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Shares in Alien Metals (LSE:UFO) took off today, up over, with stock in the miner approaching 1.27 as we went into the close. Shares began the day at 0.8. This represents a massive gain for a company that was trading at 0.11 in July. Most of the share price action has been in the last few days however.

One of the big areas of focus for the miner is the Elizabeth Hill silver project in Western Australia. It completed its acquisition of Elizabeth Hill on 25 September. The site is believed to contain more than just silver however, with the possibility of copper and zinc as well. Estimates of 3m ounces of silver have been cited.


Elizabeth Hill: solid silver grades in the past

The Elizabeth Hill site has a track record of producing some good grades in the past: previous grades have almost reached 2200g/t. At current silver prices, this makes the project very lucrative indeed. Let’s not forget iron ore, which has been one of the top performing metals in 2020, rising from $80/t to $120/t. With Asian markets coming back online in 2H 2020, demand for iron ore has predictably picked up again.

Alien Metals also has other mines in its portfolio, with silver projects in Mexico and iron ore operations at Hancock and Brockman in Australia (in which it has a 50% stake). It announced 22 September that it had commenced geological mapping and sampling at its Hammersley iron ore project in Australia.

Mexico silver mining projects

The miner has solid silver projects in Mexico which host very high grade mines, including San Celso and Los Campos. San Celso has had grades of as high as 2683g/t and Alien Metals has also found recent sample grades of 1389g/t. Numerous stopes at this mine indicate the presence of high grade silver ore shoots off the main veins and there is also apparently unmined mineralisation in the footwall.

Elizabeth Hill looks similarly exciting. The mine is adjacent to solid infrastructure (45km from the main Karratha infrastructure and labour hub) with grid power and groundwater on site. Elizabeth Hill was also where the largest native silver nugget was found in an Australian mine, so it has pedigree. Silver mining there was suspended back in 2000 when the then silver price was at four dollars.

Alien Metals is evaluating the potential of significant unmined resources at Elizabeth Hill with numerous targets yet to be tested. The next phase of field exploration had been scheduled to also investigate repeat silver orebody and follow up some historic anomalies for other metals on the site.

Ambitious program of trenching and mapping

The company has an ambitious program of trenching and mapping underway, with maiden drilling beginning across most of its portfolio this winter. Elizabeth Hill has drilling scheduled for next year, while maiden drilling is taking place at Donovan 2, San Celso and Los Campos this autumn. Alien Metals thus has a lot of activity ongoing across multiple sites on two continents, any of which could pay dividends relatively quickly.

Exploration is being managed by Bill Brodie Good who took over as CEO in August. Brodie Good has over 25 years’ experience in the mining sector behind him, including with Rio Tinto and five years as a consultant with SRK Exploration Services. He has worked with most of the major mineral commodities, including gold, base metals, iron ore, diamonds and uranium. He is managing the entire process of field exploration, from area selection and project acquisition through to field work and project development.

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Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Stuart Fieldhouse

Stuart Fieldhouse

Stuart Fieldhouse has spent 25 years in journalism and marketing, including as a wealth management editor for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong. He was the founder editor of The Hedge Fund Journal.

Stuart has worked at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Based in The Armchair Trader’s London office, Stuart continues to advise fund managers, private banks, family offices and other financial institutions.

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