SMALL CAP SHARE IDEAS: IronRidge

‘We’ve had three discoveries in three years in three jurisdictions,’ says Vincent Mascolo, the chief executive of IronRidge Resources.

It’s not a bad track record, especially as the commodities in question – gold and lithium – are two of the most sought after by investors today.

‘What two great commodities to be involved in,’ says Mascolo enthusiastically.

‘Gold is the economic backbone for most countries and lithium is on the way back up too with the green renewal.’

The projects in question are respectively the Zaranou gold project in Cote D’Ivoire, the Ewoyaa lithium project in Ghana, and the Dorothe gold project in Chad.

Could it be that of all of them, the Chad projects are the most exciting and exhibit the most upside? It could, but the market needs to be eased into a Chad story, since there aren’t many of them about.

And that’s why IronRidge popped over to Cote D’Ivoire and picked up Zaranou, the asset that has been making most of its running for 2020.

Cote D’Ivoire is far more au fait with investors, hosting as it does the producing Yaoure, Agbauo and Tongon mines. The geology is part of the prolific west African Birimian greenstone belt and so far it hasn’t disappointed.

Zaranou has been drilled pretty much continuously this year and when the maiden resource comes, it’s unlikely to disappoint.

‘Covid knocked us sideways for about three weeks,’ says Mascolo, ‘but we recovered our poise and got 37,000 metres done. Now we’re committed to another 50,000.’

The thinking is that while the gold price is high, while access to the projects is available, and while there’s money to pay for it, the company ought to press ahead and get as much work done as possible.

‘Our strategy is all about shortening the time to the maiden resource,’ says Mascolo.

So far the signs are very positive. Highlights from this year’s drilling include five metres grading a whopping 270 grams per tonne, 24 metres grading 13.6 grams, 22 metres at over three grams, and 12 metres at over six grams.

At the time that these results were announced Mascolo called them ‘outstanding’, and given what they portend, this may not be an understatement.

The most recent results, released in late October, have continued to demonstrate significant grade and mineralisation.

‘Zaranou’s got a 47 kilometre strike zone, and we’ve only tested 10 per cent of it,’ says Mascolo.

‘The top 50 metres is all weathered and is effectively free dig. We see that as our early production strategy.

‘But we are also starting to prove mineralisation continues at depth. We believe Zaranou has the potential to be one of the most significant gold discoveries in West Africa.’

At 15.2p currently, IronRidge is valued at around £62million

That last is a highly speculative statement to make at this stage, but it’s worth noting that it’s not just IronRidge that likes the potential at Zaranou.

The company has received interest from several major companies, and as Mascolo points out, the majors don’t generally take an interest in anything that’s does not have a clear path to at least three million ounces.

So, all eyes will be on the announcement of the maiden resource when it comes next year – it may herald a real step change in the company’s positioning in the market.

Because if Zaranou works as Mascolo and his team think it might, then the momentum gained is likely to allow the company to roll into Chad without much demur from investors.

‘All the majors keep coming up to us and saying ‘tell us about Chad,’ says Mascolo. ‘They’re interested, but at this stage slow to move.’

What’s needed is a bit more trailblazing by IronRidge and a bit more work on the geology there.

That will come when the coronavirus restrictions ease, and when the time comes the company already has plenty to follow up on.

Dorothe consists of a 200 square kilometre licence that hosts extensive artisanal workings. There’s visible gold in the ground, and some nuggets have been discovered measuring up to a centimetre across.

It’s an enticing prospect, and one which has Mascolo and his team justifiably excited.

What of the lithium?

This too is a highly attractive project, but as gold is enjoying its moment in the sun on the markets, it has slightly faded from investors’ minds.

‘Two years ago we were only valued on our lithium,’ Mascolo remarks wryly. ‘Then this May we were only allowed to talk about the gold.’

But even if it is true to say that the focus of investors and the company is on the gold, there’s no doubt that the lithium project holds significant value.

One plan could be to spin it out into its own vehicle next year, a manoeuvre IronRidge has successfully executed before with other assets. ‘There’s interest in joint ventures, and farm-in deals,’ says Mascolo.

At 15.2p currently, IronRidge is valued at around £62million. Watch this space.