The hotspots to watch in 2019 – including Garimpeiro’s personal favourite
Investor interest in mining exploration stocks is drying up as it always does when the wind-down for the festive season begins.
There is good news in that as the thin trading volumes and lack of price action gives the committed investor a chance to do some shopping in the better explorers without much competition.
The focus as always should be on quality explorers, particularly those set to have a big 2019 with the drill bit.
As it was, this year has been better for the junior explorers than most had expected. The remote Paterson region in Western Australia became something of a hotspot on the strength of evidence that Rio Tinto has made a big copper discovery there.
More recently, BHP fired up interest in South Australia’s Gawler craton with the release of some stunning copper results from its Oak Dam West project.
And before that, there was the Nova-style nickel discovery by Australia’s most successful “prospector” Mark Creasy in the Fraser Range of WA.
All of the discoveries created a bit of a buzz for the junior explorers active in areas close to the discoveries. Many whose share prices benefitted took the
chance to top up their cash holdings to fund expanded drilling efforts on their own ground in 2019.
But if it is a possible new exploration hotspot investors are after in 2019 then they need look no further than the Tanami province which straddles the WA and the Northern Territory border.
On the NT or eastern side of the province, US gold mining giant Newmont owns the 14m oz Callie deposit, one of Australia’s most successful gold operations.
But today’s interest is in the west Tanami which hosts the same Trans-Tanami structure on which Callie is found.
More particularly, today’s interest is in the hardy junior explorer Encounter (ENR) which has secured a 100km strike extension of the Trans-Tanami structure in WA.
Recognising it was in potential Tier 1 discovery country, Encounter has joint ventured the ground with local gold heavyweight Newcrest under a 50:50 strategic alliance.
The alliance is planning to kick off a drilling program on the first of five project areas in April/May next year. Given Encounter’s modest market capitalisation of $15m at 5.7c a share, it could be one to watch.
Garimpeiro’s personal favourite is the Watts joint venture ground where the Hutch’s Find prospect is a known gold anomaly of scale.
Limited drilling back in 2010 by previous owners returned 19m at 2.3g/t gold from 98m and 10m at 5.4g/t from 123m.
The Phillipson joint venture with Newcrest is another one to watch. Government survey work identified a highly anomalous gold target where there has been no previous exploration.
The joint venture ground (Newcrest can increase its interest to 80% by sole funding exploration activities in the five areas and delivering a resource of 1m oz of gold or gold equivalent) is hard up against a big ground position taken up by Newmont.
If Encounter only had next year’s exploration blitz in the Tanami on the go, its current market cap could be seen to be about right ahead of any discoveries being made.
But Encounter is also a long-standing player in the Paterson where it recently attracted Nova owner, Independence Group, to pick up the running at its Yeneena copper-cobalt project.
Independence can earn a 70% interest by spending $15m any time before March 2020.
The deal was sealed by Independence taking up a 9% placement of Encounter shares at a 60% premium to the market prize at the time.
Encounter has also made an interesting move in to the prolific Laverton gold province in WA. Its Nazare project covers 40km of the prospective Laverton Tectonic Zone, home to multi-million ounce deposits like Granny Smith, Wallaby and Sunrise Dam to the north.