You haven’t heard of Searchlight Resources (SCLT.V).
You haven’t, don’t lie. But that’s okay because we’re going to use this as a learning opportunity, and by the end of this article, not only will you understand SCLT better, but you’ll also understand mining better, even if you’re a total newbie, because Searchlight just released an NI 43-1010 resource estimate and we’re going to break down what that means, in layman’s terms.
If you know what a 43-101 is, feel free to zip down a bit to the WHAT DOES THE REPORT CONTAIN section; everyone else follow me.
Alright, let’s break this down:
What’s Happening?
Searchlight Resources Inc., a public company, has paid for a detailed study on a project they are involved with in Kulyk Lake, Saskatchewan – one of several they own the rights to – with this one involving digging for rare earth metals and uranium. They have had a qualified person put their findings in a formal report and made it available for everyone to see, especially for those investing or interested in the company.
What Is This Report?
This report, known as the National Instrument 43-101, or NI 43-101 for short, is a standard in Canada. By producing this report, Searchlight is showing that they’re following the best methods and are open about their activities. It’s like a restaurant getting a health inspection and then putting the grade in their window.
Why Do We Need It?
The National Instrument 43-101 (NI 43-101) is a regulatory standard in Canada for the public disclosure of information about mineral projects. It came into being because of several high-profile mining scams, primarily the infamous Bre-X scandal of the mid-1990s. If you’ve never heard of the Bre-X scandal, here’s a simplified breakdown:
Bre-X Minerals, a Canadian company, claimed to have found an enormous gold deposit in Indonesia. Their reported discovery sent stock prices soaring, making their market capitalization reach billions of dollars. Many investors poured money into the company based on this exciting find, however, it was later revealed that the gold samples had been tampered with – they were salted with gold from other sources. There was, in fact, no significant gold deposit. This revelation collapsed the company’s stock value and wiped out billions in investments overnight, and the industry vowed that this should never happen again.
You might have even seen a movie based on it all:
Enter NI 43-101:
In response, Canadian securities regulators introduced the NI 43-101 in 2001. The main goals of this new regulation were to:
- Ensure that misleading, erroneous, or fraudulent information related to mineral projects isn’t provided to the public.
- Set specific standards for public disclosure of information about mineral projects.
- Require companies to have their claims about mineral resources and reserves verified by a “qualified person” – a professional with relevant experience in the kind of minerals and type of deposit under consideration.
What’s Does The Report Contain?
The SCLT report [found here] discusses:
- Past efforts of digging and searching before Searchlight took over.
- What Searchlight did between 2021 and 2023.
- An in-depth look at the land’s geology, confirming the presence of these precious metals. It compares one of the uranium styles to a big uranium mine in Namibia.
- The report also suggests what the company should do next.
Searchlight believes the Kulyk Lake area has important metals, which are crucial for various high tech and green energy industries. They think the region has not been studied enough, especially for its potential to host these valuable metals which, historically, were much less in demand than they are today. The CEO of the company, Stephen Wallace, is optimistic about the prospects, but the 43-101 is the scorecard for investors – and company management.
The Technicals:
Usually, a 43-101 is known as a resource estimate, and will include estimations of what level of ore is inferred (projected as present), indicated (likely present), and measured (definitely present), based on considerable exploration, drilling, historic records and more. That said, sometimes mineral explorers use the 43-101 process to get a second set of eyes on an early stage project. That is, they see indications of ore being present but wish to lay out a longer term plan of where they should be looking, how they should be looking, and what risks might exist to make it hard to properly look.
For the project in question, the Searchlight 43-101 concludes;
“Considering the historical data and the current exploration work completed by Searchlight, it is the author’s opinion that additional exploration of the Kulyk Lake Property is warranted. Several generations of historical exploration have identified a number of pegmatites trends in the project area which contain elevated levels of [uranium]; the [rare earths] potential of these pegmatites has only been more recently recognized. As much of the [historic] work dismissed the radioactive pegmatites as uneconomic, modern analysis of these pegmatites including REE assays should be completed. To assist with this, the legacy data for the project area should be compiled, digitized, and integrated with the modern results to help guide the additional exploration.”
Okay, so words like ‘bonanza’ and ‘omg there’s so much uranium what is even happening’ are missing from this report, but they usually are. What Searchlight has done here is non-hypey ground work, looked over by qualified experts, who agree there should be more exploration done here.
“The airborne radiometric survey completed by Searchlight in 2021 should be expanded to cover the remaining portion of the claim block. The ground truthing completed in 2022 showed that the radiometric data identifies the pegmatite bodies and be further evaluated on the ground. The geophysical anomalies identified by the current airborne survey should be examined in more detail, both by additional geophysical analysis and geological mapping and prospecting.”
So, steady as she goes. Searchlight does have other projects, notably the Kulyk Lake South and Duddridge Lake uranium projects, the Kulyk Lake North and Hanson Lake rare earth projects, and the Bootleg Lake, Robinson Creek, and Flin Flon Regional gold projects. That’s a lot of projects for a $4m market cap explorer and might indicate good value for the casual investor prepared to hang in while they do the work, though it’s far more likely the reason the 43-101 was done on Kulyk Lake is because it’s the property most interesting out of the batch..
There is, of course, no guarantees on any mining excplorer that they’ll find an economically viable amount of what they’re looking for, but that’s the play in mineral exploration.. if you DO find a decent amount of the metals you’re looking for, your value can run hard, and the process to get to that point has a lot of twists and turns and stages.
But for Searchlight, good job in moving things forward in a responsible, one-step-at-a-time manner. Investors who have had a wait and see approach for a while are starting to notice, with the stock up from $0.025 to $0.035 on the news.
— Chris Parry
FULL DISCLOSURE: Searchlight Resources is not an Equity.Guru marketing client, but we like the little guys with big potential who do the work. and they may become a client down the road.
