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Landore Resources potential underpinned by resource upgrade

New resource underpins forecasts while further exploration offer opportunities for hefty value uplift, suggests Panmure Gordon.
Landore Resources potential underpinned by resource upgrade

Landore Resources’ (LON:LND) Junior Lake project in Ontario is on track for production in 2015-16 after it announced a significant increase in indicated nickel resources.

Drilling on B4-7, one of three main deposits at Junior Lake, has boosted the indicated open pit and underground resource to 2.67mln tonnes at 1.24% nickel equivalent or 33,428 tonnes of contained metal.

The previous estimate for B4-7 was 26,521 tonnes of contained metal.

Landore said it had also identified a new exploration target along strike and down dip from B4-7 containing a potential 1.5Mt (million tonnes) to 2Mt at similar grades. A drilling campaign is already underway to explore this new target, it said.

Bill Humphries, Landore’s chairman added the company had successfully and significantly increased the size and confidence level of the B4-7 resource, all in the indicated category.

“In addition we believe that the resource is capable of further material enlargement. The updated B4-7 resource together with the nearby VW Nickel resource allows Landore to proceed with pre-feasibility studies. Landore is well-poised to advance the project towards production in 2015-16."

Prior to today’s upgrade, Junior Lake had an NI 43-101 compliant resource of 48,281 tonnes of contained metal. As well as nickel, the deposit contains, copper, cobalt, gold and platinum group metals.

Alison Turner, an analyst at broker Panmure Gordon, said today’s upgrade increases the total resource at Junior Lake to 55,100 tonnes of contained metal.

It represented a 25% increase in contained metal at B4-7 and a 22% increase in the grade, though the latest update took a significantly more conservative approach than previously.

This estimate was based on long-term metal prices (US$) of $9.00/lb nickel, $3.50/lb copper, $16.00/lb cobalt, $1,700/oz platinum, $800/oz palladium, and $1,300/oz gold. Open pit mineral resources were reported at a net smelter royalty (NSR) cut-off grade of C$23 and underground resources at C$58.

Panmure added that the new 1.5-2.0Mt exploration target implies a potential 19,000-25,000 tonnes contained metal upside on top of the new 55,100 resource base, while the potential to extend B4-7 even further west could add a further 20,000 tonnes as well as adding considerable platinum group metals (PGM) potential.

In valuation terms, the broker left its 12p target unchanged but said confidence has been boosted by the resources now being classified as indicated.

In addition, the new exploration target could add 3p to its price target, while any success further in the west could mean an additional uplift of between 4p-5p.

Shares were 6.3p.

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