Mansoor’s Radar: Azure Minerals – the market darling

In January 2023, minnow junior exploration company Azure Minerals with its Andover Project came onto everyone’s radar after SQM, the lithium behemoth, announced a $20M investment. 

The market has seen the Azure Minerals share price growth, which is instrumental. SQM’s entry on the register has given them ~8-10X returns in just seven months. 

SQM had an advantage due to its directors’ close involvement with Azure’s technical exploration committee, providing them with a detailed understanding of the Andover ground. As a result, SQM witnessed a Tier 1 asset unfolding before their eyes. With this knowledge, they made a takeover offer of approximately $1 billion to Azure, but it was declined by their management. 

Azure acted swiftly by raising capital after carefully analysing the wind conditions. They identified Andover as a discovery of global significance and secured $120M without a fuss. The potential deposit of 150 to 240Mt is unprecedented and worth exploring. 

Analysts are spruiking Andover as having the potential to bring lithium supply into equilibrium. They have become acutely aware that Azure could be the real deal, possessing an extraordinarily long life, tier-1 projects, and assets.  

Companies with a potential discovery run, they run and run hard, even after the takeover offer. Azure’s Andover is a lead character on centre stage for at least the next six months. 

CURRENT DRILLING INSIGHTS 

17,000 meters were drilled using RC and DD methods, confirming a large, mineralised zone in pegmatite. Three target areas (TA1, TA2, TA3) are being drilled by Azure, and significant intercepts and grades have been found. 

The Andover pegmatite swarm extends over 9km (east-west) and up to 5km (north-south). Azure has identified several hundred outcropping pegmatites from extensive surface sampling and mapping, with many containing high lithium grades. 

MINERALISATION & GRADES  

Azure’s last five drilling announcements have confirmed broad and high-grade lithium mineralisation. DD017 is ~ 210m at 1.42% Li2O DD0228 is ~183m at 1.3% Li2O. Both the holes are ~400m apart.  

Azure Minerals updated the market with the target Area 2 plan and highlighted three targets with ~500m strike length and width from ~50m to ~150m. All three marks appear to have trend extension potential towards the northwest.  

RESOURCE BLOCK MODEL AND RESOURCE ESTIMATE 

 Azure’s 130M raise is used to drill ~100,000 meters, almost 4X the current meters drilled. It has highlighted a mid-point of 170Mt resource estimate by Q1 calendar year 2024. Analysis suggests that a mid-point resource estimate is achievable. A significant intercept of all three target areas and interconnectivity at depth will significantly increase the resource estimate beyond a high calculation of 240 Mt. 

Note: This analysis is based on high-level assessment, and some guestimates are used due to incomplete information.

VALUATION & RISKS 

Azure Minerals is raising A$120M as part of its capital to fund 100,000m of drilling. This will help the company gain a better understanding of its three targets. Based on market estimates, a resource of 50Mt is typically valued at around $500M. Market Open also uses similar estimates for price target analysis. Independent research suggests a potential upside of approximately 70% share price, with a target price of A$4.63. 

Previous Mansoor’s Radar: Winsome close to delivering 2 MRE’s next quarter

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