• Junior with silver interests in Mexico and Australia
  • Also potential DSO iron ore assets
  • The company intends further deals to build a portfolio

What does the company do?

Alien Metals Ltd (LON:UFO) is a mining project generator, which plans to create value for shareholders by identifying and acquiring assets in the base and precious metals space and then adding value and selling them on or joint venturing them out. 

What does the company own?

The portfolio includes significant legacy assets from the company’s former life, in the days when it was known as Arian Silver. The assets in Mexico have significant high grade, potential and are located in well-known mining districts adjacent to some major names in silver mining.

The company also has an interest in iron ore projects in Australia, which look highly prospective for DSO. Mining industry professionals will know that DSO can be at a premium in the iron ore space, especially for juniors, since it means rock can be mined and shipped directly without any processing, thus saving on potentially huge investment in processing plant and equipment.

Grades taken in sampling as part of an ongoing due diligence process at Alien’s Brockman and Hancock Ranges projects have returned higher than 60% in several cases, and higher than 65% in one case.

It’s all the more significant because of the location of these projects in Australia, right in the heart of a prolific mining district, and not too far away from the famous mining export hub of Port Hedland.

How’s it doing?

Alien has agreed on terms of a farm-out deal with Capstone Mining Corp (TSX:CS) for its Donovan 2 copper-gold project in Mexico.

Capstone will spend circa US$10mln to earn up to an 80% interest in the project, after which Alien has the option to contribute on a pro-rata basis.

In the first stage, Capstone will take a 65% stake through a cash payment of US$290,000 to Alien over three years plus US$3.6mln of exploration expenditure.

This stake can rise to 75% through a further cash payment of US$200,000 and funding for a preliminary economic assessment and up to 80% for full funding of the PFS.

The company has also recently published results from soil sampling on a new licence adjacent to Elizabeth Hill

From the CEO: Bill Brodie Good

“We believe that with careful budgeting, we can deliver high-impact exploration programs across our existing and proposed licences as soon as safe fieldwork becomes possible both in Mexico and Australia.”

Inflexion points

  • Exposure to high performing commodities  
  • Further additions to the portfolio 

What the market says

“The Donovan 2 farm-out demonstrates the management’s ability on delivering by securing a JV partner,” research house First Equity said in a note.

“Alien has its current exploration plans funded through to 2021, with cash being added to balance sheet from warrant exercises.

“We are encouraged by the success many Pilbara focused explorers are having recently and resultant share price appreciation of those companies.

“With Alien Metals only at the start of its exploration journey in this part of the world and seeking similar high-target discoveries, we believe much further upside remains.”