Field operations on-hold to preserve capital given continuing weakness in the lithium sector”
- That the current focus is on getting permits for the wells MAN wants to drill so that if/when the lithium market improves, MAN is ready to drill straight away…
AND - The company mentions that “Mandrake is undertaking detailed reviews of several precious and base metals opportunities within the US and globally”.
That last point was interesting, especially within the context of a silver and gold price that is rallying pretty strongly.
Gold is at all time highs (above US$3,000 per ounce for the first time ever) and silver price is looking really strong too.
With MAN trading below cash backing we think new assets could help bring some market interest into the company.
Latest on MAN’s lithium project:
We don't mind seeing MAN hit pause on any big capital spends for its lithium project in the current macro environment.
MAN’s project is an existing discovery, so the work MAN would be doing would be mostly resource definition/technical de-risking work.
In the current lithium environment newsflow from definition work just isn't being rewarded by the market, so it makes a lot of sense to hold off on any major spending.
IF MAN was drilling to make completely new discoveries then we would have a slightly different view (we think discoveries can get rewarded in any market, especially if the market cap of a company is low enough).
We also liked that MAN is still continuing to get some of the more time consuming parts of the project de-risked.
MAN confirmed it had permits for one well ready to be “issued pending payment of the US$165,000 bond”.
And the permitting process was underway for a second well location nearby an old well that hit lithium grades of ~340mg/Li.
That second location would be interesting given MAN’s current JORC resource is based on average lithium grades of 86mg/Li, any results that improve on those grades could potentially increase the size/scale of MAN’s project.
(Source)
