Rolek Resources Ltd (ASX:RLK) hopes to meet global supply deficits for the critical metal of manganese through readmission to the Australian Securities Exchange and developing its Barramine Manganese Project in Western Australia’s Pilbara region.
Initial metallurgical tests have shown a 20% head-feed produces a product consisting of 43% manganese and 10% iron.
About $7.2 million has been spent on exploration at the project 255 kilometres east-southeast of the Pilbara centre of Port Hedland.
The historical exploration spend has allowed Rolek to compile a database of 27,000 metres of drilling, geophysics and metallurgical studies.
Rolek views the Barramine ground as an ideal geological setting.
The ground is only 70-80 kilometres from the Woodie Woodie manganese operations to the south.
Woodie Woodie was snapped up by Ningxia Tianyuan Manganese Industry Co (TMI) with its acquisition of the now delisted Consolidated Minerals Limited in 2017.
The old ConsMin operation could be an option for bulk mining operations of Barramine ore.
Rolek has firm ambitions for advancing Barramine project while building short-term and long-term shareholder value.
Barramine ore has similar recovery to manganese from nearby Woodie Woodie operation
Short-term value creation
Rolek’s planned efforts to build shareholder value include defining a maiden inferred resource for upgradable manganese product for the steel industry.
The steel-strengthening critical metal manganese is also vital to the lithium-ion battery supply chain.
Rolek has plans on that front to test the ore’s grade capacity.
The company, once known as Shaw River Manganese Limited, has 2,500 metres in a main target zone and believes JORC resources are achievable for the prospects known as areas 3 and 4.
Thirty-three mineralised holes in the zone are grading better than 5 metres at 10% manganese.
The best drill hole assays are 36-46% manganese while the average intersection is 10 metres at 16% manganese from 46 intersections in 39 mineralised holes.
Rolek’s other planned value-creation efforts are to apply for a WA mining licence, produce a scoping study for the steel industry and assessing the battery metals grade capacity of the ore by leaching manganese oxides.
The company views the efforts as a way to capitalise on the $7.2 million historically spent at the project.
A manganese mineralisation model for Barramine project within 80 kilometres of the Woodie Woodie operation
Long-term value creation
Rolek is also intent on building long-term value for its investors and future shareholders.
Its plan to build wealth long-term includes further exploration drilling to enable further resource upgrades.
Another goal is to prove economic outcomes of the project before a start to construction.
The company hopes to submit a mine plan so it can convert more areas to mining licence areas.
It has also its sights set on multiple uses for its manganese ore.
Rolek hopes to sell its manganese products to producers of battery metal products and the steel industry.
A critical mineral in short supply
Manganese is a critical mineral on the US Strategic Minerals stockpile list.
The US doesn’t produce manganese in its borders, so it must look elsewhere for supplies, with Western nations being an attractive option from a national security perspective.
While there was volatility in manganese pricing in 2017-2018, a global supply deficit is expected to put prices on a continued uptrend.
The bottom average yearly price for manganese over the past 13 years was the $1,660 a tonne average achieved for 2016.
Manganese prices increased by 10% in 2017 to average $1,850 a tonne and by 10% again in 2018 to reach $2,060 a tonne average last year.
Barramine has solid geology based on historical drilling Rolek plans to build upon
Other projects and an acquisition
Rolek plans to buy up a company known as Rolhold Pty Ltd and its wholly-owned subsidiary Rolbar Pty Ltd.
A conditional binding agreement will allow Rolek to grab five mineral exploration licences and two licence applications from Rolhold.
The deal will also allow Rolek to acquire the iron and manganese rights for mineral exploration licence E45/4368 in the Pilbara, which have been promised to subsidiary Rolbar in a deed.
Once the deal goes through, WA-focused Rolek will hold strategic and base metals projects in the state’s Kimberley, Gascoyne and Murchison regions, in addition to the northwest Pilbara region.
Rolek plans to explore five other projects in the next two years besides Barramine.
These WA projects are: the Mt Dockrell and Lamboo Beryl-Lithium-Tantalum-Nickel-Cobalt Project in the Kimberley region; Maroonah Beryl Project in the Gascoyne region; Red Hill Well Lithium-Tantalum Project in the Murchison region; Milly Milly Nickel-Cobalt Project, also in Murchison region; and Balla Yule Nickel-Cobalt Project in the Pilbara region near Port Hedland.
An initial public offering
Rolek hopes to raise $5 million by offering 250 million shares priced at 2 cents each in a public offer being led by DJ Carmichael.
Every five shares would come with a free-attaching 4-cent option exercisable within three years.
If the company raises the cash its market capitalisation would be $8.9 million, with a $4.4 million enterprise value.
Rolek has set a two-year budget for cash spending if it raises the full $5 million.
This would involve spending $1.32 million at Barramine in year one and $1.134 million in year two.
The other five exploration projects would get a collective $580,000 over the two years.
Working capital would be $1.4 million while public offer costs would come in at $646,916, taking total spending to $5.1 million.
The ASX has given Rolek an extended deadline of March 29 for its securities to be reinstated to quotation on the ASX.
Rolek’s relisting deadline extension will allow it to complete its acquisition of Rolhold and help enable its securities to be reinstated at the exchange.
The merged company expects to hold up to $4.5 million cash on reinstatement.