Krakatoa Resources Limited: A Review of Company’s Operations

Krakatoa Resources

An exploration company, Krakatoa Resources Limited (ASX: KTA) is rapidly progressing to emerge into a prominent electrical energy and technology metals player by acquiring, locating and developing high value mineral projects. With its recently acquired Mt Clere Rare Earth Project, the company is eyeing to become a significant REE producer.

Mt Clere REE Project- Thorium Radiometric Imagery, Ion Absorption Laterite REE Targets, Pan Concentrate Geochemistry

(Source: Company Reports)

Located approximately 200km northwest of Meekatharra, Western Australia, Mt Clere Project boasts multiple targets, including REE (rare-earth element) and thorium in enriched monazite sands. Along with this, the project also contains REE ion adsorption on clays within the widely preserved deeply weathered lateritic profiles, making this project strategically important for the company and its shareholders.

The previously conducted exploration programs on this project also provide enough evidence to prove that this project holds an enormous potential to serve in the REE space.

The earlier activities by BHP at Mt Clere Project, which were not aimed at rare earth elements’ discovery at that time, identified:

  • Substantial monazite (with mineral abundances exceeding 50%) in a significant number (>20%) of pan concentrate stream sediment samples;
  • High thorium (Th) content, ranging from 4% to 12%
  • Monazite concentrates can contain up to 70% REE after physical upgrading, primarily cerium (Ce) and lanthanum (La) as well as significant concentrations of neodymium (Nd), praseodymium (Pr), and samarium (Sm).

Astro Mining NL, which was not looking for REEs at the time, also revealed some important observations:

  • Extraordinarily high monazite (up to 48%) was independently confirmed in heavy mineral concentrates taken by Astro Mining NL 
  • Heavy mineral concentrates also included very high zircon (up to 60%), ilmenite (up to 29%) and leucoxene (up to 20%) 
  • The extremely high levels of thorium are apparent in the airborne radiometric imagery, form prime targets for Chinese-type ion adsorption clays

Besides this, the Project’s REE prospectivity was further confirmed by All Star Minerals Plc, which unveiled following observations:

  • Heavy mineral concentrate produced from alluvium returned up to 0.46% Ce, 0.25% La, 0.12% Th, 1.4% Zr and 9.9% Ti;
  • Numerous REE anomalies returned in limited shallow auger drilling, including sample EBA052: 1050ppm Ce, 660ppm La, 112ppm Pr, 360ppm Nd and 43ppm Sm

The company recently made a fresh licence application (E52/3722) at the Project, which covers an area of 153km2 and expands the Project to 556km2.

During the June quarter, the company commenced the compilation of legacy data and reprocessing the existing geophysical datasets using modern approaches and enhancements. The work has resulted in a slight adjustment in project area to encapsulate anomalous ground. In the September quarter, the company is planning to conduct a reconnaissance field program

Along with the Mt Clere Rare Earth project, Krakatoa Resources also owns several other high value projects, which include Mac Well Project, Dalgaranga Project, Corkill-Lawson and Farr Projects.

The Mac Well Project

Covering a total land area of around 66.9km2, the Mac Well Project contains a 7.5km strike along the prospective Warda Warra greenstone belt and it is believed there are favourable structural conditions for gold mineralisation within the Mac Well tenement, making this project of great value for the company and its shareholders. In the last quarter, the company continued to review and prepare for a sampling program to test the previously generated gold target zones through geophysics work.

Dalgaranga Project

Located within the Dalgaranga Greenstone Belt, which contains gold mineralisation, a zinc deposit, graphite deposits, and occurrences of tantalum, beryllium, tin, tungsten, lithium and molybdenum related to pegmatites, the Dalgaranga Project is believed to be prospective for base metal mineralisation as well as contain the right rocks and an EM conductor in the south of the property.

Corkill-Lawson and Farr Projects

Located in the Gowganda area of north-eastern Ontario, the Corkill-Lawson and Farr Projects are believed to be prospective for cobalt-silver mineralisation. Last year, the company had identified 11 targets prospective for silver-cobalt nickel mineralisation and to investigate these targets for potential mineralisation, the company had engaged Canadian Exploration Services Ltd. Seven rock samples, which were collected when outcrop was present, were noted to contain chalcopyrite and aplite, which may indicate proximal mineralisation and along with this, a preliminary soil sampling program was completed where no outcrop was present, with several indicating elevated base metal values.

In the June 2019 quarter, the company spent around $ 46k of cash on exploration and evaluation activities and $ 60k on administration & corporate costs, taking the total net cash used for operating activities to $ 106k. At the end of the June quarter, the company had cash and cash equivalents of $ 407k. The total estimated cash outflows for the September quarter is approximately $ 190k.

During the June quarter, the company issued a total of 17.5 million fully paid ordinary shares at an issue price of 2.2 cents to raise $ 385,000 (before costs), which will be used to conduct exploration activities on its existing projects, with a focus on the company’s recently acquired Mt Clere Rare Earth Project. During the quarter, the company also reviewed a number of potential acquisition opportunities.

Under the current scenario where REE’s demand and price, both are expected to rise in the near future, Krakatoa Resources with its Mt Clere Rare Earth Project is providing a great opportunity to the investors to reap benefits from.

For comparison, an ASX snapshot of listed REE companies appear below:

At market close on 8 August 2019, KTA’s stock was trading at a price of $ 0.023.


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