Litchfield Minerals Ltd (ASX: LMS) experienced a subdued start on the ASX last Friday, with its shares opening at A$0.195, down 2.5% from the offer price of A$0.20 (Figure 1).
The first trading day saw a volume of 850,386 shares, indicating moderate investor engagement, amidst a bid/offer spread of A$0.185 to A$0.195.
Despite high anticipation of the oversubscribed $5 million IPO, the opening below the offer price reflects a cautious or uncertain outlook from investors.
Figure 1: Share price chart (Source: Commsec)
The company’s shares are currently trading at A$0.16, down 25% from the offer price.
Litchfield is drill-ready and plans to drill its initial targets early at Mount Doreen targeting copper shortly. The company have two major projects which are located in the Arunta Province (Figure 2).
Figure 2: LMS projects are located within the Arunta province. A prospective region that has very little exploration undertaken compared to other mineral provinces in Australia. (Source: LMS Prospectus).
“Only wanted a small raise”
Speaking shortly after the company’s shares began trading for the first time, LMS chairman Dr Peter Eaglen said: “It’s a tough market, but we only wanted a small raise, just enough to run this first drill programme,” he says.
“A lot of people go out and try and fund everything, but you just can’t do that.
“So we went very small – deliberately very small – just to work up these first lot of targets at Mount Doreen.
“And if that doesn’t work, we’ve got a big manganese lease to go and explore over at Lucy Creek near the Queensland border.
“What we found from this process was investors want something highly prospective, but then they also want to see there’s some sort of future beyond that.”
What’s the Story?
Litchfield Minerals boasts a prime portfolio of exploration projects (Figure 3), including significant drill-ready copper assets and uranium holdings with an 8-kilometre-long uranium, radiometric anomaly in the Mount Doreen tenement, located 350 kilometres from Alice Springs in the Northern Territory.
The projects are well located in a prospective region, under-explored and have great access via roads.
This project is notably adjacent to Energy Metals’ (ASX: EME) Bigryli uranium deposit, highlighting the area's rich uranium potential.
The company also holds the Lucy Creek Project is an 'early-stage' manganese exploration project that encompasses an area of 791.64 square kilometres.
Figure 3: LMS Projects are located in between the town of Alice Springs with good road access to the projects. (Source: LMS Prospectus)
Samso's Thoughts
This is a typical exploration play. The projects are located in the Northern Territory and hence can bring some added interest, as in my opinion, there is a lot of prospectivity in the region that has had not much exploration. As an exploration geologist, the opportunity to discover is in regions with little activity.
I have always felt that the Arunta region is one of the least understood and least explored regions in Australia. One should not discard the LMS projects but we will follow the company.
The Mt Doreen project (Figure 4) looks very interesting. Historical mining in the prospects within the project gives good evidence of existing mineralisation. It's kind of a good sign. I see that in the Silver King prospect, there is Cu-Pb_Zn and Ag mineralisation. It has 10t of copper historically mined. Similarly, the Clark prospect is Cu-focused as well.
Figure 3: Mount Doreen Project. Local geology and mineral occurrence map. (Source: LMS Prospectus).
There is a prospect called Wolfram Hill and that has had 90t of Wolframite (Tungsten) mined. The historical mining activities in the Mt Doreen project are good to have as it established known mineralisation.
As the company has mentioned, they are raising to drill and that is also a good thing. They don't have to go looking for a drill target.
I have always liked the Arunta Province. I looked at this area in 2009 and wanted to take on the area with my first IPO. At that time, we were raising AUD 3M and that was not going to be enough. The area was big and access was not the best. We have now success stories coming out from the western margin with the WA1 Resources discovery. The discovery of similar styles is proven and I am sure there are plenty more to come.
Another potential concept for LMS is the introduction of Uranium. The market narrative and that of the average city folk is tending towards nuclear energy. It is softening and hence being in the Northern Territory is a good thing you can mine it. There is a lack of population to bother you as well.
For those interested, as usual, DYOR and take your time to discover the pros and cons. Samso will be following the LMS progress.
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