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Macarthur Minerals hits the ground running in encouraging ASX debut


The company is primarily focusing on production of magnetite from its well-located Lake Giles project in Western Australia.

Macarthur Minerals hits the ground running in encouraging ASX debut

Quick facts: Macarthur Minerals Ltd

Price: 0.2 AUD

Market: ASX
Market Cap: $20.47 m

Macarthur Minerals Limited (ASX:MIO) (CVE:MMS) hit the ground running for its listing on the Australian Securities Exchange on Friday as it prepares to transition from explorer to producer in the near-term.

The company opened at 28 cents with shares trading more than 10% higher intra-day at 31 cents.

Listing on the ASX complements the company’s existing, 10-year-old listing on the TSX Venture Exchange in Canada while its securities are also swapped over the counter in New York.

“I shall return”

The company’s CEO, vice-president and executive director Joe Phillips told a recent Melbourne meeting of potential investors that the company was named after famed American General Douglas Macarthur.

He said it was appropriate that the General was famous for the words ‘I shall return’ uttered when he left the Philippines during WWII because the Australian listing represented a return home for the company.

Focus on Lake Giles

Supporting the company’s ASX listing is the advanced Lake Giles Iron Ore project in WA’s Yilgarn region, about 175 kilometres northwest of Kalgoorlie-Boulder.

Macarthur also has conglomerate and hard-rock greenstone gold assets in Western Australia and hard-rock lithium holdings in the battery metals powerhouse of Nevada.

Strength in the iron ore market, a positive future outlook and impressive Lake Giles fundamentals have seen the company take great strides towards production with 2020 to be an important year in the transition from explorer to producer.

Iron ore companies on the ASX have been doing well this year with Fortescue Metals Group Limited (ASX:FMG) up around 140% year-on-year (YOY) and Champion Iron Ltd (ASX:CIA) up around 77% YOY.

Six-month price target of 43 cents

Macarthur opened an offer to list on the ASX in early November seeking to raise up to A$7.5 million via the issue of shares at A25 cents.

This offer was well supported, prompting Breakaway Research to provide a ‘buy’ recommendation and set a 6-month price target of 43 cents.

Breakaway said the listing would enable the company to profile its “valuable” Lake Giles Iron Ore Project “to an investor base more familiar with the earnings and cash flow potential of the project and its strategic positioning which is driven by rail and port access”.

Lake Giles is 175 kilometres northwest of Kalgoorlie and has substantial magnetite resources at Moonstone project and hematite resources across a number of deposits at the Ularring project.

Moonshine has an indicated and inferred resource of 1.31 billion tonnes at 30.1% iron and metallurgical test work indicates this can be upgraded to 68.5-69.1% iron.

Ularring has an indicated resource of 54.46 million tonnes at 47.2% iron and an inferred resource of 26 million tonnes at 45.4% iron.

Further resource updates are expected with drilling results imminent.

Magnetite focus

Macarthur plans to exploit the hematite resource through tribute mining and to focus on the high-value, high-grade magnetite resource.

After working the project for the last 7-8 years, Macarthur has positioned the project to optimise future and growing demand for high-grade magnetite concentrate, supported by positive studies, strong economics, an offtake agreement and proximity to port facilities.

A BFS for the project is nearing completion with positive early indications.

Macarthur’s strategy focuses on early cash flow targeting high-grade regions of the Lake Giles magnetite deposits.

The project will utilise available capacity on the rail network and export facilities through the Port of Esperance, which provide significantly lower transportation capex requirements than many other competing projects.

Glencore offtake

Another key development in the push towards development is an offtake deal with Glencore PLC (LON:GLEN) involving the sale of 4 million tonnes of iron ore annually for the first 10 years of operation with an option to extend for a further 10 years.

The lead manager for the dual listing has been Shaw and Partners whose Corporate Finance associate director Jeremy D’Sylva said, “The recent unlocking of infrastructure in the Yilgarn region has ensured the Lake Giles Iron Project’s large deposit has the potential to play a meaningful long-term role in the seaborne iron ore market.

“We view Macarthur as analogous to Champion Iron in its pre-development stages, which has since performed spectacularly.”

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