Triton Minerals Beats All Expectations with Maiden JORC Resource
On October 21st, Triton Minerals (ASX: TON) announced its much anticipated maiden JORC compliant mineral resource estimate for the Nicanda Hill graphite deposit at the Balama North project in Mozambique. The company’s management team promised it would be good, and they more than delivered. Not only is the maiden resource the largest known in the world, but it includes both Indicated and Inferred categories. There was a possibility that the maiden resource would only be Inferred, however due to the shallow depth and proven wide-scale dissemination (high continuity) of the deposit, an Indicated resource was also delineated. The total mineral resource estimate comprises 1,457 Million Tonnes “Mt” at an average grade of 10.7% Total Graphitic Carbon “TGC” and 0.27% Vanadium Pentoxide. That means the defined resource contains 155.9 Mt of graphite and 3.93 Mt of vanadium. At almost 4 Mt, the vanadium deposit is also one of the largest on the planet. The Indicated Mineral Resource is 328 Mt graphite at 11.0% TGC and 0.26% vanadium. The Inferred Mineral Resource is 1,129 Mt graphite at 10.6% TGC and 0.27% vanadium.
Triton Minerals Managing Director and CEO Brad Boyle said,
“This is a tremendous result for the Company, as Triton has successfully defined the largest graphite and vanadium deposit in the world – only 6 months from the commencement of drilling at Nicanda Hill. It was evident from the drilling data received to date, that it confirmed the geological continuity at Nicanda Hill and together with the consistency of the graphite grades provided Triton the opportunity to undertake and complete an initial mineral resource estimate well ahead of schedule…”
Triton moving fast, very fast
That’s right, only six months…The Nicanda Hill drilling program commenced in April and was originally designed as purely exploration, but due to the strong and consistent drilling results, it quickly developed into a resource definition program. Importantly the reported 1,457 Mt was at a cut-off grade of zero. Even at higher cut-off grades the size remains truly outstanding. For example, at a 10% cut-off, the total deposit is 908 Mt at an average grade of 11.7% TGC and 0.28% vanadium. No matter how one slices it, this is a monster. In fact, the company prepared a chart of 15 global graphite companies ranking each on size of JORC (or NI 43-101) deposits and by average ore grade. The chart is very compelling in showing how incredibly large Triton’s deposit truly is.
Pre-Feasibility Study to be completed in 2015
It was noted in the press release that the maiden resource is based on 50% of the assay results, meaning that further revisions will be coming. To be clear, that does not mean that the size will double, nothing close to that. The further assay results will likely increase the proportion of Indicated vs. Inferred. The Indicated category is very important to the company as it now feels confident enough to proceed with a scoping study. Triton is already working on aspects of a Pre-Feasibility study that it hopes to have completed by next year. The company will also be operating a pilot plant next year, all of which will assist in obtaining a mining license.
Even though the company’s assets are in Africa, Triton has easy access to sites and is adjacent to all required infrastructure for future project development needs, including the Pemba natural deep water port. A billion plus Mt in the middle of nowhere would not be worth nearly as much as Triton’s treasure. Triton’s management team also believes that it maintains strong local community and federal government support.
Mutola zone becomes prime area of focus
Due to the consistency of tonnage and graphite grade both at and near surface, the Mutola Zone has become the most attractive and near-term target. Previously known as the HG1 zone, the average true thickness of the Mutola zone is roughly 30 meters and is clearly identifiable along the entire strike length, either outcropping or extending to within 1-2 meters of the surface. This important confirmation provides Triton a number of options and flexibility, including the ability to selectively target the higher grade graphite and vanadium domains within the Mutola zone. This optimizing activity could greatly enhance the company’s opportunity to keep the cost of mining low.
The Company confirms that,
“…based on the drill data received to date, the Mutola Zone and parts of other northern prospects contain approximately 26 Mt of graphitic resource, at an average graphite grade of 15.8%. This zone extends from surface to a depth of about 200m. Further assays results are expected to upgrade this zone towards the north. Because of these features the Mutola zone and adjacent better grade schist units have now become the primary focus for rapid development by the Company and are the most likely location for future mining development.”
Understandably, the stock moved much higher on this news. From a prior-day close of A$0.315, the stock shot up as high as A$0.53, a gain of 68%, before closing at A$0.405, up 29% on the day. As of the close on October 23rd, the stock was at A$0.37. Therefore, Triton Minerals is up only 17% from this blockbuster news. This is a symptom of a terrible market for junior stocks. High volume brings out sellers looking to get out of any junior name, in any sector. Triton stock closed at A$0.86 about 3 months ago, long before anyone could have known about the Indicated & Inferred JORC resource of 1,457 Mt. In the October 21st press release it says,
“Triton notes this Mineral Resource estimate far exceeds the Company’s original exploration expectations.” And, “These strong results then provided Triton the opportunity to undertake and complete an initial mineral resource estimate for Nicanda Hill approximately 6 months early.”
Closing the gap with Syrah Resources?
Said another way, the market cap is up only A$18.5 million despite the company going from no JORC complaint resource to the world’s largest. [Note: I used 336 million fully-diluted, in-the-money shares in my market cap calculations]. At the latest $A0.37 close, the market cap is roughly A$125 million. Compare that to Syrah Resources’ (ASX: SYR) market cap of nearly A$600 million. The differences between Syrah and Triton are certainly shrinking, yet the gap in market caps remains striking.
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