In Search of the Next WA1 Resources

There is nothing like the performance of a potential “ten-bagger” in the making to send investors off in a flurry of activity seeking “the next ….”

Long time investors have seen this phenomenon time and time again. For some of the newcomers, a “ten-bagger” is a term coined by legendary US fund manager and author Peter Lynch. A ten-bagger is an investment that has appreciated ten times the investor’s initial purchase price.

While not always the case, many ten-baggers emerge from the doldrums in one burst following a blockbuster announcement to investors. This is what happened to newly listed clean energy minerals miner WA1 Resources (WA1).

The company listed in February of 2022 and treaded water for months before sharing the news with the market of the discovery of rare earth minerals present on its flagship asset. The stock went into a trading halt on 23 October pending an announcement. The few investors who had been following the stock should have been able to see what was coming from prior announcements. The announcement of the discovery came on 26 October, with the price up close to twelve hundred one thousand percent over the last month. Over three months the stock price is up 1500%.

While lithium miners continue to dominate investor passions as a leader in the march towards a cleaner energy future, rare earth minerals are attracting more and more interest as investors learn how many there are and how many industries will benefit from applications utilising rare earth elements.

While skeptics remain, the financial and business pages offer article after article, all indicating the move to cleaner energy is a megatrend that will affect the way we live, play, and do business.

There are multiple small cap miners jumping into the cleaner energy space, focusing on one or more of the many minerals deemed critical for the transition to clean energy by countries around the world.

Here are six of them with their percentage gains year to date, qualifying some as ten-baggers.

Lindian Resources (LIN) up +552%, explores for rare earths and bauxite

Galileo Mining (GAL) up + 398%, explores for nickel, copper, and cobalt

Cygnus Gold (CY5) up 237%, explores for lithium, gold, nickel, copper, and platinum.

Loyal Lithium (LLI) up +190%, explores for lithium, gold, copper, and zinc

Kingfisher Mining (KFM) up +177%, explores for rare earths, copper, and gold

Dreadnought Resources (DRE) up +144%, explores for rare earths, copper, and gold.

On the company website, Lindian Resources stakes the claim of supplying critical minerals for the future, with rare earth and bauxite assets.

Most investors now recognise rare earth elements as critical minerals, but bauxite? Bauxite ore is the largest source of aluminum on the planet, with aluminum included on the lists of critical minerals found in virtually every country in the world.

Aluminum is light weight and considered critical in the aerospace, defence, energy, and transportation sectors. Lindian has five bauxite assets in Africa – the Lelouma, Gaoual, and Woula bauxite projects in the West African country of Guinea, and the Lushoto and Pare bauxite projects in Tanzania in East Africa. The assets in Guinea are in development while the company has acquired a 51% controlling interest in the Tanzania projects.

Rare earth metals are extracted from different rock formations, with carbonites being the most common. Rare earths are essential to most high-tech applications, from radar systems to rechargeable batteries In a 2016 podcast from the magazine of the US based Smithsonian comes the following quote:

• “Oil is the blood; steel is the body; but rare earth elements are the vitamins of a modern society.”

Lindian settled a legal battle over the company’s acquisition of the Kangankunde Rare Earths Project in Malawi from a local producer. The company had acquired a 75% interest earlier but on 3 August, a deal was finalised.

On 12 October Lindian received the full support of the government in Malawi, a country in southeastern Africa. The project has an exploration history from multiple potential producers.

On 13 October Lindian announced its comprehensive development project, including drilling and infrastructure development, would begin sometime in November. The company cites analysts and industry professionals opinions that Kangankunde is one of the most highly prospective rare earth assets in the world. Drilling began at the end of October.

The company has a market cap of $177.9 million dollars, with a stock price of $0.215. The 52 Week High is $0.36 and the 52 Week Low is $0.027.

Galileo Mining has prospective assets in metals critical to the transition to clean energy – nickel, copper, and cobalt. The company has two assets in Western Australia – the Norseman Project and the Fraser Range Project.

The company listed on the ASX in May of 2018. On 6 June the company announced field work in preparation for a drilling campaign at the Norseman Project, with drilling for cobalt underway by 2 July.

Drilling continued at Norseman and began at Frasier Range but it would be early May of this year before the share price exploded.

On 11 May Galileo announced an assay result from the Callisto discovery within the Norseman Project indicated the presence of a “major palladium discovery.’

On 5 June the company announced the beginning of a five week drilling programme at the palladium discovery at Callisto. In July Galileo completed a successful $20.4 million dollar institutional and sophisticated investor capital raise to fund further drilling. The positive drilling announcements continued through 2 November with multiple positive findings on nickel sulphide; news of the presence of rhodium at Callisto; and increasing palladium grades seen in assay results.

The company has a market cap of $218.1 million dollars, with a stock price of $1.12. The 52 Week High is $1.95 and the 52 Week Low is $0.185.

Cygnus Gold is one of many ASX junior miners that have turned their attention to the booming market for lithium. On 29 July of 2022 the company announced an agreement to acquire as much as a 70% interest in the Pontax Lithium Project in Quebec, Canada. The project has already had twenty five holes drilled, finding lithium pegmatites also containing rare earth elements cesium and tantalum.

On 8 November Cygnus began its drilling program at Pontax. Based on historic drilling results, Cygnus management is confident there is “significant high grade lithium pegmatite (rock) over a length of 620m. The company has a war chest of ten million dollars to fund a 10,000m drilling program.

The company has a market cap of $85.15 million dollars, with a stock price of $0.59 per share. The 52 Week High is $0.625 and the 52 Week Low is $0.13.

The remaining miners saw less than 200% share price appreciation but remain worthy of consideration.

On 3 November of 2022, Monger Gold changed its name to Loyal Lithium to reflect the company’s shift towards lithium exploration as its primary focus. The company has existing lithium projects in North America, including projects in the James Bay Lithium District in Québec, Canada – Brisk and Trieste – and in Nevada in the United States – the Scotty project.

The Trieste Project has field mapping underway, while Scotty has metallurgical testing in progress with the remaining projects in early planning stages. The company’s long term goal is to not only supply lithium, but also to use better technology to address the entire lithium supply chain.

The company has a market cap of $30.5 million dollars with a stock price of $0.61 per share. The 52 Week High is $0.725 and the 52 Week Low is $0.195

Kingfisher Mining is another relative newcomer to the ASX in search of battery minerals, listing in 2020. The company is yet another example of a copper/gold/base metals explorer finding a cache of rare earth minerals and watching the share price climb, and in most cases continue to climb with continued positive announcements The share price is up 92% 0ver that time.

The breakout came on 30 August of this year when the company announced assay results of rock chips from Kingfisher’s Mick Wells Project within the Gascoyne Mineral Field. The results showed 40.02% Total Rare Earth Oxides (TREO). Mick Wells is wholly owned by Kingfisher, as is the other project within Gascoyne – the Kingfisher Project.

In the Ashburton Mineral Field Kingfisher has exploration licenses for the copper/gold Boolaloo Project.

On 24 October the company announced new rare earth elements discoveries at the Mick Wells Project. Initial discoveries were for rare earth elements encased in rocks. Additional discoveries Kingfisher has made recently included rare earth elements encased in clay.

The company has a market cap of $29.2 million dollars, with a stock price of $0.54. The 52 Week High is $0.685 and the 52 Week Low is $0.165.

Dreadnought Resources has three core project areas in Western Australia. The Tarraji-Yampi has an exploration history, but the area has not been touched since 1978. Tarraji-Yampi does have proven presence of outcropping (exposed rock) mineralisation with the company currently focusing on copper/gold/silver and cobalt.

Within the Mangaroon Project, Dreadnought has a wholly owned project and a joint venture. The company’s wholly owned project is prospective for gold and rare earth elements while the JV partnership project with First Quantum Minerals is prospective for nickel, copper, and platinum.

The final area is the Central Yilgarn Projects, comprising fourteen tenements acquired from Newmont Mining and Arrow Minerals. The area was mined for gold in the 1970’s and the area was tested for sulphide deposits in the 1980’s with no follow-up exploration. Due to prior iron ore mining in the surrounding regions, the Central Yilgarn has existing port connections via roads and rail.

The company has a market cap of $304.2 million dollars with a stock price of $0.10 per share. The 52 Week High is $0.155 and the 52 Week Low is $0.32.