Alien Metals AIM:UFO, the AIM-listed precious and base metal exploration company with operations in Mexico and Australia, announced today (24th August) that it has been granted the option to acquire an additional 39% interest in the Hancock and the Brockman iron ore projects, part of the Hamersley iron ore project, from Windfield Metals.
The new arrangement replaces an agreement from May 2021 whereby Alien would acquire 80% of Windfield which holds a 49% stake in the Hancock and the Brockman projects. Alien holds the other 51%.
The option, once exercised, will give Alien 90% control of the projects, both in the Pilbara region of Western Australia and contiguous to the Vivash Gorge project that Alien recently acquired in May from Zenith Minerals. Collectively the three sites form Alien’s Hamersley Iron Ore Project.
Progressing project towards Direct Shipping Ore
Alien Metals, under the umbrella of its subsidiary Iron Ore Company of Australia (IOCA) is aggressively progressing its Hancock and Brockman projects towards Direct Shipping Ore (DSO) operations. The Pilbara deposit includes some of the world’s largest iron ore pits. Alien has 18-months in which to exercise the option, but according to a company statement today: “the company intends to action earlier.”
Alien will pay GBP1.8m for Windfield’s stake, this will be paid through GBP600,000 in cash, the issue of 260,000,000 ordinary shares at a deemed issue price of GBP0.0067 pence per share and the issue of 100,000,000 share warrants exercisable at 1p each.
Alien is waiting on receiving approval to issue the consideration shares and “the parties entering into a deed of assignment and assumption in relation to the Hancock project native title heritage agreement.”
In February, Alien issued 50 million new shares to Windfield as part of a joint venture agreement relating to the Hamersley iron ore project in Western Australia.
Alien opened trading at 55p, within the first hour of trading had lost 2p. Alien’s shares have ranged between GBP1.24 and 52p over 52-weekss, offering a -19.4% year-to-date return and -33.1% one-year return giving the exploration company a market capitalisation of USD25m.
Dan Smith, non-executive chairman of Alien Metals, said: “The execution of the revised binding option agreement with Windfield is a key milestone in the development of both the Hancock and Brockman iron ore projects, as we can now drive both forward knowing the company has de-risked the projects with the ability to move to a 90% project interest.”
Alien, through IOCA, is focused on getting the more advanced Hancock project into production in the first half of 2023, while exploration work on the Brockman and the Vivash projects is ongoing.
Hancock hosts a JORC-compliant inferred Mineral Resource of 10.4Mt @ 60.4% Fe and the project hosts significant potential to find more DSO grade material on the tenement according to previous statements from the company.
The company is continuing with metallurgical work, as well as offtake & marketing strategies and discussions at Hancock. Additionally, compliant tender requests from third-party contractors to support the Hancock mining project along with continued field work remain ongoing.
Containing DSO grade iron ore with low impurities, Alien is confident that future production from Hancock will be a highly sought-after product. As such, the IOCA team is driving development plans forward on all fronts.
Alien Metals operating in Mexico
Alien also operates in Mexico. The company holds two silver projects, San Celso and Los Campos, located in Zacatecas State, Mexico’s largest silver producing state, which produced over 190 million ounces (Moz) of silver in 2018 alone, accounting for 45% of the total silver production of Mexico for that year. Alien also owns Donovan 2, a copper-gold project in the same region.
The company recently released test drilling results from Mexico from San Celso and Donovan 2. Seven holes were drilled, three at San Celso and four holes at Donovan 2. No significant intersections were returned for San Celso, and at Donovan 2 the sample recovery, along with the majority of the intersections of interest, was sub-standard for the industry, with returns of only 15% to 20% mineralisation in the key areas. However, Alien said: “this anomaly is encouraging as further copper mineralisation has been identified at Donovan 2.”
At San Celso, the local stakeholders advised Alien that they will now not allow the company to drill in the central licence, which is unfortunately the priority target area for future drilling. Subsequently, no further work will be done on the San Celso project until future access can be secured.
In March 2022 Alien acquired 100% of the former joint venture interest in the Munni Munni Platinum Group Metals (PGMs) and Gold Project in the West Pilbara, Western Australia, one of Australia’s major underexplored PGMs and base metals projects. Munni Munni holds a historic deposit containing 2.2Moz of PGMs including palladium, platinum, gold and rhodium. The company also has a zinc-lead exploration licence in Greenland.
In its last results for year ending 31st December 2021, published in June, Alien’s pre-tax losses increased to USD2.6m (GBP2.2m) in 2021 from GBP1.2m in 2020. Total assets were USD13m, up 38% from USD9.1m the year before. At year-end, the company held 12 fully owned mining concessions in Mexico and is in the process of obtaining an option to acquire an interest in another project. Alien Metals said that 2021 was held back by the Covid-19 pandemic but added that despite this it was able to achieve significant milestones, such as a maiden direct shipping ore inferred resource for the Hancock iron ore project.
David Seers, an analyst for WH Ireland, which has Alien Metals under coverage said: “As Alien positions itself as a DSO operator, with its low capex and simple business model, we expect Alien to rerate. The Option Agreement executed today is considered in our fair value of 2.7p a share and we will continue to monitor Alien as plans are derisked.”
