At the time of writing, shares of Superior Lake Resources Ltd [ASX:SUP] are up by 21.21%, to four cents per share.
Why did Superior Lake Resources Ltd shares do this?
The company announced a significantly oversubscribed placement at 3.5 cents per share, raising $5 million. The placement was a 6.1% premium to last closing price ― a testament in this tough resources market. The proceeds will be used to advance the Superior Lake Project Feasibility Study.
What now for Superior Lake Resources Ltd?
David Woodall, Superior Lake Resources CEO, told the market (my emphasis added):
‘Following the outstanding initial JORC resource1 which confirmed the Superior Lake Project as one of the highest grade zinc projects globally, we are weeks away from completing the restart study. The $5 million placement will allow the Company to quickly transition to a Feasibility Study, which we expect to complete by mid-next year.
‘To complete this placement at a premium to the closing share price, despite what remains relatively difficult market conditions in the junior resource sector, is testament to the quality of the Superior Lake Project. Finally, Tribeca is a new institutional investor on our share register and has also been appointed to arrange Project Financing of up to US$60 million.’
The company is working with Nordmin Engineering Ltd and Mining Plus Pty Ltd on the Restart Study, which is for completion this quarter. The Feasibility Study is planned to start next quarter, with completion expected in the second quarter of next year.
The re-start plan is a preliminary scoping study, which aims to show the economic potential of the Superior Lake Project. For more than a decade, the project produced ultra-high-grade zinc concentrate. The grades ranged between 52 and 53.5%. Copper concentrates were associated with the ore, ranging from 22 to 25%. High-grade gold and silver was also produced from the project.
The operation closed due to low metal prices at the time.
Indeed, surrounding the project, infrastructure remains in excellent condition today. That should help reduce the initial capital cost in the future. Furthermore, with advancements in metallurgical technologies over the past 20 years, the company believes the capital cost will be even lower.
The bottom line: The project sounds exciting. But it’s still early days for shareholders ― we don’t know whether it will be economic at today’s metal prices. That said, the company boasts a good-looking ‘brownfields’ project that’s close to existing infrastructure. If the economic feasibility studies are positive and commodity prices hold up, the share price could explode over the next year!
Resources Analyst, Markets & Money
PS: Interested in mining stocks? My free new investor report, ‘The Top 10 Mining Stocks for 2018’, does exactly what it says in the name. I look at 10 companies that could make you huge money this year, and beyond. To download that report free, go here.