I’ve been given a nudge here by a respected City Analyst to take a good look at this company as a mid-term investment. Now I don’t usually rush in as it takes a good month or two to get an in-depth angle on the play and we do get literally dozens of contacts from the City emailing info’ re’ different company’s with reasons to research them. However separating the wheat from the chaff can and has paid dividends, some very good pointers from different Brokerages and Analysts have over time been proven up. This pointer has come from the chap who called Kenmare (next door to Pathfinder) and a whole host of big gainers over the last 3/4 years Sefton being the latest.
Pathfinder Minerals has a 100% interest in two concession licences to mine heavy minerals sands, containing a potential titanium dioxide ore resource. The Naburi Licence and Moebase Licence, formerly owned by BHP Billiton, are on the Indian Ocean coast of Mozambique. Historical reported mineral resources on the property are estimated at 2.02 billion tonnes with a 3.55% total heavy mineral content, which is equivalent to approximately 71.7 million tonnes of contained heavy minerals. Confirmatory drilling and metallurgical test work will be required to upgrade the classification of the mineral resources in accordance with current AusIMM, SAMREC or CIM resource classification codes.
Exploration work conducted on the licences from the mid-1980s through to 2002 identified significant mineralisation. Bulk sampling and metallurgical test work conducted in support of pre-feasibility and feasibility studies in the mid-1990s indicates that valuable heavy minerals can be recovered using conventional dredge mining, wet concentration and dry mineral separation processes.
Pathfinder are undertaking a detailed feasibility study with a view to developing for commercial extraction Heavy Minerals Sands. The more valuable components of these heavy mineral sands deposits include the titanium oxide minerals ilmenite, rutile and zircon. Ilmenite and rutile are used to produce titanium dioxide pigment used in the production of paint, paper, plastic, textiles, rubber and pharmaceutical products. Zircon is commercially mined for the metal zirconium and is used for abrasive and insulating purposes.
The recent placing was heavily over-subscribed indeed Pathfinder turned down a further £10 million pounds in funding from another party/institutional investor. JP Morgan and Genesis have invested here and unknown to the general Blogosphere Jupiter asset management has also taken a stake which is below the notifiable threshold. At the moment Pathfinder are below the radar of the Private Investor if you look at the share dispersement the majority are held by Board members and institutions. Stock is tightly held on 2 to 3 year tie ins.
Now here’s the crux of the play Pathfinders’ assets are World Class (which is beyond dispute). Now where Private Investors fall down is their miss-understanding of the funding issue to bring both assets into production. There’s not going to be a $600 million dollar placing. Yesterdays ED note fails to address this point and more so it heavily discounts the price of ilmenite. which sells at over $300 per tonne indeed there is a production shortage world wide for rutile, ilmenite,zircon and generally most heavy minerals. China and the world are thirsty for these minerals hence why Kenmare has rocketed over the last 12 months from 13p hitting 60p at it’s top. I spoke to John McKeon today and asked him to clarify the funding issue which has been the main bone of contention.The company are now fully funded for the next 18 months and see no problem whatsoever regarding funding issues, the Board have large stakes themselves and are averse to dilution. McKeon stated “We don’t believe we have to have a major fund-raising” The majority if indeed all of the funds can be raised via forward trade contracts for a 10% sale of ilmenite,zircon,rutile (or there could be investment from the myriad of Development banks). It’s known by the Blog that Pathfinder have had many approach’s regarding forward trade contracts. Pathfinder are fully supported both locally and nationally they are way ahead of the game and have leading industry experts on side to progress their assets. (TZMI) For instance the camp in Mozambique is fully operational and run by former local BHP employees and Tribal heads. The security situation is very favourable to the company. The main target now is to get the bankable feasibility study completed which will ignite the share-price and could bring predatory noises. There’s only two ways they can go it’s either full production which will bring massive spikes in value or the company could, once the feasibility study is completed, be gobbled up. I had a brief chat with a contact at JPMorgan who confirmed that all the institutions invested are here for the “Long haul” i.e. either production or takeover.
There’s much more to the company than meets the eye for instance McKeon is fully committed to bring home the bacon for investors and the Board is packed with proven winners. Private Investors should get researching this company there’s no doubt that they will prove up the resource with the feasibility study. The company are back and forth from Mozambique on an almost weekly basis. Busy bees sourcing the honey!
Get researching them they will almost certainly rise over this year.