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Lake Resources Concludes Kachi Project’s PFS, Robust Results Further Strengthen Project Prospects

  • April 30, 2020 08:18 PM AEST
  • Team Kalkine
Lake Resources Concludes Kachi Project’s PFS, Robust Results Further Strengthen Project Prospects

The reported UK Construction PMI was 55.3 in June, which improved from 28.9 in May. The threshold for growth is 50.0; the reported numbers were highest since July 2018. The UK market remained buoyant, and FTSE-100 was trading at 6,285.30 up by 2.07 percent (as on 6 July 2020, before the market close at 3:40 PM GMT+1).

The other essential factors to watch out were:

  • On 8 July 2020, the British finance minister Rishi Sunak is expected to announce measures to revive the British economy. The minister has already extended the threshold for property tax concession to £500,000 to boost the housing sector.
  • The British government has announced an aid of £1.57 billion to support the culture sector.
  • The Brent crude oil was trading at $43.26 per barrel up by 1.05 percent (as on 6 July 2020, before the market close at 3:45 PM GMT+1).

In view of the above market conditions, we will review two basic material stocks - Amur Minerals Corporation (LON: AMC) and Landore Resources Limited (LON: LND). The shares of both Amur Minerals and Landore Resources were up by 27.48 percent and 25.58 percent, respectively (as on 6 July 2020, before the market close at 1:30 PM GMT+1). Let’s walk through their financial and operational updates to understand the stocks better.

Amur Minerals Corporation (LON: AMC) – Debt position on balance sheet remained zero

Amur Minerals Corporation is involved in the evaluation, acquisition, exploration and development of mineral projects. The Company is incorporated in the British Virgin Islands and listed on the London Stock Exchange. The Company mainly operates in Far East Russia.

FY2019 Annual results (ended 31 December 2019) as reported on 26 June 2020 (USD Million)

In FY19, Amur spent $0.5 million on exploration mainly due to TEO (Permanent Conditions) work programme. The operating cost was down to $1.9 million from $2.6 million, following the executive management restructuring. The net loss narrowed to $2.3 million from $3.3 million a year ago.

As on 31 December 2019, the Company had a cash balance of $0.4 million. On 4 May 2020, the Company repaid £0.5 million of the outstanding loan to Plena Global Opportunities and had no debt on the balance sheet. In April, Amur raised £75.0 million through an issue of 75.0 million common shares at 1 penny per share.

Pre-feasibility Study of Kun-Maine

The Company completed the Pre-feasibility Study in 2019 of Kun-Maine. There is production capacity from four open pits and one underground operation with two production scenarios, toll smelt and low-grade matte. The toll smelt metal is estimated to generate $3.87 per pound of payable nickel. The toll smelt is expected to generate NPV of 614.5 million and IRR of 29.3 percent.

The low-grade matte is expected to require a pre-production capital expenditure of $695.0 million. The low-grade matte is projected to generate NPV of 987.4 million and IRR of 34.7 percent.

Financial Result FY19

(Source: Company Website)

Share Price Performance

1-Year Chart as at July-6-2020, before the market close (Source: Refinitiv, Thomson Reuters)

Amur Minerals Corp’s shares were up by 15.92 percent and trading at GBX 1.82 per share (as on 6 July 2020, before the market close at 2:30 PM GMT+1). Stock 52-week High and Low were GBX 3.92 and GBX 0.85, respectively. The Group had a market capitalization of £15.13 million.

Business Outlook

The Company will focus on completing the TEO and bankable feasibility study (BFS) and expects an update over resources and reserves. Amur will streamline the mine scheduling and increase the open pit potential. It will perform the metallurgical test for copper concentrate. It also plans to prepare an economic model for the outputs. It is also seeking opportunities to invest in mining projects that are either cash-generating or near to production. The revenue from these investments would help to fund corporate activities.

Landore Resources Limited (LON: LND)

Landore Resources Limited is a mineral exploration company incorporated in Guernsey. It identifies, develops, and acquires mineral projects independently or in a joint venture. Landore mainly operates in Eastern Canada, where it has 100% owned Junior Lake Gold project in Ontario.

Issued new shares as reported on 29 June 2020

The Company raised approximately £2.8 million by issuing 414,814,815 new shares at 0.675 pence per share. The new shares issued are close to 23.06 percent of the total enlarged share capital after admission. The Company has issued equivalent warrants for newly issued shares. As on 26 June 2020, the Company had a cash balance of £95,932.

BAM Gold Project

In January 2020, the Company performed an economic assessment and announced a technical report of the BAM Gold Project; the project is located at Junior Lake Property in Canada.

The BAM gold deposit is expected to generate 1,015,000 ounces of gold. In the base case, project life is expected to be 6.75 years with a net gold revenue of US$731.0 million. The initial capital expenditure is expected to be close to US$93.8 million. The project is expected to generate NPV pre-tax and NPV post-tax of $180.8 million and US$124.8 million, respectively. The project IRR pre-tax and IRR post-tax is expected to be 43.9 percent and 35.4 percent, respectively, and a payback period of 3.5 years. The project breakeven gold price is expected to be US$1,060 per ounce.

BAM project financials

(Source: Company Website)

Share Price Performance

1-Year Chart as at July-6-2020, before the market close (Source: Refinitiv, Thomson Reuters)

Landore Resources Limited’s shares were up by 27.78 percent and trading at GBX 1.38 per share (as on 6 July 2020, before the market close at 2.20 PM GMT+1). Stock 52-week High and Low were GBX 1.42 and GBX 0.42, respectively. The Group had a market capitalization of £14.88 million.

Business Outlook

The Company plans to focus on the development of the BAM Gold Resource, and it will explore potential opportunities in other gold projects. The Company will consider a corporate transaction to generate a good shareholder return. Moreover, the recent fundraising puts them in a position to pursue multi-a million ounce gold resource to maximize shareholder value.

Gold MTF non-AMP

 

 


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