Alien Metals (UFO.L) has this morning revealed further information from due diligence work being undertaken by its management team on the prospective new silver project at Elizabeth Hill in Western Australia.
Today’s announcement outlined the details of a JORC compliant resource estimated in 1999, with contained silver ounces of 4.05m ounces (oz), grading 2700 g/t (2.28m oz Indicated (underground), 0.90m oz Inferred (underground) and 0.87m oz (open-pit) Inferred). The RNS also explained about potential exploration upside to these figures, with possible further high-grade material within the existing mine, untested targets below 100 metres and exploration targets within the mining licence area highlighted by geophysical anomalies.
Comment and Recommendation
We are encouraged that over 50% of the resource is estimated in the higher confidence classification level of ‘Indicated’ rather than ‘Inferred’ and of potential to add to this from further exploration in areas immediately adjacent to the mine or at deeper depths.
The project’s excellent location within an established mining region of a tier-1 country, with grid power, groundwater availability, nearby rail infrastructure and a deep-water port, ticks many of the boxes that a mine development company should be ticking.
With silver commodity prices now around three times higher than when the mine was last in production 19 years ago and given the high grade nature of the resource, the project should easily fall within economic margins.
We await further details on this new project to be revealed in the coming weeks and months, which could involve updating the existing resource, testing new exploration targets or conducting a scoping study to determine the viability of reopening the mine.
In anticipation of more being learnt on this brownfield silver project in the near term, along with potential news on other silver prospective projects within the Group in Mexico and further developments on the iron-ore projects in Western Australia, we continue to recommend the shares in Alien Metals as a ‘Buy’.
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