Platina Resources Adds Blue Moon Zinc Project (US) To Global Portfolio of Metal Projects

Australia-based Platina Resources Limited (ASX: PGM) is an international resource company exploring and developing precious and specialty metal deposits, with a special focus on metals from the platinum group and the strategic metal scandium.

The company has amassed an extensive Project Portfolio comprising-

  • Platina Scandium Project (100%-owned) located in central New South Wales is the flagship project and one of the biggest high-quality scandium deposits, globally.
  • Skaergaard Project (100%-owned) located in Greenland is a large undeveloped gold deposit and perhaps the biggest palladium resource outside of Russia and South Africa. A potential extension of the Skaergaard Project is the Qialivarteerpik Multi-Element Project encompassing two significant project regions – Miki Fjord Dyke and Sortekap Greenstone Belt.
  • Munni Munni PGM (platinum group metals) and Gold Project (30%-owned) is located in Western Australia’s Pilbara region. Munni Munni also has potential for conglomerate hosted gold and is a Joint Venture with Artemis Resources Limited.

New Flagship Project – Blue Moon Zinc Project, US

Lately on 29 August 2019, Platina Resources informed the market about the signing of a joint venture (JV) agreement to earn up to a 70% interest in the Blue Moon Zinc Project in the United States and also become the operator of the project. It is a transformational transaction whereby the company would be able to leverage its core expertise experience in advancing projects from drilling, feasibility through to development.

 Source: Blue Moon Project Investor Presentation

Transaction Summary: As per the terms of the JV, Platina would spend CAD 3.25 million over 18 months to earn 50% and a further CAD 3.75 million over subsequent 18 months to earn an additional 20%. Thereafter, the expenditure would be contribute/dilute-based subject to Platina providing CAD 5 million fully refundable financing loan for both parties.

Besides, Platina is also acquiring a 5% equity stake in the project owner, TSX-V listed Blue Moon Zinc Corporation (BMZ) by subscribing to shares for CAD 300,000. In addition, the company has a six-month option to acquire a further 5% stake in BMZ at market prices.

Investment Proposition:

  • Significant Valuation UpsideBlue Moon is a drill-ready, brownfield project having a significant sunk cost. Furthermore, as per PGM, it also has an evident potential for enabling re-rating of the share price as the company proceeds along the value curve through completion of drilling and evaluation studies. The figure below demonstrates the values achievable, as benchmarked by the market caps of ASX-listed zinc/lead companies, as Platina Resources transitions from explorer towards production.

Source: Blue Moon Project Investor Presentation

  • Large, well-defined Mineral ResourceThe project is well understood with significant well-defined Mineral Resource and a high-grade, zinc-copper rich massive sulphide deposit. The resource is open at depth and along strike and has favourable metallurgy.
  • Attractive GradesA drilling program previously executed in 2018 intersected some of the highest grades ever intersected on the Project (referring to the figure below). Besides, there is a significant potential to expand the existing mineral resource.

High Grade Deposit (Source: Blue Moon Project Investor Presentation)

 

  • Drill ReadyThe drilling permits have been approved and a planned 10,000 m infill drilling for resource definition and exploration drilling for resource expansion is ready to kick off with an initial focus on extensions of drill hole BMZ-78. Moreover, the project was historically permitted for direct shipping ore operations.
  • Right Commodities, Right time Zinc is the fourth most consumed metal after iron, aluminium and copper, with its primary use in galvanisation for protecting steel from corrosion, accounting for ~ 50% of its demand. Other uses include diecasting for industrial/household products, brass for construction, and chemicals and nutrients. Moreover, the LME zinc price had hit a 10-year peak of USD 3,600/tonne in 2018. Thus, the project would offer the stakeholders an exposure to a commodity suite (zinc, copper, gold and silver) with compelling supply demand fundamentals.

Source: Blue Moon Project Investor Presentation

  • Favourable location The Project is situated 193 km east of San Francisco in Mariposa County, 150 km from the Oakland export port facility and 1 km from low-cost hydro-electric power. Besides, California is a stable mining jurisdiction with low corporate taxes and no state royalties would be charged to the company. There are a number of significant mining operations and resource development activities currently ongoing in the state of California, which generated USD 4.6 billion in non-fuel mineral production in 2018.
  • Regional Infrastructure The project has excellent infrastructure in the vicinity such as access to rail networks 20 km west at Merced, easily accessible by a rural road network which links to a national highway a few kilometres from the Project site, labour supply from nearby townships and on-site water supply.

Way Ahead

Going forth, the company’s current strategy is to advance the Blue Moon Zinc Project via a staged approach in the following manner-

  • Commence the fully permitted drilling program by the December quarter of 2019.
  • Explore the broader land package for new mineralisation and resource expansion.
  • Complete an Environmental Impact Statement and associated perming activities.
  • In parallel, execute metallurgical test work to define the optimal process flow sheet
  • Complete technical studies including Pre-feasibility and Definitive Feasibility Studies.
  • Identify strategic offtake partners, source development financing and advance the project towards development.

Source: Blue Moon Project Investor Presentation

Stock Performance

Platina Resources has a market capitalisation of around AUD 8.72 million with ~ 264.13 million shares outstanding. On 18 September 2019, the PGM stock price settled the day’s trading at AUD 0.032 with ~ 189,530 shares traded.


Disclaimer

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