Resources Top 5: Dundas proves it wasn’t a fluke, another small lithium play attracts heavy hitter to its register

Punter favourite Dundas Minerals hits 358m of sulphides in first proper hole of the drilling campaign at Central target
Element 25 says feasibility study into the production of battery grade manganese due for release December 2022
Larvotto raises $3.4m in a royalty, equity, and offtake deal to expedite lithium exploration

Here are the biggest small cap resources winners in early trade, Tuesday October 11.

DUNDAS MINERALS (ASX:DUN)

It wasn’t a fluke.

DUN — which famously hit surprise paydirt while digging a toilet/water bore – says the first proper hole of the drilling campaign in the Albany-Fraser Orogen of WA has pulled up 358m of massive (the best, highest grade stuff), semi massive and disseminated sulphides.

Initial assays from the so-called Central target may take 6-8 weeks the company says, although given these promising early results the initial five-hole, ~2000m program is likely to be expanded.

“The geological setting at Central is complex,” DUN says.

“With only a single diamond drill hole the geology is not yet sufficiently understood, however this is a geological environment conducive to an intrusive Ni-Cu-Co type deposit, plus gold and silver.

“Assay results are required to confirm mineralisation and further drilling is required.”

In light of Cobre’s (ASX:CBE) recent fall from grace, DUN also warns that “visual estimates of sulphide abundance should never be considered a proxy or substitute for laboratory analysis”.

CBE plummeted after initial assays from its Ngami copper project did not live up to expectations generated by initial visual analysis of the core.

“Laboratory assay of the drill core is required to obtain accurate details of mineralisation, including width and grade,” DUN says.

“The company will update the market when laboratory analytical results have been returned.”

That hasn’t the stopped the $42m market cap stock rerating heavily in early trade Tuesday. It is now up 520% over the past month.

ELEMENT 25 (ASX:E25)

The manganese miner looks to have overcome early problems at the Butcherbird manganese mine in the Pilbara as it shifts its focus to the emerging battery market.

While manganese is mostly used in steel applications, EV batteries are trending toward higher manganese content for safer, more cost-effective solutions, the company says.

Today, it announced that a feasibility study into the production of high purity battery grade manganese sulphate monohydrate (HPMSM) for battery markets is on schedule for December 2022 delivery.

Using its own tech, E25 wants to build a bunch of these plants in major locations around the world, such as Malaysia and the US.

The company has also been engaged in “constructive discussions” with several potential offtake partners in relation to the supply of HPMSM, it says.

“Counterparties to these discussions, aimed at securing binding supply agreements with high quality project partners, have included electric vehicle OEMs as well as established cathode and precursor material manufacturers.

“The discussions have also been focussed on combining offtake, pricing, and finance outcomes to bring certainty to project delivery and, in turn, provide supply and pricing certainty to customers.

“These discussions are progressing well and in line with stated project timelines, the company anticipates being in a position to announce binding agreement(s) in the near future.”

The $130m market cap stock is down 30% year-to-date.

ARUMA RESOURCES (ASX:AAJ)

(Up on no news)

Yesterday, a 26-hole, 3000m drilling campaign kicked off at the Gossan Hill prospect – part of the Melrose gold project in the Pilbara – targeting a strong surface anomaly “in a structural setting similar to the nearby [1Moz] Paulsens gold mine”.

The program follows 2020 drilling at Gossan Hill which returned promising hits like 27m @ 0.3g/t Au from surface.

“The significant historic gold grades over very wide intercepts at Gossan Hill are consistent with the wide carbonate halo around the richer sulphide cores of these types of deposits,” managing director Peter Schwann says.

“This is interpreted to fit exactly with the Aruma exploration model, and the style and host rocks at the rich mineralisation at the nearby Paulsens Project.”

The program could be expanded depending on the initial results.

Last week the company also restarted drilling at the Mt Deans lithium project, southeastern WA.

The $11.5m market cap stock is flat year-to-date.

LARVOTTO RESOURCES (ASX:LRV)

LRV has come out of a trading halt after raising $3.4m in a royalty, equity and offtake (REO) deal to expedite lithium exploration at the Eyre project in WA.

The REO was inked with Canadian-based Lithium Royalty Corp (LRC) who will acquire a newly created 1% gross revenue royalty payable if any lithium is extracted or sold by LRV from Eyre.

They will also subscribe for ~11m new shares at an issue price of $0.18 to raise $2m – a small 10% discount to 10-day VWAP — and acquire a 20% life of mine offtake right for lithium from Eyre Project for an extra $700,000.

Lithium Royalty Corp also holds royalty investments in lithium players like Core Lithium (ASX:CXO – $2.2bn market cap), and Sayona Mining (ASX:SYA – $2.9bn market cap).

The remaining $1.8m of the equity investment is being taken by Waratah Capital, which manages over CAD$4bn in assets and is the founding sponsor of Lithium Royalty Corp.

“Bringing a substantial North American institutional fund onto the register is a huge vote of confidence in our assets and management and will enable the company to accelerate its lithium exploration at the Merivale prospect and other areas within the Eyre Project well beyond what was initially planned on listing,” LRV managing director Ron Heeks says.

“This working capital injection significantly improves our balance sheet and enables Larvotto to confidently progress our various drill programs into 2023.”

The 690sqkm Eyre project is under-explored for lithium and recent work by Liontown Resources (ASX:LTR) in the area has gained significant attention from the investment community, LRV says.

The $9m market cap stock is up 90% in 2022.

BBX MINERALS (ASX:BBX)

(Up on no news)

Explorer BBX is in the process of re-assaying some holes it drilled back in 2017 at the Três Estados project in Brazil.

The first five holes all returned precious metal mineralisation, the company said October 4, including 6m @ 4.28g/t Pt from 12m in TERC-005.

There’s a bunch more to come.

“It is BBX’s intention that beginning with TERC 002, the oldest drill hole, to assay the next 15 or so drill holes in the order that they were drilled,” CEO Andre J Douchane says.

“The geological anomaly that the first five drill holes are in is quite large and I’m pleased to see continuity between the holes assayed to date, especially with TED 001 and TED 015 being about 3.5km apart at opposite ends of the anomaly.

“BBX has just started and there are many more holes to assay and I’m excited to see the result for all of them.”

The mineralisation at BBX’s projects is peculiar, with an ongoing test work program designed to fine-tune a preferred assaying technique.

The adopted method consists of smelting samples with a nickel ‘collector’.

This is followed by initial digestion of the resulting nickel button to remove nickel, and then a subsequent digestion of the residue containing the precious metals that remained after filtration.

The final solution is then assayed by a conventional fire assay/AA finish.

The $31m market cap stock is down 60% year-to-date.