2437: Fortuna Metals; the next major Malawi rutile project?

The Vox Markets Podcast. Nothing in this podcast is intended as investment advice and the people in this podcast may hold positions in the stocks they talk about. Do not buy anything based solely on a tip or recommendation. Please do your own research.

Tom Langley is the CEO of Fortuna Metals. The company is developing a rutile and mineral sands project in Malawi. It also has some other assets in Australia, but Malawi is the focus for the time being and that's what we're going to kick off talking about. First of Hello to you, Tom.

Very good to see you. Hi, Alistair. Thanks for your time. So tell us what's going on in Malawi.

There's a significant amount of new slow coming out of the company at the moment on various levels. What are the highlights? Yeah, it's been very busy in-country in Malawi with our Macando, Routile and Graphite project. We've currently completed about 500 hand-dogger holes.

So this is building on the 600-odd holes we did last year. We've currently commissioned our own lab. So that's been built early this year. We're training up technicians and geologists as well to process samples in the long way.

And this will be a great cost savings and time saving with turnaround of assays. So you're moving towards a resource base there as well, aren't you? What can you tell us about your hopes for that resource base and the timing of it? Yeah, so we're currently working on our first maiden inferred resource, hopefully be due out early July.

It's going to be a critical step underlying the potential mineralisation of rutile across the Macanda project. And we've started with an exploration target a few months ago of around 200 million tonnes, between 0.8% and 1% rutile grade. So that was only down to 4 metres depth.

This maiden resource will be down to average depth of 8 metres. So we think that that number is going to get substantially bigger. So it's going to be quite a milestone for the company. What's going to happen after that?

Yeah, so we're currently also working in parallel with a conceptual study with mineral technologies. That's going to help outline potential centre of gravity of mining pits, CAPEX, OPEX, some key parameters moving forward for mining studies. And we've also actually got a bulk sample finalising at the moment in Johannesburg. That's basically already shown some outstanding results of 96.

6% titanium oxide in a clean rutile concentrate. So really excited by those results and looking forward to getting them out to market Yeah so that something to look forward to So tell us about where you expect this product to end up once you are up and running mining assuming that you managed to do that. You've got some connection into the US already with a cornerstone investor that you guys connected with a few months ago. Is the product going to the US?

so yeah being a high grade premium rutile product basically it can go into the all the various segments of the market titanium sponge being one so japan predominantly buying a titanium sponge we've got the pigment market uk us and you've got electrode market which is primarily uk and in korea as well so we've had some some really good backing from a credible group winder co They put $8.6 million in recently. So the idea of that is a strategic investment. They're going to hopefully open up the right doors for downstream buyers or other strategic optionality going forward as we develop the project.

I mean, you talk about grade there. How good is this project compared to other projects of a similar nature? I mean, you're not alone in Malawi, are you, with a project like this? Yeah, so we're just next door to Sovereign Metals, about 20 kilometres to the south.

Same geology extends through to our project. They've already outlined the world's largest rutile deposit. So we think, you know, if we can be anywhere near the top five, I think that'd be exceptional. And Malawi's already proven with the work Sovereign's done is that this rutile is exceptional.

The crystalline is good. The grain size is good. It meets all the high-end specs with low impurities. So, yeah, I think we're very fortunate that we've got a great project in a great region.

And, yeah, really looking forward to advancing the project. Is there anything you can say about the potential economics at this stage? Obviously, you haven't done the sort of full detailed studies, but, I mean, can you sort of throw out the idea that it might be cheap and easy to mine? It's near to surface, it's high grade.

How does it look for you at this early stage in terms of the economics? Yeah, that really is the beauty of this project. It's free dig and it starts at surface. There's no drilling, blasting, there's no crushing.

Very simple mining method, zero strip mining. So, yeah, low cost, low opex. And the beauty of it too is like being a graphite project, we've got dual commodity focus. The graphite comes out at a very low cost incrementally per tonne.

This actually makes it lower cost production than Wollapachana graphite So yeah we have a very strategic asset here in rutile graphite And then something that we really working on lately is the rare earth potential We've seen Sovereign just come out with some monazite numbers. Maybe they're going to be putting out 5,000 tonnes per annum of monazite. It's going to add significantly to the bottom line of their project. And so we're hoping to wrap some numbers around that this year as well.

So talk to us a little bit about the logistics of the project then. And some investors may think that Malawi presents some challenges in that regard. What do you say to that? Look, we're only 11 kilometres away from the Nakala railway line that goes all the way to the deep water port in Nakala and Mozambique.

I think that's an exceptional logistic advantage. Anywhere in the world, if you're that close to rail, it's a great outcome. So it's a huge saving in capital to develop the project. There'll be some work to do in terms of getting electricity and power to site.

but we could look at independent power providers or solar farms or diesel backups. So there's options there. And ultimately, the project that we're thinking about building isn't a huge consumer electricity. So it's definitely going to be in the realm of possibilities.

And how about your social licence to operate in Malawi? How do you get on with the locals there? Yeah, very good. We've got an exceptional in-country manager, Aquatsweer Resources, led by Hilton Bander.

He's been phenomenal. Everything we need to get done, he's been able to achieve and he's delivered everything to date. We're actually doing some educational work with the schools around our project. So we're going to roll that out this year.

And we're also going to start doing some farm trials later this year and next year. So this is about showing improved food security at where we're going to mine and away from where we're going to mine. And just enabling the farmers with the right skills going forward. So, yeah, really looking forward to starting that farm trial work.

So would you characterise Malawi as a mining-friendly jurisdiction then? I think very much so. We're seeing advancement with Lindian Resources, Kakungundi, Rare Earth Project, that's nearing production at the moment. Lotus Resources, Uranium Mine in the north, that's been in production previously.

And, yeah, I think overall with Sovereign's pushing ahead to a near-development stage, they've just finished their DFS. Yeah, I think Malawi, while it's very early, and doesn't have a long history of mining. I think that the right steps are being made in country just to support the mining industry So let just zoom out for a second before we close Tom So what does the rutile market and I suppose the graphite market as well given the commodity spread you have, what do those markets look like to you at the moment and how do you see them shaping up as you move towards production?

Yeah, so rutile is critical for aerospace, metal, so a lot of demand coming out of the likes of Boeing. So basically high strength titanium, lowest fuel savings, lowers the weight of the aircraft. We're seeing potential drivers with humanoids as well. So basically all the weight sensors of the joints, like hips and shoulders are all titanium.

So Rutil's going to feed that. So there's some out there numbers about potential demand coming from various groups such as Tesla. And graphite is actually really interesting in terms of its use in batteries. So anywhere from 40% to 60% of a battery is made of graphite.

And then you've also got the battery energy storage systems as well, which is seeing other battery minerals like lithium go really well. Yeah, so a very interesting and potentially lucrative environment in which you're operating there. Just close us out, Tom, then, with a summary of the news flow that we can expect from you guys in the coming months. Yeah, so currently just about wrapped up the hand-orger drilling.

That's going to be closed in a term of spacing. We've got air core drilling starting in the next couple of weeks. That's going to be infill again. We've got our first maiden resource coming out early July.

We've got the bulk sample test work should be due any week now. And that's basically going to prove that 96% plus TIO2 that we can then send to downstream titanium sponge purchases. So, yeah, a lot of news flow. On the back of all that, we're doing conceptual study that's going to outline some CAPEX, OPEX numbers for us.

And, yeah, we're just going to keep progressing the drilling and updating the resources as we go. So lots to look forward to. Thanks very much, though, for talking through all that with us in the meantime. Tom Langley, Fortuna Metals.

Thanks, Alistair. Cheers. The Vox Markets Podcast. Nothing in this podcast is intended as investment advice and the people in this podcast may hold positions in the stocks they talk about.

Do not buy anything based solely on a tip or recommendation. Please do your own research.