Empire Metals

Empire Metalsrocketed last year after increasingly assured Pitfield announcements. But the sell-off thereafter may be justified.

2023 was not kind to the junior resource sector. But a handful of companies managed to buck the trend — with Empire Metals shares rising sharply from under 2p at the start of last year to as high as 12.8p during mid-January 2024.

Empire Metals ltd

The stock has since fallen back to around the 8p level, with investors now starting to cast a critical eye on Pitfield’s true potential — and the various risks associated with what is claimed to be a globally unique titanium deposit type.

For clarity, I have no shares in Empire, and will not be trading the stock. You can never tell where retail might take a company before fundamentals come into play, and in any case, I do not short small caps on principle — but I do think Empire may end up falling rather than rising.

There is an investor meet next week, so there is a decent chance that the company will answer some of the gaps in the investment case then — if I’m asking questions, others will be too.

Let’s dive in.

Pitfield: the flagship

Empire has multiple assets, but I think everyone can agree that the vast majority of the company’s market value is based on 70%-interest Pitfield.

The project is located Western Australia, and positively, is located close to all the typical infrastructure you would expect in a mining-friendly Tier 1 jurisdiction. Empire describes the asset as a ‘giant’ titanium project — with airborne geophysical surveys confirming a mineral system with a ‘40km by 8km by 5km deep magnetics anomaly.’

The company has now completed 61 reverse circulation drillholes covering some 8.900m along a 30km strike length, with all but one hole throwing off titanium mineralisation. It’s also completed three diamond cores totalling circa 1,200 metres, which all intersected ‘thick, high grade TiO2 beds of hematite-epidote-carbonate altered sandstone.’

So far, so good. You might be a long way from production, but perhaps a major will step in to JV or simply buy out the asset? Or perhaps some sweet government grant funding at some point? I think these two are unlikely based on what I can surmise, and here’s why.

It’s a titanite deposit. There is not a single titanite deposit, anywhere in the world, which is an operating mine. I have checked — though if anyone can find one, I will happily correct this.

Now, I am aware that current investors are (much like an angry Scot being challenged on legal tender) chomping at the bit to say: ‘Yes Charles, but all previous titanite finds have really only had trace amounts of titanite, while the Pitfield deposit has lots of Titanite. So you can’t compare.’

We will get to that in a moment because it’s a fair argument. For clarity, Empire notes that based on its best available data, titanite accounts for ‘for ~67% of the total contained TiO2 and makes up around 20% of the ore by mass.’

Titanium bearing iron oxides, ilmenite and a little rutile is present — but the economics of a potential mine are going to rest on the viability of extracting sellable titanium from the titanite. For clarity, one of the big problems is that investors simply do not know exactly how much actual TiO2 is in the titanite present. TiO2 contained within titanite is usually fairly low — and while the ore may be 20% titanite, and account for 67% of the TiO2 present — this doesn’t actually say how much TiO2 there is.

We do know from highlighted assays that the top grades are coming in at over 6% Ti02 — and given that circa two-thirds of the deposit is titanite, this means there should be 4% TiO2 in the best segments of the titanite. But these are the highlighted assays, if you look at the 22 January RNS, the average assay grade is lower — closer to 4% TiO2, so less than 3% TiO2 associated with the titanite.

Empire did release some petrography and mineralogy results (for fairness, covering only some very specific locations), covering 29 samples for petrographic analysis and 16 samples for Tescan Integrated Mineral Analyser analysis.

This gives us some more accurate numbers. Using two highlighted samples selected from the maiden RC drill campaign (one from the Thomas property and one from the Mount Scratch area), titanite was set as 36.7% TiO2 based on CSIRO microprobe analyses.

For context, ilmenite was set at 54% TiO2 based on a typical assay for Western Australia primary ilmenite — while Ti-oxides were set at 100% TiO2 for rutile and anatase minerals.

Overall the titanium grade itself seems pretty average — the argument is that the size of the system is so vast that it more than makes up for the grade, and that processing should be relatively cheap. For copper enthusiasts, a little like a porphyry system.

Processing plans

So the processing has to be cheap and easy. Empire plans to use an acid leaching process which they argue is ‘more financially advantageous’ compared to igneous hard rock ilmenite ores which they claim commonly require on-site smelting to produce a titanium-rich slag product.

The problem with this argument — to start with — is that igneous hard rock ilmenite ores are almost always processed using hydrometallurgical techniques, including sometimes acid leaching. Yes, a few ilmenite deposits require smelting if you look hard enough for some examples, but only when necessary — and it is rare for smelting to be employed, precisely because it is rarely economical unless grades are super high.

This is kind of like opening a corner shop up next to a Tesco Express and arguing it’s a little cheaper than Waitrose.

Let’s consider though, whether acid leaching is actually going to work. The company cites work done in Murmansk, Russia — where leaching of titanite followed by purification by hydrolysis is cited as one potential method for the processing of the titanium at Pitfield. However, I cannot find evidence that the methods tried out are now, today in actual use. At a plant, making money. I can’t see financial results from a company using acid leaching on a titanite deposit.

Why is this? If the evidence exists of an economically viable titanite operation in Russia — please send it my way.

Then there’s the various ilmenite analogous methods — there seems to be an underlying assumption that processes that work for ilmenite will simply work for titanite, but with zero evidence to support this view other than optimism. Okay, ilmenite and titanite may be cousins, but the company is planning to, at this point completely alone, commercialise the processing of a novel mineral — and with no guarantee that its experiments will work.

While either a sulphuric acid or hydrochloric acid-based leaching process to treat the Pitfield titanite rich concentrate is the plan, Empire does note that:

‘Test work and investigation is needed to evaluate the effectiveness of the leaching systems and to target conditions. Further research and evaluation of industry and researchers’ know-how is required.’

How expensive is it going to be to prove that this titanite deposit can be mined profitably? This is Western Australia economics it’s working with. What happens if the company decides Pitfield cannot be processed economically?

The other consideration is that even if Empire manages to get its ‘fine precipitated material’ from the leaching stage, this material will still require calcination and some form of consolidation to make a saleable product; further increasing costs.

Empire argues that the final product from the leaching stage will have a very high TiO2 concentration, approaching the same content as natural rutile (>95%).

But we do not know how much titanite ore will be needed to get to that 95%. Will it be economical? The whole point of a rutile deposit is that it is extraordinarily cheap to extract the titanium — with EEE’s own numbers acknowledging that TiO2 is set at 100% for rutile and just 36.7% for its titanite.

Even under the assumption that they can go down the acid leaching route, (and right now that is still an assumption), there’s still crushing, sorting, grinding, wet gravity separation, and floatation first — from their own flowsheet idea. Compare this to Sovereign Metals’ rutile deposit, where there is no need for crushing, grinding or acid leaching and it’s still not exactly going to come out cheap.

Even if all of the titanium from all sources within the deposit can be recovered (more modules, more expense), a predominantly titanite deposit with an average grade cannot cost compete with ilmenite, and in my view, is hopelessly outmatched by rutile.

It’s pretty much universally acknowledged that rutile is the best possible orebody, followed by ilmenite and then titanite at a distant third, due to ease/cheapness of processing. Titanite systems — even where there is an abnormally large amount of titanite in the system — have lower titanium content and more complex mineralogy, meaning more expensive and complex processing, and this makes deposits uncompetitive.

Investing in Empire Metals before it can prove that its titanite can be processed, and sold through an economically viable model, is risky.

Finances & Management

In interim results, the company had (rough figures) £1.4 million in cash, but lost £1 million in the six months to 30 June 2023. That implies a cash burn of roughly £170,000 per month.

It then raised £3 million on 22 January 2024 — add the £1.4 million in cash, that gives you £4.4 million. At £170,000 per month cash burn, from July 2023 to March 2024, EEE will now have burnt £1.5 million since interims, and have circa £2.9 million left over.

It’s hard to know exactly how much runway this leaves however, as metallurgical test work is going to be expensive, as will continued drilling of the asset. Arguably, it makes sense to check whether the titanite can be economically processed in the first place.

The placing was conducted with a Saudi Strategic Investor alongside existing shareholders. But it’s important to note that for Mr Fahad Al-Tamimi of TransOceanic Minerals, throwing a million or so into the pot is not the same as ratifying the deposit as viable — it’s merely an expression of interest.

Unique deposits

Unless a major is already on board, it pays to be careful around the language surrounding unique deposits — or mines with a compelling economic case. It’s often just not true.

Sirius Minerals’ polyhalite is perhaps the most famous example — Anglo took the company out for pennies on the dollar, and even then has recently been forced to write down another $1.7 billon on the investment.

Horizonte Minerals is another. Capex costs are incredibly cheap. Actually, they’re up a bit. Now at least 35%. Hang on, $1 billion in capital expenditure?

But there is another example closer to home that is also worth considering.

On 23 April 2018, Bluejay announced a 400% resource increase at its flagship Dundas ilmenite project, reaffirming it as ‘the highest-grade mineral sand ilmenite project globally whilst highlighting the Project’s significant commercial and strategic value.’

Here’s the key quote: CEO Roderick McIllree said: ‘Dundas could quickly become unique amongst all known deposits.’

Unique among all known deposits.


By September 2023, Bluejay was forced to admit that after Dundas was examined by Palaris, the JORC resource had been reduced from 59.3Mt @ 3.26% to just 29.7Mt @ 1.99% — making it utterly economically worthless.

Empire CEO Shaun Bunn was formerly a significant shareholder at Bluejay, and there was at one point some controversy over his holding. And Empire Finance Director Gregory Kuenzel was a Director of Bluejay between 2010 and June 2018. Both had jumped ship by the time this unique, world class titanium deposit was independently assessed as junk.

The bottom line

A former Rio Tinto geologist — Andrew Farragher — is onboard with Empire. It’s also hired two senior titanium consultants — Dr. Trevor Nicholson and Mr. Eugene Dardengo. This cannot be taken as evidence that the deposit is economic; they are being hired to find this out, alongside Narelle Marriott who will lead the investigation as process development manager.

Empire Metals has existed in other forms; it was first Noricum Gold, and then Georgian Mining Corp, and in those years was pushing multiple assets that had effectively gone nowhere in terms of creating shareholder value — until Pitfield.

No major is going to touch the company to fund R&D into metallurgical processing of titanite. Investors thinking Empire be sitting on trillions of dollars of titanium might be wondering why Rio Tinto hasn’t jumped in already.

It’s because they’re deeply, deeply sceptical. And economic viability is going to cost way more money to prove than the <£3 million currently at hand. Empire will need to raise millions going forward, for an uncertain outcome. This will be a hard sell, and the discount on the next raise will be massive.

Here’s what investors need: will any of the three new hires go on record with a realistic percentage chance of success, based on what they know right now?

And can Empire find one independent titanium expert, who is neither company affiliated nor being paid, to corroborate the enthusiasm of management?

If not, tread lightly.

This article has been prepared for information purposes only by Charles Archer. It does not constitute advice, and no party accepts any liability for either accuracy or for investing decisions made using the information provided.

Further, it is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

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