Searchlight Resources Inc. (SCLT.V), a mineral exploration company, has announced a significant business move by selling its Hanson Lake project in Saskatchewan. This decision marks a shift in focus for the company, paving the way for it to concentrate on new opportunities and projects.
Located about 65 kilometers west of Creighton, Saskatchewan, the Hanson Lake project was a joint venture with Willgrass Resources, a private entity.
Now, nobody is getting rich of this sale (at least not in the next decade), as Searchlight originally agreed to give Willgrass the chance to own a 50% stake in this project if they completed assessment work worth $50,000. Willgrass met this condition, leading to Searchlight selling its remaining stake for the same amount, plus a 1% net smelter return royalty.
This means that Searchlight still gets a small percentage of the revenue if Willgrass gets to production, which can be bought out for $1 million at any time.
But we’re not buying SCLT because they earned a neat fiddy K.
WHAT DOES IT MEAN?
In a word, this sale is housekeeping. Because Searchlight has a LOT of projects, in gold, uranium,. rare earths, and lithium, all for a $3.4 million market cap.
The sale allows the company to fully dedicate its resources and attention to other projects, including an area ripe with potential just north of Hanson Lake called Jan Lake. This project is fascinating because it sits on a large claim block of about 148.6 square kilometers that contains valuable pegmatite formations—rocks that are often rich in rare minerals and elements.
Unlike the Hanson Lake project, Searchlight owns the Jan Lake claims outright, with no obligations to share profits through royalties. This freedom means the company can explore and develop these claims as it sees fit. The area is accessible via Highway 106, providing easy access to potential exploration sites.
Interestingly, previous investigations in the Jan Lake area have revealed the presence of pegmatites with high concentrations of rare minerals such as beryllium, rubidium, gallium, tantalum, cesium, and lithium. These elements are in high demand for various industries, including electronics and renewable energy.
In essence, Searchlight’s decision to sell the Hanson Lake project not only simplifies its portfolio but also highlights its commitment to unlocking the potential of the Jan Lake area.
By focusing on Jan Lake and other spots, like the Duddridge Lake and Kulyk Lake uranium locations, Searchlight aims to explore and hopefully develop a project that could have significant economic and technological implications, especially in the fields of green technology and advanced manufacturing.
The company is inexpensive and, for mine, sitting on a lot more value than it has realized. I’d expect we might find another deal or two emanating from the company in the near future, as it monetizes non-core projects rather than raising money on the cheap.
This chart for SCLT tells you some things – the trading volume is rising, every tick is a decent sized percentage increase or decrease, and you there’s been interest from investors as recently as January, where canny investors could have made a triple in two weeks.
I’m not telling you to buy. I am telling you it’s undervalued, but you’ll need to make the judgement as to whether you think that’s about to change.
I think it’s interesting. Watchlist.
— Chris Parry
FULL DISCLOSURE: Client company, and we’ve picked up cheap stock on the open market, so do your own due diligence but – hey – do some. We think you’ll enjoy what you find..