It’s a telling statement that Landore Resources (LON:LND) was one of only two junior mining companies that undertook any drilling in Northern Ontario last year.
Northern Ontario is one of the world’s great mining destinations, hosting as it does the Sudbury and Thunder Bay projects amongst others, and has long been a stomping ground of Landore’s Richard Prickett and Bill Humphries.
In a former life they were there with Brancote too, a company they sold 15 years ago in the first significant successful mining transaction that took place on the Aim market.
This time round, the focus has largely been on the Junior Lake area where Landore has been methodically working up the B4-7 nickel project to the point where it now boasts nearly 2.7 million tonnes of ore at 1.24% nickel equivalent in the indicated category.
But Landore also has several other projects both in and around Junior Lake and dispersed more widely across the region.
Which brings us to the second of the two companies that found the wherewithal to undertake drilling in Northern Ontario last year: Ardiden (ASX:ADV).
Ardiden is Australian-listed but has lately demonstrated a serious intent to build a portfolio of lithium projects in Canada.
It also has shareholders in common with Landore, so it was perhaps inevitable that the two companies would come together at some stage.
In a deal announced on 10th February Landore has announced that it is to sell the Root Lake lithium project, which lies more than 400 kilometres away from Junior Lake, to Ardiden in a cash, shares and royalty deal.
Ardiden will pay an initial non-refundable C$50,000 deposit, plus a further C$150,000 in cash on completion, C$150,000 in Ardiden shares, and the granting of a 3% net smelter royalty.
What’s more, the value of the royalty has been underpinned by an agreement that Ardiden has the right to buy back half of the NSR for C$1 mln.
“This is a very good deal as far as we’re concerned,” says Landore’s Bill Humphries.
“The asset is non-core for Landore. It needs to be drilled and enlarged and we don’t have the money to do that. And Ardiden are dedicated towards lithium. It’s win-win.”
The C$50,000 in the bank helps too, in a market that is no longer friendly towards junior miners.
Not that Landore has ever seriously struggled for funding. It has several key backers, including its own directors, and knows when and how to cut its cloth according to market conditions.
The most recent raise took place at the end of last year and should take the company a long way forward in 2016, certainly to the point where a new resource for B4-7 can be released to market in the summer.
For the time being, it’s perhaps unhelpful that the nickel price is languishing. Then again, it’s worth noting that Landore hasn’t actually got any nickel to sell yet.
“It’s the price in two or three years’ time that really matters,” says Humphries.