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Pathfinder Minerals - Update

Pathfinder Minerals originally acquired a large African mineral sands project in Mozambique back in 2011 for £34 million via a paper reverse takeover transaction.  These licences have been subject to dispute for 9 years trying to regain control of them through the courts. Recent news indicates that Pathfinder, finally, looks to be making serious progress at long last. A deal seems to be fast evolving on the licences with the key difference that there appears to be the buy in of all parties. Such developments would seem to herald a basis change for long suffering shareholders.

 

• Potentially world class minerals sands ex-BHP Billiton project

BHP invested US$29m on drilling/infrastructure to prove up an impressive resource in the mid-1990s. Back then, commercial circumstances did not merit future development. But now, Pathfinder is set to benefit from improved demand for ilmenite, the pigment for brilliant white paint.

• Team set to rapidly increase shareholder value via spreadsheet mining

The 2019 updated Scoping Study determined an NPV(10) of US$1.05bn. Pathfinder could benefit from the big uplift in value seen in mining projects in the early stages to smartly push the project up the valuation curve.

 

• Based just 50km from Kenmare’s Moma Mine suggests a natural buyer

We believe Pathfinder has all the hallmarks of being Kenmare mark II. Pathfinder’s neighbour has more than a decade of operating experience in Mozambique and its close proximity creates unparalleled upside potential.

 

• Risked conservative NPV suggests considerable upside potential

Our conservative valuation shows the potential. We update coverage of Pathfinder with an initial target price of 7.23p and Conviction Buy stance.