Alderan soars on high hopes for Utah copper play
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It’s not easy for a mining company to keep a low profile when its shares have risen by 785 per cent in the five months since listing in June.
But that’s just one of the interesting facts about Alderan Resources (ASX:AL8) which has largely escaped media attention, so far.
Another way of emphasising Alderan’s share price, is that at one stage last month the copper explorer with attractive assets in the US, was up 1100 per cent with shares issued at 20c trading at $2.40, before slipping back to a recent price of $1.77.
A rise like that is both a blessing and a curse.
It is obviously good news for subscribers to the float — but it also puts pressure on management to deliver on sky-high expectations.
Whether Alderan can do that will become clearer in the next few months as drilling gets underway at its Frisco project in Utah, a State which is home to several major mines.
The biggest in Utah is Bingham Canyon, a giant copper project close to Salt Lake City which has been operating for more than 100 years and now forms part of Rio Tinto’s extensive copper interests.
Alderan’s assets are further south and like Bingham Canyon have a long history of copper, gold and silver production, but from multiple operators.
The fragmented ownership means that the mineralised system being mined was never held by one company – until Alderan arrived.
New technologies that look deeper
Like many historic mining districts which blossomed and faded the appeal of Frisco lies partly in the knowledge that old-timers could never dig as deep as modern miners, and that new technologies enable an explorer to “look” deeper using geophysical tools such as electro-magnetics and induced polarisation.
Both of those newish technologies have been applied to Frisco, a region which has hosted a series of developments, including the Cactus and Accrington copper, gold and silver mines, and the Horn silver mine which produced huge amounts of silver until it collapsed in 1885.
Very much the wild west of American folklore the region into which Alderan has plunged is richly mineralised, and like the Australian outback littered with ghost towns.
Alderan’s plan is a classic form of “consolidation” that has proved popular and successful in other historic mining districts with the first step being to get control of many tenements as possible and to then set about exploring the entire mineralised system rather than focussing on one asset.
At Frisco, Alderan has an opportunity that eluded earlier generations of explorers with the aim being to join the dots that connect old mining areas and prove that Frisco is a single system known as a porphyry, which is essentially the magma chamber of an ancient volcano, often of immense size – such as Bingham Canyon.
10,000m drilling program underway
In its September quarter report filed last week Alderan said a 10,000m diamond drilling program has started at Frisco, focusing on targets such as Cactus Corridor, Comet and the New Years mine.
Historic sampling at the Cactus mine has included enticing assays such as 6.1 per cent copper over 21.5 metres, and 3.8 per cent copper over 32.5m.
Interesting as those assays are, the key to what Alderan is doing at Frisco is to pick up where earlier explorers left off and prove that they were simply mining the higher portions of bigger and deeper system, with the easiest ore being in the form of breccia, a rock made up of fragments which have been re-joined to form a solid form of ore.
At Frisco it is conceivable that mines such as those at New Years, Cactus and Comet where the upward pointing “fingers” of a deep-seated porphyry structure.
Alderan has named its porphyry hunt the Cactus Canyon project, but on the way to the big one it will be aiming to answer a number of other questions such as whether the old mines contain reserves of payable ore, and whether the different breccia pipes are connected.
Results due in coming weeks
First answers to those and other questions at what is one of the most ambitious exploration projects by a relatively small Australian company (market capitalisation of $110 million) should start to flow in the next few weeks as assays from drilling are reported.
A well-connected company in Australia, Alderan is one of the stocks added to the portfolio of Syrah Resources co-founder Tolga Kumova, but the more important aspect is the combination of location, commodity and minerals market outlook.
At Frisco, Alderan is in a region with a history of prolific mineral production but unlike the harsh conditions oldtimers confronted there is today world-class infrastructure in a business mining jurisdiction.
The first hole drilled at Frisco only went down as far as 206 metres, intersecting old mine workings (stopes) before being terminated short of its 250m target but after passing through mineralised zines.
The second hole is currently being drilled, and was at a depth of 236m last week.
Future news flow from the drilling program make Alderan a stock worth watching, with first assays expected in early December.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.