Mining exploration as a business is in recession right now.
Nobody really doubts it. The Chinese recovery is progressing in fits and starts. Inflation is devastating Western economies and consumer spending. We are just beginning to realize the debt hangover caused by Covid.
And yet, there are always exceptions.
In mining exploration, recession only counts if you stay afloat.
If a major discovery is made, the world will continue to seem like a place of optimism and hope.
When Empire listed in 2021, it focused on a gold project called Central Menzies.
And an important discovery is why, against the trend of the sector, the shares of Metals of the empire They have increased in value more than four times in the last 12 months.
The real push came in July this year, when the company announced that its Pitfield titanium discovery in Australia was likely high-grade mineralized over its entire 40-kilometre length.
This is a big discovery for anyone, but while the progress so far seems impressive, there could be much more to come.
And for several reasons.
The first thing to note is that Empire, as with all young explorers, started from a relatively low base.
In 2021, when it first listed, attention was focused on a gold project called Central Menzies. But Central Menzies fell short and there was a shift of emphasis to two other gold projects.
Pitfield only joined the company in April 2022, and while he looked promising from the start, it was still unclear to what extent he would support the company’s overall value.
And while the July 2023 announcement gave some clue about the direction of travel, a lot of potential remains untapped.
Because, even with the triple-digit percentage gains in share price that Empire has now recorded, the market capitalization remains a relatively modest £23m (4.8p).
For a company with a high-quality titanium deposit that spans 40 kilometers in length and 8 kilometers laterally, and is located in one of the safest and easiest jurisdictions to operate in the world, that valuation seems still offers a considerable advantage.
Now, as we mentioned, there is currently a downturn in junior exploration, and that is one of the reasons for the market’s apparent caution.
Another is that for all the sound and fury about geographical spread and slope, there is still a lot of physical work to be done to get Pitfield to a position where anyone can exploit him.
Most of the information so far has been obtained by combining new drilling data with historical data. Such historical data is likely to be accurate, but will need confirmation in due course.
Consequently, further drilling is planned and some of this work will use a diamond drill bit which will provide much more detailed information.
Very good – as of mid-June 2023, the company had £1.8m on its balance sheet and can easily afford to get out into the field and get to work. But at some point the need for more financing will arise, and shareholders may well be asked to contribute money.
That won’t necessarily be a headwind, given the rising share price, but it does add a cautionary tone to any early excess exuberance.
It is true, as Empire itself has said, that Pitfield has the potential to be one of the largest primary titanium mineral resources discovered worldwide. It is also true that it will take more money to prove it.
Still, given the enormous potential (the size and scale of that lateral footprint), there is a clear path forward to increase value.
We are no longer savages here. What we are talking about is the methodical accumulation of an extremely valuable resource that could be worth untold millions and millions of dollars.
It is not yet possible to give a round figure on its value, but it is worth noting that titanium is on the list of “critical minerals” of many countries, including the United States, Japan and members of the European Union.
As the world continues to worry about the emergence of new trading blocs, the discovery and development of a significant secure titanium supply within the Western sphere of influence is likely to provide satisfaction to politicians and investors alike.
All things being equal, the project is likely to receive support when it comes to permitting.
In the more immediate term, however, keep an eye on news of imminent drilling and positive momentum if the company’s early conclusions begin to be confirmed by a new stream of hard data.
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