Conico Ltd (CNJ) - Large Scale PGE Project in Western Australia

Conico Limited is a mineral explorer with assets in Greenland and Australia. Its asset portfolio includes the Ryberg project in Greenland. Ryberg is a multi-element project featuring copper, nickel, cobalt, PGE (Platinum Group Elements), gold, and magmatic sulphide. The company also has the Sortekap orogenic gold project and the Mestersvig lead, zinc, and silver project in Greenland along with the  Mt.Thirsty cobalt-nickel project in Australia. All the Greenland assets are wholly owned by Conico Limited, while the Australian asset has 50% ownership.

Matt Gordon caught up with Guy Le Page, Executive Director, Conico Limited. Mr. Le Page joined the company’s Board in March 2006. He also serves as a Director and Corporate Adviser at RM Corporate Finance and is actively involved in a range of corporate initiatives from mergers and acquisitions, initial public offerings to valuations, consulting, and corporate advisory roles.

Mr. Le Page was Head of Research at Morgan Stockbroking Limited (Perth) prior to joining Tolhurst Noall as a Corporate Advisor in July of 1998. As Head of Research, Mr. Le Page was responsible for the supervision of all industrial and resources research. As a Resources Analyst, he published detailed research on various mineral exploration and mining companies listed on the Australian Securities Exchange.

The majority of this research involved valuations of both exploration and production assets. Prior to entering the stockbroking industry, he spent 10 years as an exploration and mining geologist in Australia, Canada, and the United States. His experience spans gold and base metal exploration along with mining geology. He has acted as a consultant to private and public companies.

This professional experience included the production of both technical and valuation reports for resource companies. Mr. Le Page holds a Bachelor of Arts, a Bachelor of Science, and a Masters’ degree in Business Administration from the University of Adelaide. He also holds a Bachelor of Applied Science (Honors) from the Curtin University of Technology, a Graduate Diploma in Applied Finance and Investment from the Financial Securities Institute of Australia, and a Graduate Diploma in Financial Planning from Kaplan.

Company Overview

Conico Limited is a mineral exploration company that acquires, explores, and develops cobalt, nickel, and manganese oxide deposits. The company was founded in 2006 and is headquartered in Australia. It is listed on the Australian Stock Exchange (ASX: CNJ). Longland Resources Limited and Meteore Metals Limited are the company’s subsidiaries.

Conico Limited has a joint venture in Australia called Mount Thirsty. In East Greenland, the company’s assets are in the second year of exploration. A drill program commenced here in June 2022 and is expected to end soon.

The company has 50% ownership of the Mount Thirsty asset through a joint venture with Greenstone Resources. The company was previously planning to spin out the oxide resources at the asset. Galileo Mining, the company’s northern neighbour in Greenland, found an impressive intercept featuring over 20m of PGE including copper, nickel, rhodium, and gold at a depth of 140m. This intercept was found to be trending right onto Conico’s tenement. As a result, the company diverted a part of its exploration budget to carry out review and drilling, which is currently underway.

The 50-50 joint venture between Conico Limited and Greenstone Resources has been in place since 2008. Both companies are looking to consolidate the association at some point in time. Conico Limited anticipates that following the assay results and success at Mount Thirsty, it will be able to fast-track the tenement consolidation.

Currently, the Mount Thirsty tenement joins Galileo Mining to the south, where the latter has uncovered a series of impressive intercepts. Conico Limited is looking at a potential spin-out or merger, This has also been hinted at in the company’s quarterly reports in recent times. This transition will help bring the oxide resources together. The company also anticipates that it will bring together the hard rock resources containing the PG mineralization. The 50-50 partnership between Conico Limited and Greenstone Resources comprises the tenement, valuation, and funding.

200m north of Conico Limited’s boundary, Galileo Mining has had reasonably consistent results. The latter has intercepted 15m-20m widths with around 3g gold equivalent discoveries with consistently nice widths. This mineralization trends onto the company’s ground at a very shallow dip. Conico Limited has hit mineralization in 6 holes so far. This region was previously drilled 15 years ago when the company hit the same prospective horizon further south. However, the drill results were never assayed. The company is reasonably confident that the horizon extends well over 500m in strike length onto its ground, which is much more than previously expected. It is looking to determine whether the mineralization has the same degree and grade as Galileo’s findings.

Conico Limited had to recently make corrections that were a result of a calculation error. As per the corrected metrics, the company has between 15m-25m of the prospective horizon where similar sulphides have been identified. The company is looking to publish assay results which are expected in the next 2 weeks. It is looking to release batches of 2-3 holes at a time. In the case of an exceptional result, the company will put out the first hole it gets. Overall, it intends to put out batches of 2-3 holes and fast-track them through the lab. This will be followed by an acid test to determine the material processing costs.

Conico Limited’s neighbour, Galileo Mining has a 700Mt resource, which makes it one of the largest deposits in the world. Conico Limited has observed good continuity over a 500m area. Palladium has been a favourable commodity in recent times, especially since the auto industry is a heavy user of palladium. As per the company, the market is yet to establish a valuation standard for PGEs. Although in recent times, these metals have seen some very high valuations, despite having lower grades. The company has been in discussions with retail investors, and institutions, all of which have pointed to higher valuations. The market value of these elements serves as a huge benefit for Conico shareholders.

Cash Position

Conico Limited had $6M in capital at the end of its raise dating back to 3 weeks. The funds are expected to take the company through the end of the year or up to February. Currently, it has budgeted around 10,000m of drilling for Greenland, and about 700,000m for Mount Thirsty. In terms of meterage, the company has been able to drill 5,000m for a cost of $1.5M. The Mount Thirsty budget is expected to be within the $1.2M-$1.5M range until February-March 2023. The company is looking to drill 10,000m at Mount Thirsty within this time. Guy Le Page, the company’s Executive Director has ownership of about 2.9% of the shareholdings. He has been involved in the company since 2008.

Operational Challenges

Conico Limited faced challenges in Greenland as the logistics didn’t work as expected. Due to a few equipment failures and contractor performance issues, the desired drill meterage couldn’t be achieved. The company anticipates that this could be a function of being too aggressive with its drill program. It has a highly ambitious program planned for the Ryberg and Mstersvig assets. The company is expecting assay results for both assets in the next 4-6 weeks.

According to the company, Greenland offers a huge scale and requires a big budget. In 2021, the company was unable to produce results that were of commercial interest. It had grades of 1m at 40g gold. However, in Greenland investors are more interested in nickel than gold. If the nickel reserves can’t be located, the company will focus on getting a partner as it has already spent a considerable amount on the asset.

The Mestersvig asset is easier to manage and navigate. The project’s logistics are also much better, and the company has identified a lot of walk-up targets. In 2022, the company is expecting to have several good hits in the region. It is looking to wind up the operations by November-December this year. The company is seeking fairly significant discoveries as it will help gain market confidence for a potential $7M-$8M capital raise in the near future.

The company is open to entering a joint venture at either Ryberg or Mestersvig. Spinning out the zinc-copper portion of the Mestersvig project is being considered. There is also an option to take the joint venture route for the entire package. Due to a few tailwinds at Mount Thirsty, the company was successful in raising capital at higher prices. The company is cognizant that it needs to deliver results in Greenland in order to gain access to future market capital.

The Market Landscape

In recent times, Conico Limited has been getting a lot of attention from the market. The market is closely looking at the company’s results. In Greenland, the company has found a lot of mineralization that isn’t visual. The company anticipates that there could be a lot of high-grade material in the assets, but this remains to be determined. Conico Limited got a head start at the Mount Thirsty project following the results published by Galileo. The company already knows the grades at Galileo, which is located a few 100m away from the company's asset.

Conico Limited is looking to make a decision on its Greenland assets by November or December 2022. Given the results are reasonable, the company has plans to continue drilling at the Mount Thirsty project until it runs out of targets.

Following the changes in government 18 months ago, the anti-uranium policy brought Greenland Minerals’ operations to a halt. Conico Limited’s assets are based on Greenland’s east coast, a region that has seen limited activity in recent times. Ironbark Zinc Limited’s Citronen mine in the north is operating in the region. The region is also seeing a fairly limited gold exploration. On the west coast near Nuuk, there has been limited mineral sand exploration as well.

According to the company, Greenland needs to take measures in order to rebuild investor confidence. Notably, Greenland Minerals is in the process of litigating the Greenland government. Bigger mining companies are needed in the country in order to renew interest in the jurisdiction. There is a possibility that the anti-uranium sentiment might spill into an anti-mining sentiment, which is yet to happen, but nonetheless a valid concern.

To find out more, go to the Conico website