Barry FitzGerald: Missed the Meteoric rise? This Brazilian rare earths junior’s got a $17m cap – and it’s near-production
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Brazil has again proven to be a happy hunting ground for ASX-listed juniors looking to seize opportunities that would not be available to them in the crowded Australian mining and exploration scene.
Bom para eles too, Garimpeiro says. The latest junior to benefit from its Brazilian adventure is Alvo (ASX:ALV) which was brought to the market in October 2021 in a $10 million IPO by Melbourne geologist Rob Smakman.
Alvo has been making its way as a base metals explorer at its Palma project in central Brazil and has a maiden mineral resource estimate under its belt of 4.6Mt grading 1% copper and 3.9% zinc, with lead and silver values as well.
Given Palma is considered to be a district scale opportunity with more discoveries of the volcanogenic massive sulphide-type to come, the company’s market cap earlier this month of $10.5m at 14.5c a share was probably underdone.
Not to worry, Smakman has put a rocket under the stock by securing an agreement to acquire the Bluebush rare earths project which is actually closer to the company’s operation base in Brazil than it is to the Palma project area.
Alvo is now trading at around 30c for a market cap of $17m, so it can be said that at this stage, it is officially a three-bagger. The hope is of course that the stock can continue to build as Alvo sets out to prove Bluebush’s potential as a Tier 1 ionic clay rare earths project.
It is a situation that other ASX juniors operation in Brazil have found themselves in recent times.
Centaurus (ASX:CTM) was a $24m company when it picked up the Jaguar nickel sulphide project from Brazil’s iron ore king Vale in 2019. It is now on the pathway to becoming a 20,000tpa nickel producer and has a market cap of $330m, making it a true 10-bagger.
And more recently, Meteoric’s (ASX:MEI) pick of the Caldeira ionic clay rare earths project in December – and its subsequent confirmation of its world class credentials – has driven its market cap from $25m before the acquisition to $410m, making it a 16-bagger in the space of six months.
The common theme across the three companies mentioned is that they are reaping the rewards of being long-term players in Brazil. These sort of opportunities are not offered up to Johnny-come-latelies fresh from Copacabana beach.
Smakman, whose Portuguese is better than Garimpeiro’s after being active in Brazil for 20 years, takes up the story:
“I have always said it’s a land of great opportunities. But you need to have a presence, and you need to be out and about amongst a whole bunch of contact networks to find projects like this.’’
“This is one of those situations where there is no doubt it helped to be a local. We are so local the project is actually closer to our base office and core shed than the Palma project is,’’ Smakman told Garimpeiro.
Alvo’s agreement is with the local and privately owned Mata Azul which has been exploring Bluebush since 2010 for alluvial sources of rare earths in drainage channels. But the bigger story is the potential of the broader potential of the saprolite (clay) found on what is the northern half of the same granite host of the Serra Verde ionic clay development which is owned by private equity groups.
Serra Verde is close to first production from a world-class mineral reserve of 350Mt of ionic clay grading 1,500ppm total rare earth oxide (the resource is 911Mt at 1,200ppm).
It is the only ionic clay development of scale outside of China which came to dominate the rare earths market from ionic clay deposits (600ppm) in southern China and Myanmar.
The same rocks/clays run in to Bluebush and previous work by Mata Azul has returned Serra Verde type grades from shallow auger drilling.
Fresh from a $5.1m equity raising at 25c a share, Alvo has just kicked off a maiden drilling program at Bluebush using its own auger drill rig with a depth capacity of about 30m compared with the average 3.6m limit of drilling in Mata Azul’s alluvials-focussed work.
The first holes will test an area where previous results from surface included 5m at 1,139ppm and 6m at 1,118pm. Importantly, samples from the program will be sent for analysis to confirm Bluebush is a true ionic clay deposit like Serra Verde to the south.
Like Meteoric before it, the main question Alvo is getting is if Bluebush has clear world class potential, how did Alvo manage to secure the deal?
Smakman takes up the story: “One of our first hires was actually a field technician who had previously been working with Mata Azul.’’
“He knew the project really well and we had a good conversation with him when he got hired late in ‘21.
“We stepped up our interest six months ago when we imported an augur rig at the end of last year, with an eye to using at the project as well as at Palma.
“It took quite a bit of time to secure the deal and there is some history to it – the original champion of the project passed away 18 months ago. His son inherited his shares in the company and has basically been looking for his father’s legacy to be continued, and he had seen all the good things we have been doing around the local town.’’
The views, information, or opinions expressed in the interviews in this article are solely those of the interviewees and do not represent the views of Stockhead. Stockhead does not provide, endorse or otherwise assume responsibility for any financial product advice contained in this article.