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Montem Resources Corp retains BUY rating from Petra Capital off the back of Chinook Project scoping study

The company's Tent Mountain mine and Chinook project are located on Category 4 lands, which are areas in Alberta where surface mining is contemplated.

Montem Resources Ltd - Montem Resources Corp maintains BUY rating from Petra Capital off the back of Chinook Project scoping study
Drilling at Chinook is expected in the near-term.

Montem Resources Corp (ASX:MR1) is advancing its two quality coking coal assets – Tent Mountain (60 million tonnes JORC) and Chinook (149 million tonnes JORC) – which both sit on Category 4 lands in Alberta, Canada.

According to Petra Capital, these projects are unaffected by the recent decision from the Government of Alberta to reinstate its coal policy which will see Category 2 lands prevented from developing open pit projects.

The broker said this is very positive for MR1’s assets in the near term.

“We highlight MR1’s projects alongside Gina Rinehart’s Grassy Mountain project as the three projects closest to production in the region, noting all three currently sit on Category 4 lands and as a result remain unaffected by these policy changes.”

Chinook scoping study

Petra said: “MR1 have also completed a positive scoping study at Chinook, indicating the potential for an open cut mining opportunity based on the current 149,000 ounce resource.

“We expect this project will have similar economics to Grassy Mountain, namely a 4-5 million tonnes per annum operation, with first quartile cash costs and moderate capex costs given its proximity to existing infrastructure.

“We maintain our BUY and target price of A$0.49/share, noting the opportunity for MR1 to re-rate significantly as the company progresses its 2021 plans.”

The scoping study identified multiple opportunities for open cut mining including low strip ratios targeting hard coking coal.

As a result, the company will progress its exploration plans in order to complete a pre-feasibility study at Chinook over the next 12 months.

The Chinook Project has the potential to produce multiple open-cut hard coking coal mines

Looking forwards

The Chinook scoping study showed that multiple open-cut hard coking coal mines were economically and technical viable, and the company plans to explore, define and develop these mines going forwards.

The Chinook drilling campaign is expected to be undertaken between the June and December quarters 2021.

MR1 completed a definitive feasibility study (DFS) on the Tent Mountain Mine in 2020 which is providing guidance for the re-start project, with the aim to be exporting coal in 2022.

A farmout of the Tent Mountain mine (20-30% interest) is expected during the second half of the year.

Quick facts: Montem Resources Ltd


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