Altair Minerals (ASX:ALR)

Company: Altair Minerals
Ticker: ASX:ALR
Sector: Copper / Gold / Lithium

What Does ALR Do? 

Altair Minerals (ALR) are a junior exploration company searching for world class copper / gold assets and has projects located in South Australia, Western Australia, Queensland and Ontario Canada, with a key focus on its Olympic Domain tenements located in South Australia. 

ALR Recent Performance

Over the past 24 months ALR has spent ~70% of its capital on exploration, clearly demonstrating their commitment to making discoveries through the drill bit. 

However, whilst the exploration results have returned what we believe to be promising hall marks of a potentially large IOCG system, ALR have not managed to directly hit the ‘mother lode’ which the market is desperately chasing.

What is The Sector Thematic? 

As the world switches to electrification to meet decarbonisation goals, copper demand is set to double from 25m metric tons (MMt) today to about 50 MMt by 2035.

The challenge is however, whilst there’s no physical scarcity of copper, getting the required quantities out of the ground in time to meet the demand. 

To put this in context, as stated by one of the world’s most renowned investors, Rick Rule, “We need to replace the biggest copper mine in the U.S., Bingham Canyon, every year, for the next 10 years to meet current demand, assuming demand doesn’t grow”.

As such, we see copper as being highly leveraged to take advantage of the looming supply /demand gap in addition to higher copper prices, which we are now witnessing.

Writing is On The Wall for Copper – Majors Moving First & Copper Price Increasing

BHP Lobs Two Failed Takeover Bids for Anglo American

One of the world’s biggest mining companies, BHP, is aggressively chasing copper assets which has seen the company lob their second all-script takeover offer of ~$60 billion for Anglo American, which again has been rejected. 

In acquiring Anglo American, BHP would secure ownership in four of the world’s largest copper mines and control approximately 10% of global copper production, making it the worlds biggest copper producer. 

We view this as extremely bullish for copper and in our opinion believe BHP are strategically pursuing copper assets with expectations of a looming supply crunch and higher forecast prices. 

Gina Reinhart Diversifying Into Copper   

Like BHP, Australia’s richest woman, Gina Rinehart has been active in increasing her exposure to strategic metals, including copper.

Hancock recently agreed terms with ASX listed Titan Minerals (~$40M MC), which will see the Hancock subsidiary pay US$120M to earn up to 80% of just one of TTM’s Ecuadorian copper projects.

This deal ascribes a rough value of US$150M for the early-stage copper project which has only had eight diamond drill holes including an intersection of 308m @ 0.4% copper equivalent (Cu Eq) from 54m.

Additionally, Hancock recently also purchased a 49% stake in a state-owned mining company for $120 million, which gave it six mining concessions in the north of Ecuador. 

Copper Price Is Now Hitting All-Time Highs

ALR Investment Highlights

Revised Company Structure & Direction 

ALR has changed its executive team and initiated a comprehensive review of several business opportunities, marking a new strategic direction for the Company.

Major Project Acquisition & Re-Rate?

With ALR looking for major JV’s at their flagship tenements, the question is what will ALR be exploring for themselves? 

The company recently announced they’re evaluating and assessing complementary new business development opportunities. 

In our view, this is the perfect storm for a tiny market cap explorer to re-rate and create shareholder value: 

1. You have current prospective tenements financed and explored by a major – a low-risk / high reward opportunity for ALR shareholders 
2.  A meaningful project acquisition has the opportunity to provide shareholders with multiples of upside overnight 

Copper, Copper, Copper 

In our opinion the ASX has been starved of quality, small cap, copper plays and we have been waiting a long time to find one we genuinely like and support. 

We also know the market is craving a copper success story as proven by some strong market reactions to recent drill hits by junior copper explorers:

• ASX:CPO – Share price ran from ~$0.03 to ~$0.13 following a 40m intersection of visual copper mineralisation
• ASX:AW1 –  Share price ran from ~$0.05 to ~$0.35 following a 67.1m @ 1.1% Cu intersection 
• ASX:CPM – Share price ran from ~$0.09 to ~$0.44 following a 50m @ 1.32% Cu intersection

The commonality between ALR and these companies is they all had low market caps, a low forming ‘base’ and upcoming share price catalysts.

ALR Exploring in World Renowned IOCG Elephant Country – Gawler Craton, South Australia 

In a nutshell, ALR is hunting Iron-Oxide-Copper-Gold (IOCG) deposits in an area of the Gawler Craton in South Australia known as “ the IOCG belt .”

IOCG deposits are massive concentrations of copper, gold and uranium ores hosted within iron oxide. These styles of deposits are enormous and extremely valuable.  

Whilst, IOCG deposits are found across the world, the biggest are found in South Australia – exactly where ALR is trying to find the next one.

However, it’s not just about being in the Gawler Craton, as IOCG deposits appear to be linked to a major crustal and lithospheric scale boundary.

As shown in the below image, all of the major IOCG deposits sit within and or are in close proximity to the ‘white’ lithospheric scale boundary – Note ALR’s prime location.

ALR Tenements Adjacent ~$230 billion Market Cap Major – BHP

ALRs ‘Olympic Domain’ tenement package, comprises eight (8) exploration licences covering 831 km2 in the Horse Well, Pernatty C and Lake Torrens projects.

Not only is ALR one of the smallest capped companies within this prospective region, their tenements are only kilometres from some of the world’s largest IOGC deposits and display all the necessary hallmarks for their own IOCG deposit. 

This area has also been a hot bed of M & A, most recently with BHP acquiring OZ Minerals for $9.6 billion, securing the world class Carrapateena deposit. 

• The Horse Well project – directly abuts BHP’s ‘Olympic Dam West’ which hit a world class 425.7m @ 3.04% Cu, 0.59 g/t Au, 346 ppm U & 6.03 g/t Ag intercept and exploration target is between 500-1,700Mt @ 0.8% to 1.1% Cu. 
• Pernatty C project – ~20km from BHP’s Carrapateena mine, 130Mt @ 1.5% Cu, 0.6g/t Au, 7g/t Ag deposit. 
• Lake Torrens project – ~30km from BHP’s Olympic Dam, 10.7Bt @ 0.72% Cu, 0.3g/t Au, 0.27kg/t U308, 1.3g/t Ag deposit and along same major structure.

Horse Well Project – Displays All the Required Characteristics of a Major IOCG System 

What we like about the Horse Well Project, is that it doesn’t just tick a few boxes, its ticks all the boxes when looking at the hallmarks of a potentially meaningful IOCG System.  

Horse Well Gravity & Magnetic Expressions the Same as World Class IOCG Deposits Within Gawler Craton. 

Almost all the largest IOCG deposits within the Olympic Cu–Au Province can be identified by their geophysical similarities. This is because these sizeable IOCG deposits are associated with an abundance of magnetite & haematite which reacts well to gravity and magnetic TLM survey hence why it’s an accurate pathfinder.

The below image displays the residual gravity and TMI expressions of six IOCG deposits (including Olympic Dam, Olympic Dam West & Carrapateena) within the Olympic Cu–Au Province, clearly highlighting the effectiveness of this type of geophysical exploration. 

What we like is that Horse Well displays the same ‘expressions’ within their tenement. The below images are the residual gravity and TMI anomalies identified at Horse Well, clearly showing analogous gravity and magnetic path finder’s akin with the previous six IOCG deposits.

Potential “Feeder” System Comparable to Olympic Dam “Feeder” System  

ALR have discovered potential “feeder” systems through their magnetotellurics (MT) surveys, which also show lateral continuity and are coincident with the previous magnetic anomalies, providing further evidence of moderately deep-seated targets.

This is of significant importance as it shows the presence of major conductive zones or “feeder” systems, which are highly correlative  with IOCG deposits.

What excites us more however is that analysis of this survey shows this major “feeder” system is comparable in size to the Olympic Dam feeder system.

Major Faults Go Hand in Hand With Major Deposits 

IOCG deposits are commonly discovered near major crustal-scale faults, because these large faults allowed the ascent of high-temperature Fe-rich fluids from a source magmatic system, often creating brittle fractures in this process. Once the fluids cool within these faults closer to surface, Cu mineralisation is formed which creates the ore bodies ALR are hoping to discover.  

For example, BHPs Olympic Dam (10.7Bt @ 0.72% Cu) deposit sits in close proximity to the Norwest & Torrens Faults which runs parallel to the project. 

Additionally, BHPs Oak Dam West has several interpreted faults including the ‘Hardy Hill Fault’, and is only a ~5km from some of ALRs prospective targets – see below image.

ALR’s Horse Well project has its own significant ‘Horse Well Fault’ and the recently discovered ‘Bluebush Fault’, running directly through their tenements with corresponding magnetic and gravity anomalies in close proximity.

What’s more interesting, is at each of ALRs prospective targets, there are brittle fractures which indicate numerous gases and fluids have passed through the system, indicative of a proximal IOCG deposit.

We’re In the Envelope of a large IOCG Source Body & Potentially Only 350m Away From a Discovery

The initial drill results returned by ALR are truly revealing of an IOCG source body, which we see as a significant value add to ALRs prospects and believe it has been misunderstood by the market. 

We have highlighted some noteworthy drill results below & compared to the nearby Oak Dam West discovery:

Both Carrapteena & Oak Dam West have shown that the initial drilling often doesn’t result in hitting the target, and it’s all about where you move the drill rig next. Both Oak Dam West & Carrapateena moved between 350m & 500m following their ‘near miss’ drill holes, and what followed next was their discovery drill holes. 

What Did ALR Say About These Drill Results?

To understand how close ALR are to a potential discovery and what these drill results actually mean, we spoke to the ALR team. 

The team advised that understanding every aspect of the geology, geophysics, mineralogy, petrology, structures and alterations styles such that each drill hole is not just defined as a “hit or a “miss” but part of a story that tells us where we need to be focussing our resources

In each of these drill holes, ‘significant’ faults and fractures were found, and although the presentation differs from hole to hole, the faults were presumed to be the same fault based on a ‘unique’ orientation to the fault and fault features, which is required to host a large source mineralisation system. 

Without delving deep into the geological breakdown, effectively the multiple large intercepts of low-grade mineralisation (HWDD08 & HWDD05/5W1) are indicative of a huge fluid movement through the structure. 

The harsh transition between extremely low mineralisation (HWD1 & HWDD07) to low levels of mineralisation (HWDD08 & HWDD05/5W1) is indicative you have moved from distal to proximal of the source body.

This if further supported by the small intercepts of high-grade copper, indicating that the fluid which has passed through these structures and fractionally crystallized on contact, hosted large amounts of copper.

In summary the team stressed that drilling indicates ALR are most likely within the ‘ore envelope’ , and are potentially only 250m-350m away from the source body based on similarities with other nearby deposits, such as Oak Dam.

High-Grade Cu Mineralisation Discovery Next? 

So, we can visually interpret the teams drill results and put in context just how close ALR are to a discovery, we took a section from Oak Dam and ticked (in green) everything intercepted in their drill results to date. 

✔  ALR basement geology is Donington Suite Granite which is the host rock for these IOCG deposits.
✔  The hanging wall of ALR major faults consists of granite-gneiss, sedimentary gneiss, diorite, and a mafic dyke.
✔  Hem Q intercepted in ALR drill results
✔  Low grade Cu mineralisation intercepted in ALR drill results

Horse Well is Following in the Footsteps of 950Mt @ 0.57% Cu Carrapateena

Unlike BHP who are spending upwards of $20M with a dozen drill rigs spinning at Oak Dam West, capital is finite for ALR, like it was at Carrapateena, and the team have had to work diligently in developing their geotechnical model which has never been done historically at these tenements.

To put ALRs exploration progress and process in context, we have compared Carrapateena to Horse Well and the results are strikingly similar. 

*Structural dislocation means IOCG’s don’t sit directly below the geophysical anomaly but proximal.

*CAR001 was sited within 100m outside of the Carrapateena Breccia Complex (CBC), and less than 200m from the main copper-sulphide zone of the Carrapateena ore deposit.

Lake Torrens Project – “Supergiant” Geophysical Anomaly 2-3x the Size of Olympic Dam

ALR have identified a massive geophysical anomaly 2-3x the size of Olympic Dam, in additional to several other possible targets. 

The gravity survey identified five possible targets and three of these targets also have coincident magnetic anomalies whilst the other two are gravity-only targets but with higher amplitudes.

Additionally, a historic drill hole (DDH-RED2) conducted by Western Mining Corporation (WMC) on the western margin of the Andamooka-Peninsula Project area showed encouraging results in terms of alteration styles consistent with IOCG environments.

Interestingly, there is a significant correlation between the interpreted structural lineament, the proposed annulus and the recent gravity and magnetic targets.

These “supergiant” deposits such as Olympic Dam are postulated to occur on the edge of an annulus, interpreted from notable differences in fracture densities and deep crustal structures of high permeability.

If These Projects Are So Good Why Do a JV?

Searching for IOCG deposits in the Gawler Craton is up there with some of the highest risk & reward ventures a junior exploration company can endeavour upon. 

Why? Because the geological setting of these deposits cannot just be explored with an AC or RC rig at shallow depths. These world class IOCG deposits require diamond drilling to depths sometimes in excess of 1,000m, which is a costly exercise and there is no assurance an economic ore body will be discovered. 

As demonstrated by ALR, BHP, OZ Minerals (now BHP), you might be drilling in the right ‘area’, however a drill rig could miss an ore body by a mere few hundred and need to drill again. Compounding this issue, ALR have 4 targets at Horse Well alone! 

Bringing in a Major JV not only validates ALRs exploration results to date, but completely de-risks ALR and creates meaningful upside potential with none of the financial or dilutive risk for shareholders.  

Not A One Trick Pony – Including Wee MacGregor Copper Project & JORC Resource 1.65 Mt @ 1.6% Cu

ALR’s Wee MacGregor project is located between Mt Isa and Cloncurry within the Mt Isa Super Basin, a world-class metallogenic province and one of the world’s greatest base metals provinces.

Currently they have an existing Inferred Resource (JORC 2012) of 1.65 Mt @ 1.6% Cu, with an exploration target of 1.0 – 1.5 Mt @ 2.3 – 3.7% Cu which can be upgraded through a simple in-fill exploration program.

ALR have advised that they are looking for divestment opportunities and “Cohiba has received a registration of interest for a direct investment into the Wee MacGregor project and is progressing discussions regarding this opportunity”

ALR’s tenement list is summarised as below:

ALR Has Strong Company Fundamentals 

Strong Cash Balance for Upcoming Share Price Catalysts 

ALR held $1.47M in their last quarterly report, in addition to recently raising $850k (subject to shareholder approval), filling the coffers with over ~$2.3M in cash. Executive Chairman, Mordechai Benedikt also participated in the most recent round of capital raising for $100k worth of Shares. 

With ALR looking for partners to partly or completely fund exploration at their prospective tenements, we believe the strong cash balance will be sufficient to see out upcoming share price catalysts, which if successful should see share price growth and any future capital raises undertaken at a premium to today’s share price.

Excellent New Additions to Bolster the ALR Team 

• Faheem Ahmed – Chief Executive Officer

Mr Ahmed holds a Bachelor of Engineering and Bachelor of Project Management and has >7 years of experience in project evaluation, asset management, data analysis, lifecycle cost analysis and risk modelling. 

Mr Ahmed is also a Non-Executive Director of Viridis Mining & Minerals (ASX: VMM). Mr Ahmed joined ASX:VMM in February 2023 and led the transition of the company into the Rare Earths sector where he played a hands-on role in the company’s successful exploration and development strategy. 

Since joining the board of ASX:VMM, the company share price has grown from ~0.20c to ~$1.35 in a little over 12 months. 

• Jamie Larmont – Non-Executive Director 

Mr. Larmont is a seasoned mining professional and corporate strategy expert, boasting extensive experience in operational and project management while working for BHP and RIO for over a decade. 

Mr. Larmont holds a Bachelor of Engineering and brings a profound understanding of operational strategy, project value analysis, and corporate communication to his roles.

Millions of Dollars Invested by Directors  

To date directors have purchased a significant number of shares on market and/or in placements.

Our calculations have directors spending over a combined ~$2.5M for an average share price of $0.012 per share. 

With the significant amount of financial investment in addition to the combined director shareholding average, which is several multiples higher than today’s current share price, we view directors incentives largely aligned with shareholders.

IOCG Junior Explorers Peer Comparison

Favourable Peer Comparison 

Looking at other ASX listed IOCG explorers, it is clear to us that ALR positions itself as the best risk to reward play. Whilst the market cap, cash balance and EV’s of all companies are similar, in review of exploration data, the Horse Well asset stands out amongst its peers which is partly demonstrated by their superior drill results.

Low Risk Profile

As demonstrated by Copper Search, which has a market cap of $11.5M accompanied by thin drill intercepts to date, ALRs downside risk can be considered low, and suggests an approximate ~32% downside on any unfavourable  announcements. 

What’s the Upside?

We know the market is craving a copper discover and a single drill hole has the potential to offer multiples of upside. Looking solely at any drilling success at Horse Well (excluding a project acquisition), referencing a recent discovery in the Gawler Craton, Coda Minerals (ASX:COD) capped at ~$25M at the time of their meaningful copper interception of 28.14m at 1.21% Cu, 0.37g/t Au, rocketed to ~$140M market cap within a matter of weeks.  

With ALRs current low market cap, and their drill intercepts to date which are in orders of magnitude larger than Coda Minerals, any drill intercepts with a higher Cu grade, we believe offers several multiples of upside. 

Near Term Share Price Catalysts 

1. Announcement of Horse Well project future drill programs.
2. Major JV announcement to advance the ALRs Olympic Domain tenements.
3. Meaningful project acquisition. 

Investment Risks 

1. Exploration risk – Despite ALR tenements existing in a prospective region, as with any junior exploration company, there is no assurance that ALR will have a successful discovery or alternatively the mineralisation may not prove economic.
2. Commodity risk – ALR is subject price risk due to commodity fluctuations, as a result of macroeconomic factors which may impact the underlying commodities, i.e. gold and copper. Market sentiment largely impacts these commodity prices and consequentially may negatively impact ALRs valuation. 
3. Capital requirements – More capital will be required in the future, however if company milestones are met then capital raise price should be much higher than current level