Post Transformational 2019, MRG Metals Enters 2020 on a Positive Note

Successful exploration strategies backed by cost effective techniques framed 2019 to be a transformational year for MRG Metals (ASX: MRQ). The Company has relinquished all its Australian projects to concentrate on the recently acquired and highly prospective Heavy Mineral Sands (HMS) Projects in Mozambique, where initial HMS exploration discovery has shown excellent results.

Primarily, HMS is identified in fossil beach and river environments and the deposits are exploited for their titanium and zircon content. Mined commercially and functional in the aerospace, foundry, electricity (in nuclear reactors) and the television & x-ray industries, HMS is of massive economic importance, garnering business interest of late.

A Transformational Year- 2019

The acquisition of high potential tenements in the World Class HMS district of Mozambique, which is known to host the largest HMS titanium feedstock resources in the World and has some of the World’s major mineral sands mines, was an outstanding achievement for MRQ in 2019. Further, the HMS exploration discovery at Koko Massava, MRQ’s first target for discovery has proven to be well founded.

The Company’s excellent exploration results include-

  • Flying Airborne geophysics
  • A targeted ground exploration campaign comprising reconnaissance mapping and sampling, wide spaced Auger drilling
  • A two phased Aircore drilling program, initially at wide spacing followed by infill drilling

The initial visual results followed by laboratory Assay results, has enabled MRG to plan Mineral Resource estimation processes within a year of commencement.

Moreover, the Company successfully completed a placement of $1,250,000 in December 2019 to ramp up exploration activities in early 2020 at the HMS projects. MRQ ended the September 2019 quarter with $754,000 cash and cash equivalents in hand.

Project and Commodity

Heavy Mineral Sands are usually mined in alluvial deposits for their titanium and zircon content. HMS project produces titanium minerals including Ilmenite, Rutile and Leucoxene, and less common higher value Zircon to back the revenue stream of the operations. TiO2 (titanium dioxide) pigment market accounts for majority (90%) of the global titanium feedstock consumption which is used in the manufacturing of paints, coatings and plastics. The higher grade of the titanium feedstock produces more pigments. The annual growth of the product falls in line with GDP growth. The titanium feedstocks are sold to customers on contractual periods with the price varying with the grades. Zircon is used in ceramics, chemicals and refractories.

The Zircon market has experienced softened demand due to global economic uncertainty and trade tensions. The future demand for both the products depends on the growth of the end-use sectors with positive outlooks on the urbanization and construction demand from Asia and Africa.

Zircon prices would be ruled by the reliability and relations with the customer, quality and grade of the supply and the locality. The Koko Massava project is located in one of the highest-grade HMS deposits in the world producing high-quality high-value products.

Source: Iluka

The Koko Massava project includes a 20 square kilometres footprint that has observed extensive drilling programs up to 75 meters of depth confirming robust mineralization with a maiden resource expected by Q1, 2020. The first line Aircore drilling lab results confirmed the presence of vast mineralization open in all directions. Also, the presence of mineralization grades in every drill hole and even on the surface suggest low life of mine strip ratio decreasing the operating cost. The lab results were in correlation with the visual estimates with samples grade varying up to 17.64% Total Heavy Mineral (THM).

The Company carried out extensive wide-spaced Auger drilling followed by two-phased Aircore drilling program to deliver excellent exploration results. The Company’s Perth based lab reported the Aircore drilling results for 8 holes and the remaining Assay results will follow in the upcoming months. The Company expects to release regular updates on the Auger drilling programs at Koko Massava for footprint expansion beyond 20 km2 and would launch the initial drilling programs at Poiombo, Nhacutse and Linhuane in 2020.

Technical Analysis

MRQ Daily Chart (Source: Thomson Reuters)

On the daily chart, the stock previously witnessed a breakout at a lower level of $0.0137 and surged to test the second resistance level of $0.025 (~85.50 per cent). At present, the stock is retesting the resistance of $0.0255 after slightly breaking it, and investors could monitor the level of $0.0255.

MRQ Daily Chart (Source: Thomson Reuters)

Currently, the stock is trading above the 50-, 21-, and 9-days exponential moving averages with a positive crossover, which suggests an increased interest from bulls. The 9-day EMA could act as immediate support for the stock followed by 21-day EMA and ultimately 50-day EMA.

MRQ Monthly Chart (Source: Thomson Reuters)

On the monthly chart, the stock was under consolidation and the Bollinger band was squeezed-confirming low volatility in the stock prices, however towards the end of 2019, the share prices broke out of the Bollinger band.

The breakout was accompanied by a spike in volume, reflects that the bulls currently dominate the position in the stock. Typically, stock prices post the Bollinger band expansion trace the upper range of the band. The upper range could act as immediate support for the stock.


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