east pilbara manganese focus

From my BLOG

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East Pilbara Manganese - Focus on Spitfire (ASX: SPI)
By vautexhc
The East Pilbara region is rapidly emerging as a world class manganese mining province. The Woodie Woodie mine, operated by Consolidated Minerals (CSM), produces 1.2Mtpa of manganese, and is one of only 3 major manganese mines in Australia. With a strong forecast for the future of the manganese market, exploration in the region has intensified. Drill programs are being carried out by Shaw River Resources, Ferraus and Jupiter Mines in the near vicinity to Woodie Woodie and by Ausquest further south. Mining has also recently commenced at two other projects, Ant & Sunday Hill, SW of Woodie Woodie and @ Nicholas Downs further south. MIN Resources has an interest in these 2 new mines, showing their intent on securing quality assets in this region.

The standout company in this region is ,IMO, Spitfire Resources (SPI). The Spitfire tenure is to the south, and along strike, from Woodie Woodie, and is probably the most prospective to find repeats of the CSM Woodie Woodie mine. CSM were listed on the ASX until their were acquired for approx $1.5B by a Brian Gilbertson led consortium in 2007. I was a shareholder in CSM at the time. Since then CSM�s head geologist, Nat Cull, has joined the Spitfire team bringing with him a weath of local knowledge. Spitfire has delineated a deposit known as Tally-Ho which is 2.94Mt @ 7.07% Mn. While the grade is low , the style of mineralisation is amenable to a beneficiation process to upgrade the ore to around 40% making it very attractive. My main point of interest in regards to Tally-Ho is that it may be a pathfinder deposit to more significant high grade mineralisation. Spitfire are currently drilling (Oct/Nov 10) with the aim of testing some high grade prospects.

Recent tenement applications made by SPI have been contested by by the likes of FMG, MMX, Hancock, Mesa, Jupiter, which are all focused on iron and manganese project development.

Spitfire appears to be well run and has a tight capital structure with only 115 FPO's on issue. Their current market cap is approx $12.5M, and they have $4M cash on hand. The top 20 shareholders control 69% of the issued capital. In May 2010, two Asian based, steel focused companies have taken major stakes in SPI. A recent management restructure involving the appointment of a new top shelf CEO prempts the "next stage" of development for SPI.

I believe SPI provide the best current investment opportunity to future success in manganese development in the East Pilbara. This is why in summary;

-Best tenement positions, highly sought after
-Tight capital structure, little free float, steel industry focused investors
-Drill program underway (success here means don�t look back)
-JORC deposit
-Top management including EX CSM head Geo
-CSM ramping up exploration near to SPI ground
-MIN Resources actively investing in region (stakes in the 2 most recent mines)
-Global Manganese market looks strong
-Promising investments in other projects
-Yet to be recognised by wider investment community

The following picture outlines the tenement positions in the region and the major points covered above.



The following image is the same as above with a simplified overlay of the main geology.
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I have been following developments in the region on and off since I was an investor in CSM before it was taken over. My recent stake in SPI is my first investement in the region since.