Following is an extract from Independent Investment Research’s July 2019 update on PolarX:
PolarX Ltd is set for an active 2019 field season over the Alaska Range Project and is well cashed up with ~$8 million in the tin.
$4.28 million of this came from a share subscription by the C$5.3 billion TSX listed Lundin Mining Corporation (TSE:LUN) as part of an exclusive option agreement to enter into an earn-in over the porphyry targets within the Stellar claim package, and will be used to fund the 2019 exploration over these targets.
Planned work includes 5,000 metres of core drilling over the high priority Saturn (formerly Zackly SE) and possibly Mars targets.
Ongoing data interpretation has confirmed the strong potential of these targets for porphyry-style mineralisation, with Saturn interpreted as being the source of mineralising fluids for the Zackly skarn.
The results of the 2019 field work on the porphyry targets will then be used by Lundin Mining in a decision whether to proceed with the earn-in.
Should they elect to do so Lundin Mining will have the right to earn 51% of the claims through the staged expenditure of US$24 million on direct exploration and staged cash payments of US$20 million to PolarX over three years.
Lundin Mining will earn no equity with an early withdrawal, however may choose to accelerate the programs.
Our view is that this is an excellent structure for an earn-in agreement, and will ensure, by virtue of annual expenditure commitments, that work will be ongoing.
We will not see, as is often the case in similar agreements, the larger partner making slow progress, and thus frustrating the junior partner and shareholders.
Lundin Mining agreement: This is a key breakthrough for the company, and has brought a quality partner into the project as well as onto the register - this has also ensured funding for 2019, and should the option be exercised, for the foreseeable future.
Porphyry potential enhanced: The results of work to date have further enhanced the potential of the project to host porphyry copper-gold mineralisation, which will be amongst the next drill targets for the company.
Upside and open pit potential at Zackly: The 2018 drilling has added significant size to the Zackly Cu-Au skarn mineralisation, and also highlights the potential for appreciable open cut mineralisation. Attractive mining destination: Alaska is an attractive and well regarded mining destination, ranking 5th globally and 2nd in the United States in the 2018 Fraser Institute survey – the state is home to a number of metal mines, as well as coal and a large oil and gas industry, with the attractiveness of Alaska being highlighted by the 2018 purchase of the high grade (14.7 g/t Au), 4.15 Moz Pogo gold mine by ASX-listed Northern Star Minerals (ASX:NST).
Close to infrastructure: The project is situated close to transport infrastructure, allowing for ready vehicular access, negating the need for all activities to be helicopter supported.
Strong management and technical team: The company has management, technical personnel and partners with extensive experience in the junior resources sector (and in the case of Millrock Resources, extensive Alaskan experience) and a proven history of technical success and delivering value to shareholders; in addition key personnel and related partners hold ~12% of the Company, thus aligning their interests with those of other shareholders.
Active exploration programmes and news flow: Given the results of the 2018 work program, we expect another concerted effort in 2019 (including expected drilling at Zackly, Saturn and Mars), with all indications that this will again bring very positive news.
Leveraged to exploration success: With an EV of ~A$30 million, the company is well leveraged to positive exploration news with the potential to return significant value to shareholders.