PolarX – (ASX: PXX, Share Price: $0.10, Market Cap: $29m, coverage initiated @ $0.066 in April 2019 – current gain of 51%)
Key Catalyst
Strategic earn-in joint venture with Lundin Mining over selected porphyry copper-gold targets within PXX’s 100%-owned Stellar Claims within its Alaska Range Project.
We initiated coverage of PXX during April 2019, based on encouraging results from its ongoing exploration campaign at its 80% to 100%-owned Alaska Range Project, located in south-central Alaska. Limited work so far has managed to already delineate two advanced deposits – the Zackly skarn and the high-grade Caribou Dome sedimentary copper deposit. Zackly hosts a current Inferred resource estimate of 3.4Mt @ 1.2% Cu, 2.0g/t Au and 14g/t Au – 41,000t of copper, 213,000oz of gold and 1.5Moz silver from surface, whilst Caribou Dome hosts a JORC 2012-compliant resource of 2.8Mt @ 3.1% Cu. Mineralisation at both these prospects remains open at depth and along strike, with PXX pursuing a strategy of stand-alone mining operations. More recently, 3D modelling has identified exciting copper-gold porphyry targets, which is what has attracted the corporate/exploration interest of Lundin Mining.
Latest Activity
Funding/Farm-in Deal with Lundin Mining
PXX announced today a major strategic earn-in joint venture with international miner, Lundin Mining, over selected porphyry copper-gold targets within PXX’s 100%-owned Stellar Claims, located within its Alaska Range Project.
As part of the deal, Lundin Mining will subscribe for 53.4M shares in PXX at $0.08 per share for a total of $4.3M, following which Lundin Mining will become PXX’s largest shareholder, with a 14.3% stake.
This share subscription secures Lundin Mining an exclusive option to enter into an earn-in joint venture on specific porphyry copper-gold targets within PXX’s Stellar Claims, with PXX agreeing to utilise the proceeds of the share subscription to fund an exploration program on these porphyry copper-gold targets.
The exploration program is to be completed by the end of 2019 and will be determined by a five-person exploration committee (three Lundin Mining members, two PXX). Once its reviewed the results of the exploration program, Lundin Mining will make a decision as to whether it exercises its option to commence the earn-in.
Following completion of the Lundin share placement, PXX also intends to raise up to a further $4.25M via a 1-for-7 non-renounceable Entitlement Offer to shareholders on the same terms at $0.08 per share. Funds raised will be used for exploration on the excluded Zackly Claims and the Caribou Dome Project.
Technical Significance
It is certainly a significant milestone for PXX to have attracted a quality investor and potential project partner like Lundin Mining, which has a demonstrated financial, technical, commercial and operational track record.
Lundin is a diversified Canadian base metals mining company with operations in Chile, the USA, Portugal and Sweden, primarily producing copper, nickel and zinc. In addition, Lundin Mining holds an indirect 24% equity stake in the Freeport Cobalt Oy business, which includes a cobalt refinery located in Kokkola, Finland.
Lundin Mining’s $4.3M subscription for a 14.3% stake in PXX effectively secures it an exclusive option to earn a 51% interest in PXX’s Stellar Project. If Lundin exercise this option, it could result in staged exploration spending to the tune of US$24M and staged payments to PXX worth US$20M, over a three-year period. Lundin can also accelerate its prescribed exploration spending and requisite cash payments, at its discretion. Lundin can also withdraw at any time prior to formation of the joint venture, so long as the requisite upfront cash payments for that year to PXX have been made to that point.
Alaska Range Project Overview
The Alaska Range Project comprises two highly prospective contiguous projects encompassing 241 sq km – the Caribou Dome Property and the Stellar Property. They host ~35km strike length containing extensive copper and gold-in-soil anomalism along the entire length, with clear upside potential for resource extensions and larger porphyry copper-gold discoveries.
The currently delineated Zackly inferred resource occurs over a strike length of 1km and already contains an estimated 41,000t of copper, 213,000oz of gold and 1.5Moz silver from surface. The mineralisation at Zackly remains open at depth and along strike at each end and provides an immediate opportunity to boost the overall JORC resource base.
The near-surface high gold grades and thick, sub-horizontal geometry of this mineralisation means it could be suitable for low-cost, open-pit extraction upon an economic resource being established through further drilling and feasibility studies.
PXX aims to substantially increase the current Inferred resource at Zackly, as it vectors towards a deeper and much larger potential porphyry source that forms a prominent magnetic anomaly at Zackly SE.
The Alaska Range Project also hosts the Caribou Dome deposit, which comprises a JORC Resource of 2.8Mt at 3.1% copper for 85,500t of contained copper.
PXX aims to rapidly accumulate sufficient copper-gold inventory between Zackly and Caribou Dome to support feasibility studies on a combined operation, or one or more stand-alone operations. The company is pursuing a strategy of proving up resources that will have a grade/tonnage combination to justify stand-alone mining operations, whilst also exploring the rest of its acreage.
Summary
Exploration to date over the Alaska Range project has highlighted its mineralised potential, with an almost continuous zone of copper anomalism over a NE-trending strike length of ~35km, with several individual priority prospects also being recognised. These prospects represent a number of mineralisation styles, including porphyry Cu-Au-Mo, intrusion related gold (IRGS) and sedimentary-hosted copper, with exploration results from all of these undrilled prospects highlighting the potential for each to host a major deposit.
Current excitement revolves around the new Saturn prospect, due to its potential scale. The combination of the modelling results, the magnetic responses from the surrounding zone and the close proximity to the high‐grade Zackly Skarn copper‐gold deposit, means Saturn is shaping up as a text‐book example of a porphyry prospect. It is this type of target that has attracted Lundin Mining, with the tie-up representing a major milestone for PXX and a vote of confidence in its exploration credentials. itiate any positions within the next 72 hours.
