Alba Mineral Resources (LON: ALBA), a mineral and precious metals explorer, has announced that Phase 2 underground drilling has started at its Clogau-St David’s gold mine in north Wales, following their successful Phase 1 underground drilling campaign that concluded last October.
The acceleration of drilling activity, after the pause last year caused by the Covid pandemic, has been made possible by the spin-off of Alba’s assets in Greenland and a restructuring of the group. This is the first time Alba has drilled simultaneously both from the surface and underground at Clogau-St David’s, indicating an urgent need to make as much progress as possible this year towards gold production and so catch the record gold price wave.
Gold mineralisation found across several zones
Phase 1 underground drilling intersected what Alba believes is the westerly 560-metre extension of the Clogau Main Lode, which historically has been the main source of gold production at Clogau-St David’s Gold Mine. The drilling intersected a quartz lode that returned a significant gold value of 1.79 g/t over a width of 0.25 metres.
Last month, Alba confirmed that its Phase 1 surface drilling had found gold mineralisation across several zones up to one metre thick, with individual values up to 4.25 g/t.
Alba’s executive chairman, George Frangeskides, says the intersection of values “strongly reinforces our view that the newly modelled zone, which we are calling the Llechfraith Lode, is a key target for future development and production at Clogau-St David’s”. Meanwhile, Phase 2 surface drilling has intersected lodes as predicted by internal geological model. As Frangeskides says: “The continuity of the lodes at depth is very encouraging news indeed.”
Alba mulling listing of Greenland assets on AIM
Turning to Alba’s Greenland assets, Frangeskides believes the case for a standalone AIM listing is “overwhelmingly strong”: the assets are undervalued, being based on historic valuations, with a good chance of a significant re-rating. The listing also releases Alba from having to provide all the significant funding required for the development of the Greenland assets in the years ahead.
Alba will retain a ‘significant’ interest in the listing, enabling it to follow closely the developments at the sites and benefit from any potential uplift in value, but without the downside of having to provide the funding, so creating a “win-win” situation, says Frangeskides. The valuations of other Greenland-focused miners, such as Bluejay Mining (LON: JAY), AEX Gold (LON: AEXG / TSX: AEX) and Greenland Minerals (ASX: GGG), range between £50m and £90m, so there is “significant scope for getting the Greenland listco market cap well up into the tens of millions,” Frangeskides says.
Alba’s Greenland assets consist of a 90% interest in the Amitsoq graphite mine; a 100% interest in the Inglefield mine (copper, cobalt, gold); a 51% interest in the Melville Bay iron ore mine; and a 100% interest in Thule Black Sands, which has an in-situ ilmenite grade of 8.9%, one of the highest in-situ grades of any ilmenite project in the world.
Amitsog graphite mine has feed material for lithium-ion batteries
The Amitsoq graphite project has been confirmed to have ‘very high carbon content’, suitable as feed material for lithium-Ion batteries, demand for which is expected to surge over the next decade as the automotive industry transitions to making electric vehicles.
The outlook for Alba is good, having secured enough funding to secure the group’s projected operational expenditure for the next 12 months. However, the announcement of the accelerated drilling programme and the spin-off seem not to have generated much investor interest yet, though further positive news flow could change that.
The share price, currently at 26p (25/5/21), has been trending down since peaking in January at 56p, giving a -52.56% return YTD. However, over 12 months, the figure is 242.13%, reflecting a surge in price in September last year.
