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MetalNRG sets out to build a portfolio of near-term producing assets in the natural resources space

MetalNRG is hoping for early cash flow from waste dumps and pillars at Gold Ridge

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Level 6 at the formerly worked Gold Ridge mine in Arizona

Once upon a time in the not-too distant past, MetalNRG PLC (LON:MNRG) looked set to become a second iteration of that perennial favourite of the Aim market, Metal Tiger.

It wasn’t just that it was set up as a two-tier operation, with one division designed to hold shorter-term assets and another to hold longer-term projects for development. It was also that Paul Johnson, the man behind much of the success of Metal Tiger in its early years, had brought the company back to life after a near-death experience.

Johnson set about looking for new assets, initially in the lithium and cobalt spaces, and in so doing set the company on its current path. As it turned out the asset base doesn’t currently consist of any lithium, but there is cobalt, as well as some gold and uranium. And the shorter-term investment division is still in place too, to some extent, via a 6.2% holding in Cobra Resources, a company which will soon be listed separately on the market.

In time, Johnson found other projects to pursue, like Power Metal Resources (LON:POW) or African Battery Metals, as then was, and handed MetalNRG over to Rolf Gerritsen, the current chief executive.

Gerritsen is a seasoned operator, with extensive experience in the mining sector across almost all the major mining jurisdictions, and a significant interest in making a success of MetalNRG in the shape of his 3% holding. Given that non-executive director Christian Schaffalitzky holds just over 2.5%, and chairman Christopher Latilla-Campbell holds a chunky 13%, it’s clear that directors’ interests are firmly aligned with shareholders.

But what can investors expect from MetalNRG, now that its listed and its shares seem to be on the move?

The company’s strategy is to invest in projects that offer near-term cashflow that it can then use to further develop available exploration upside on that project.

The key area of focus in the immediate term will be the Gold Ridge project, which meets the above criteria.

“Gold Ridge,” says Gerritsen, “consists of three previously producing gold mines in Arizona. The previous incumbent had gone bankrupt after its trucks full of ore were stolen, but we saw an opportunity to try to monetise what had been left behind and explore areas not explored thus far.”

To that point, there are reams of data relating to the old mines, dating back to the early 1900s. But perhaps more significant for the near-term are the waste dumps and mineralised pillars that remain.

“There are a number of underground pillars on the project,” says Gerritsen.

“Those pillars are currently being sampled. There is visible ore and we’re going to see how much it’s worth.”

The infrastructure around the pillars seems to be in good condition, so the possibilities of extracting the ore successfully look good. So cash from mining the pillars combined with the cash generated by processing the waste dumps ought to provide a good working capital base for MetalNRG to get on with the larger project of bringing the mines themselves back into production. These will likely run to pretty high grades, all though at what volume of output remains to be seen.

All that will take some time though, and in the meantime Gerritsen remains on the lookout for additional projects.

He’s somewhat coy about what any potential deal might look like.

One possibility is that the company will acquire additional ground in the vicinity of Gold Ridge, but if it does, that’s unlikely to the main event.

“We’re looking for projects that are relatively near to cash flow in the general natural resources space,” is all that Gerritsen will volunteer for the time being.

But while those deals work their way past the negotiating table and through the lawyers’ offices, there’s plenty to be getting on with at Gold Ridge. The company has enough cash in the bank to get to work demonstrating the value that’s on offer.

There’s some evidence that the market is already beginning to wake up to that value, given that the shares doubled in value in the first two weeks of November, surging from 0.25p to a current price of 0.5p.

But there should be plenty more to come. There’ll be updates within a couple of weeks from the sampling of the pillars, and then broader announcements about the company’s plans to monetise the pillars and the waste dumps.

With a steady flow of news and the potential upside of a deal, the next few months are likely to be a busy time for MetalNRG, and things may look very different in the New Year.

Quick facts: MetalNRG

Price: 0.4907 GBX

LSE:MNRG
Market: LSE
Market Cap: £1.47 m
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MetalNRG: Mining Capital’s Alastair Ford looking out for potential...

Mining Capital's Alastair Ford gives his take on developments at MetalNRG PLC (LON:MNRG) following a call he had with CEO Rolf Gerritsen. A pillar gold sampling programme at its Gold Ridge project in Arizona is underway and Ford also discusses wider plans for the company including new...

3 weeks, 4 days ago

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