While Mandrake Resources (ASX:MAN) was the top-watched stock on HotCopper on Tuesday morning, not all users were converted into bulls by its latest update.
Let’s start with why the announcement grabbed attention in the first place. To be fair, the stock was up 13.7% to 2.9cps at 11am Sydney time on Tuesday.
That upside was because Mandrake on Tuesday published an inferred Mineral Resource Estimate (MRE) for its Utah Lithium Project.
The MRE came in better than expected – by some shareholders, at least, as evidenced by comments in the announcement thread – for 3.3Mt of Lithium Carbonate Equivalent (LCE.)
The project isn’t hard rock lithium but instead brine lithium where salty subterranean liquids are brought to surface and from there processed to get out the material battery makers want. Mandrake proposes to use “Rio Tinto-backed” direct lithium extraction methods.
Management commentary from MD James Allchurch was, unsurprisingly, bullish in tone.
“The identification of a 3.3Mt LCE Resource is an exceptional milestone for the Company, confirming Mandrake’s 100%-owned Utah Lithium Project status as a top tier US lithium asset,” Allchurch said.
“Mandrake will now proceed with well re-entry operations which will provide potential tonnage and grade upside to the Resource.
“Furthermore, two leading DLE providers, ElectraLith and Electroflow, will be processing Mandrake brine at their respective pilot processing plants in the near term.”
However, not all HotCopper users were as equally certain brine mining would be going ahead. Some users took issue not with the number of 3.3Mt – a good result by any metric – but that the MRE is categorised under the low-confidence ‘Inferred’ category.
“It’s all just Inferred in other words worthless unless proven to at least Indicated level,” user Chris2184 sharply quipped.
“They’ve also removed all cut-off grades, previously 50ppm, so now they’re including anything under that,” the same user wrote in reply to another comment.
For those playing at home: ‘Inferred’ resources aren’t bankable and Geoscience Australia notes they “must not be converted to an Ore Reserve.” For financial considerations to legally consider what may lie underground, an MRE needs to at least hit the mid-confidence ‘Indicated’ category.
More than one commenter suggested Mandrake’s announcement was, while a good sign, not enough yet to throw money at the company. (Others strongly disagreed.)
However, those cautious on geology might have had their eye on the bigger issue: at porosity of 9.6%, multiple users wondered whether lithium brine could even flow to the surface at all.
Time will tell.
MAN last traded at 2.9cps.
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