Mandrake Resources Ltd
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5 Day VWAP
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Mar 04 2021
Our Current Returns
Investment Memo: Mandrake Resources (ASX:MAN)
What we want to see from our investment in MAN during 2022.
Mar 25th 2022
This investment memo is a short, high level summary of why we continue to hold MAN and what we expect the company to deliver in 2022. The purpose is to record our current thinking as a benchmark to assess the company's performance against our expectations 12 months from now.
What does MAN do?
Mandrake Resources (ASX:MAN) is a junior exploration company chasing a large scale copper porphyry discovery in a region of northern Chile that hosts the world's largest copper mine. MAN also holds ground 30km from Chalice Mining’s Julimar project in WA, Australia.
What is the macro theme behind MAN?
We see MAN as being leveraged to the global electrification boom and anticipated commodities super cycle over the coming decade.
Copper is already the third most widely used metal in the world, used primarily in buildings and infrastructure projects - two sources of demand likely to benefit from pandemic stimulus. Copper also has a growing demand source from technology - EVs have up to 3.5 times more copper in them than a standard petrol car.
Why do we continue to hold in 2022?
- Copper project in a part of Chile home to large porphyry discoveries: MAN’s new copper acquisition sits in a region that hosts the world's largest copper mine - the 11.2bt @ 0.8% copper project owned by BHP/Rio Tinto, as well as the the 10.5bt @ 0.6% copper project controlled by state owned Codelco. Both of these are large scale porphyry deposits. MAN’s project sits on similar geological structures and has potential for a large copper discovery.
- Historical drilling data indicative of high grade copper mineralisation: MAN’s new acquisition has ~15,000m of historical RC/Diamond drilling results which have returned a peak intercept of 86m @ 4.83% copper from 121m - which includes higher grade sections of 27m @ 7.1% copper from 134m, and 3m @ 14.4% copper from 164m.
- Strong balance sheet: At 25 March 2022, MAN had $16.4M in cash. That’s a lot of cash in the bank for a small cap explorer, so MAN is well positioned to aggressively explore any potential discovery it makes across its project portfolio.
What do we expect the company to deliver in 2022?
Objective #1: Complete 12 week due diligence period and proceed with acquisition:
- MAN has set an initial 12 week due diligence period, we want to see MAN complete the DD work and proceed with the acquisition of the project.
🔲 Due diligence completion
🔲 Acquisition completion
Objective #2: Drilling program at the newly acquired copper project this year
- Target generation works leading up to MAN’s first drilling program at the copper project. We want to see the company conduct at least one drilling program by the end of 2022.
🔲 Geochemical surveys
🔲 Geophysical surveys
🔲 Exploration program detailed
🔲 Drilling permitting
🔲 Drilling commencement
🔲 Drilling results
Objective #3: Maiden JORC resource at the newly acquired copper project.
- With ~15,000m of historical RC/Diamond drilling results and any addition of new drilling data from drilling programs MAN completes, we want to see a maiden JORC resource for the new copper project either very late in 2022 or early in 2023.
🔲 Drilling results compiled
🔲 Maiden JORC resource announcement
What could go wrong?
- Acquisition risk: The newly announced copper acquisition in Chile is via an option agreement which gives MAN until at least 31 May 2023 to decide if it wants to acquire the copper project. Until then, MAN could pull out of the transaction at any time should exploration work yield no results. There is a risk that MAN elects to not proceed with the transaction and would then need to look for a new project.
- Environmental permitting risk: The Chilean government has signalled that it will put more focus on environmental permitting across the mining industry going forward. There is always a risk the government rejects new mine developments due to environmental concerns and so this is a key risk in Chile.
- Exploration risk: MAN is an early stage explorer with no discovery made as yet. As a result the company has no cash flows to fall back on should they fail to make a discovery. There is a risk that nothing will be found.
- Commodity risk: Junior exploration companies rely on elevated commodity prices to access capital. There is always a risk that the copper price falls and markets are no longer willing to finance new exploration.
What is our investment plan?
We plan to remain invested in MAN at least until it completes due diligence on the Chilean copper project. Given our confidence in the management team, if they choose not to proceed with the acquisition, we plan to continue holding until a new project is identified.
If all goes to plan and our investment objectives are met and the share price rerates, we will then look to take some profit and sell 20%, as per our standard investment plan for exploration companies.
Disclosure: The authors of this memo and owners of Catalyst Hunter, S3 Consortium Pty Ltd, and associated entities, own 2,150,000 MAN shares at the time of publication. S3 Consortium Pty Ltd has been engaged by MAN to share our commentary and opinion on the progress of our investment in MAN over time.
Catalyst Hunter Investment Milestones
✅ Initial Investment @ 8c
✅ Top Slice
🔲 Free Carry
✅ Increase Investment @ 20c
🔲 Free Carry
✅ Increase Investment @ 5.49c
🔲 Free Carry
🔲 Take Profit
✅ Price increases 250% from initial entry
🔲 Price increases 500% from initial entry
🔲 Price increases 1,000% from initial entry
🔲 12 months capital gains tax discount
🔲 Hold remaining for 2 years
Our Past Commentary on Mandrake Resources Ltd
|Type||Date||Share Price $||Title|
|25-Mar-2022||$||Cashed up MAN picks up high grade Chilean copper asset|
|26-Jul-2021||$ 0.091||MAN sold down, Assay results to come|
|15-Jul-2021||$ 0.120||MAN Takes a Beating After Showing Drill Pic|
|16-Jun-2021||$ 0.200||MAN is Drilling Now - 30km from Chalice Mining|
|08-Jun-2021||$ 0.260||MAN’s Drilling Now 7 days Away - 30km from Chalice Mining|
|31-May-2021||$ 0.200||MAN drills 30km from a $3BN World Class Metals Discovery|
|Article||04-Mar-2021||$ 0.110||2,600% Return on Discovery. ASX:MAN the First to Drill Test 30km Nearby|
Most recent catalysts for Mandrake Resources Ltd
Catalyst Hunter 25/03/2022
Cashed up MAN picks up high grade Chilean copper asset
Making the most of this, our junior exploration investment Mandrake Resources (ASX:MAN) has just acquired a high grade copper project in the Antofagasta region of northern Chile.
Catalyst Hunter 26/07/2021
MAN sold down, Assay results to come
Mandrake Resources Ltd (ASX: MAN) has been fairly aggressively sold down after the 20c placement, today MAN provided the market an update on the Julimar Province drilling 30km from the $2.6BN Chalice Mining discovery.
Catalyst Hunter 15/07/2021
MAN Takes a Beating After Showing Drill Pic
We were encouraged by Mandrake Resources Ltd (ASX: MAN)'s drilling update yesterday - two holes have been completed with two more planned and a nice photo of a drill core showed visible sulphides PLUS another conductor was discovered down hole.
Catalyst Hunter 16/06/2021
MAN is Drilling Now - 30km from Chalice Mining
As Mandrake Resources (ASX: MAN) investors, this is the moment we have been waiting for. Today MAN has begun diamond drilling at its PGE-nickel-copper project in the Julimar Province, 30km from the $2.75BN capped Chalice Mining’s discovery.
Catalyst Hunter 08/06/2021
MAN’s Drilling Now 7 days Away - 30km from Chalice Mining
Mandrake Resources (ASX: MAN) starts drilling on the 14th June and will be drilling targets just 30km from Chalice Mining’s multi-billion dollar world class Julimar nickel-copper-PGE discovery.
Jason Price 31/05/2021
MAN drills 30km from a $3BN World Class Metals Discovery
Metals explorer Mandrake Resources (ASX: MAN) has confirmed it will begin drilling on 14th June 2021, just 15 days from now. MAN’s ground sits just 30km from Chalice Mining’s $3 billion dollar Julimar nickel-copper-PGE discovery.
Jonathan Jackson 04/03/2021
2,600% Return on Discovery. ASX:MAN the First to Drill Test 30km Nearby
Mandrake Resources Limited (ASX: MAN) is set to begin a potentially company-making drilling program at the highly prospective Newleyine PGE-Ni-Cu target, part of its Jimperding PGE-Ni-Cu Project in WA.