Exploration Insights by Robert Tyerman

Crises from Japan to Libya have done little to dampen enthusiasm among junior resource companies, despite some recent short-term profit taking in gold, copper and other commodities

Fallout from the Fukushima nuclear plant has knocked uranium companies, whatever the fundamental economic arguments, with Kalahari Minerals, at 233.75p, anxiously awaiting its Chinese bidder’s decision on proceeding by 1 May – good value if it does go ahead at the original price – and investors searching for a thorium ‘safe’ nuclear play, such as PLUS-quoted All Star Minerals, now 1.4p.

Nickel has perked up of late, which does no harm to Horizonte Minerals, up from our 10p recommendation last August to 21.63p now, in the wake of impressive high-grade drilling results from its Araguia project in Brazil. Hold on.

Rare earths and metals are still finding fans, despite their recent rise. Creat Resources, at 5.25p, offers exposure to mania-treating lithium, and uranium play Forte Energy, at 5.6p, is probing rare earth possibilities at its Firawa project in Guinea. Meanwhile, wheeler-dealing Lonrho boss David Lenigas has established an AIM shell, Rare Earth Minerals, for inveterate punters at 0.63p.  

Texan cheer for Range
Range Resources has reported encouraging test rates from its North Chapman Ranch project in Texas. The company says latest combined test rates from fracture stimulation at the Smith 1 and Russell-Bevly 1 wells on the project reached 9.2 million cubic feet of gas and around 769 barrels of oil a day.

Range has already established a gross recoverable reserve estimate of 240 billion cubic feet of gas, 18 million barrels of oil and 17 million barrels of natural gas liquids at Chapman Ranch.

The company, which also has 21.75 per cent of the East Cotton Valley prospect in East Texas and interests in the Republic of Georgia and Trinidad, has potentially bigger fish to fry in Africa. Range holds 20 per cent of two licences in the ‘highly prospective’ Dharoor and Nugaal valleys in Puntland, Somalia.

Range shares have risen from a depressed 3.13p to 19.5p over the past year. Though clearly not risk-free, they could be worth a punt.

Resources grow at Beowulf 
Beowulf Mining says initial assay results from Sweden’s Kallak South iron ore deposit confirm earlier resource estimates of more than 400 million tonnes. The Ely-based company indicates results from its ongoing drilling programme suggest high-grade iron mineralisation over widths of up to 400 metres.

Following the Kallak South drilling success, Beowulf will restart drilling at its nearby Kallak North iron ore deposit. Present company estimates for Beowulf’s Kallak North and South deposits run at more than 600 million tonnes.

First highlighted by Growth Company Investor at 2.38p two years ago, Beowulf shares now change hands at 59p. Partial profit taking might be prudent, but keep a chunk for further progress.

Clearing the decks
Nighthawk Energy is focusing on Colorado’s Jolly Ranch oil shale project after losing an interim $24 million (£15 million) in disposals and impairments. The AIM-quoted company, steered by CEO Tim Heeley since the departure of entrepreneurial David Bramhill, has taken a $40.4 million write-down loss on selling another project, Revere, and a combined $23.21 million impairment charge on two others.

Nighthawk is now concentrated on Jolly Ranch, an extensive project where oil services giant Schlumberger two years ago estimated potential resources of 1.5 billion barrels. Heeley says Schlumberger now estimates 33,000 barrels of oil per acre in one part of the project, which he says could imply a potential resource of 13 billion barrels.

With a £25 million equity draw-down facility with an Evolution arm, Nighthawk might still tap the market to advance Jolly Ranch, which awaits a new resource evaluation this month. If that pleases, Nighthawk, at a depressed 8.5p, could repay a brave recovery punt.