On 13 June 2017, Alliance Mineral Assets Limited (AMAL) released on SGX the maiden resource estimate for its Bald Hill mine in Western Australia. The announcement was issued by its JV partner, Tawana Resources, which entered into a Farm-In Agreement on 23 Feb 2017 with Alliance Mineral Assets Limited with respect to the Bald Hill project. Following the maiden resource estimate, stockbroker Canaccord Genuity in Australia sent a note to clients. Excerpts from the note by Nathan McKay, its MD (Australian Sales):
Note that this resource will likely be supplanted by a larger estimate in the coming months once more drilling is factored in (target of 20-50Mt by end 2017).
Unlike the rest of the sector TAW have locked in prices over 2018-2019 at US$880/t for 6% product, with development costs fully funded via the recent prepayment.
Expect TAW/AMAL to show up on investor screens now with the maiden resource – with the project the next in line (GLOBALLY) to achieve concentrate production, this could see a further upward momentum for the stock/s. The maiden resource at Bald Hill exceeds our expectations, and should more than support development of the project ... noting likelihood of low start up capex (A$30-40m) due to existing plant and infrastructure.
Other points (the technical ones) from Nathan McKay's note:
· Independent estimate of 12.8Mt at 1.18% Li2O and 158ppm Ta2O5 using 0.5% Li2O cut off (using a 200ppm Ta2O5 cutoff the tantalum resource grade increases to +300ppm Ta2O5).
· 36% is in the indicated category – expect this to increase with more infilling of Inferred
· High grade tantalum resource of 9Mt at 304ppm Ta2O5, including 5.7Mt at 311ppm Ta2O5 not included in the lithium resource (this compares to prior Tant resource of 3.4Mt at 315ppm)
· Importantly, 80% of the resources occur in a 100m interval from 30m below surface – has postive implications for strip ratios
· Resource only covers 20% of the Southern pegmatite swarm – significant potential exists to increase resource footprint (exploration target of 30-50Mt at 0.9-1.4% Li2O)
· Feasibility study results imminent (mine scheduling was the last component to be completed for the study, which was pending the resource)