G'day
eastwest101
; I like your work and share some of your interests especially in the Cobar, with current drilling at Constellation and Canbelego. Excellent potential there but a pity that the companies involved each have above 1 billion shares on issue -v- Zenith with 294.4M shares + 16.55M Unlisted options. So to the topic in question...
Zenith (ZNC): S
mart, tidy, tightly capitalised and under-priced company
You can assess Zenith at least as well as I can but I think you've surely bought into what will be make a lot of money if held for long enough. That to me is the irresistible conclusion from looking properly at:
- today's very impressive results ... in addition to the initial Earaheedy discovery results (more about this below); plus
- Zenith's other interests - esp. those held 100% e.g. Red Mountain (gold), Split Rocks (gold), Develin Creek (copper-zinc), each of which I think is materially under-appreciated by most in 'the market';
- the clever structure of several of Zenith's less than 100% interests. Two topical examples are:
- the very sweet 25% interest in Earaheedy, free-carried by Rumble until BFS (about which I've posted before eg
Post #:
52793161
);
- the 15% interest in Bradda Head Ltd., the Jim Mellon lithium vehicle that will soon list in the UK and in which our shareholding could be worth circa $3M Aussie at listing on current estimations. The project in question is well sited in Arizona and is about to undertake a major drilling campaign from which to derive a maiden JORC resource - see Post #: 51104143. When the escrow expires in 12 months we could have quite a valuable - and readily monetisable - interest there, which should cause no management distraction and no expense in the meantime. Tick.
- the calibre of the exploration team at Zenith. MD Mick Clifford, while not a showman, obviously is a very astute and capable geologist focussed on finding a big prize. Look at the dirt they have their foot on;
- the tight share capital and admirable management desire to keep it that way. Note the discreet comment "Limiting Shareholder Dilution ...Tightly Held" on p3. 'Corporate Structure 'of today's Investor Presentation at
Post #:
54367757
;
Back to Earaheedy...
in the above
Post #:
52712465
I estimated the Rumble free-carry was worth roughly $6M-7M to Zenith i.e cots saving. We are going to be blessed with newsflow as Rumble lays into the drilling and achieves BFS as quickly as possible, which will free them of paying Zenith's share after that - albeit that will be well into 2022. It seems highly likely to me that Zenith will get a major, major rerating one way or the other. As its other acreage is not as advanced as Earaheedy, I'll offer some of my impressions re Earaheedy.
Huge upside
These things struck me from today's instalment in the recently opened Earaheedy newsflow pipeline. I'd value your insights
eastwest101
, if you're prepared to share them before getting your boots full! If got a good holding now but I still bought more today:
- There's 30,000m to be drilled in the current program. Results could see that increase of course;
- There are many smart people looking at Earaheedy at Zenith and at Rumble (and elsewhere no doubt - see below);
- As at today's release, only 13 holes (2,500m) completed or circa 8% of the program has been reported. This is just the start...;
- All 13 holestested positive using pXRF;
- Of those 13 holes, the only 4 assayed so far had 'thick mineralisation', with true widths of ~ 50m in two of them.
One of those holes was from only 18m, in the south western section which was previously thought to be pinching out and depleted of mineralisation. Not so, we now learn
;
The other hole was from 126m but not only was
it the first hole drilled 500m northwest of the previously north-western-most drilling line, but it was mineralised to EOH, after such a big step-out. And as further cream on the cake, faulting had lifted the mineralisation to open-pittable depths;
- "ongoing zinc-lead mineralisation footprint now is 3km by 1.8km, an increase of125%..."
- "mineralisation remains open in all directions..."
- Drilling has not yet focussed on the inferred feeder structures which contain near surface higher-grade Zn-Pb-Mn-Ag - because the whole system is still unbounded so finding the boundaries takes priority!
- "Gravity survey ... over Chinook confirms multiple ...gravity trendsthat importantly correlate with the inferred multiple feeder structures, providing avaluable targeting tool for further high-grade mineralisation" - correlation obviously reduces risk;
- Exploration Target range already increased to 100 million tonnes - 120 million tonnes - only 8% of the way through a program that (a) thus far has found mineralisation in every hole and (b) has not focussed on likely higher grade structures;
- "Second & third RC drill rigs due to arrive on site over the coming weeks ... When added to the existing RC rig and 1 diamond rig, there will be 4 rigs pumping out results.
- To quote Rumble's MD: “What’s incredible is the scale unfolding at Chinook, which continues to showcase all the hallmarks of a large-scale, world-class discovery ..."
Irresistible appeal to the big boys
The above is not the profile of a deposit that will stay in the hands of 'junior' companies like Zenith or Rumble. Their combined market is circa $400M; Zenith's is ~$80M.
This asset is certain to attract intense interest from multi-billion dollar base metal companies worldwide. It is only a matter of time, in my view, before one of them (or more) flops out the cheque book; mark my words.
Experience tells me that it is critical IMO that Rumble and Zenith get the most urgent understanding of what they have here so that they can present an informed view in a Target's Statement as I expect Earaheedy is highly likely to one day generate a takeover bid or similar.
