Garimpeiro does not know if Andrew “Twiggy” Forrest will be rocking up to the Diggers & Dealers conference beneath Kalgoorlie’s big blue sky early next month to talk things Fortescue (ASX:FMG) and green hydrogen.

If he does, he is likely to leave Fortescue’s formal presentation on day two of the conference to an underling, or it could be a double act.

Whatever the case, Garimpeiro knows one thing for sure, should Australia’s richest man find time to press the front bar at the Palace Hotel during a break at the conference, he won’t need to worry about having some coin in his R.M. Williams moleskins.

That’s because the bar will want to be shouting him a handle or two for single-handedly giving the beaten up gold sector a boost on Thursday when his privately held Wyloo bid for 15% of gold producer Regis (ASX:RRL) at 13.8% premium to the market.

The bookbuild pulled up short at 12% and because it was on a “fill or kill” basis as reported by the Financial Review, the whole thing was called off, leaving Wyloo with its previously assembled 4.9% stake in Regis.

While the attempted raid was abandoned, the fact that Australia’s richest man indicated by his actions that leading gold stocks on the ASX were over-sold was just the tonic the sector needed after getting smashed in June.

The June sell-off was massive. Regis lost 36% of its value in the month. Northern Star (ASX:NST) shed 24%, Evolution (ASX:EVN) lost 32% and St Barbara plunged 41%. Sector leader Newcrest (ASX:NCM) did best by falling “only’’ 17%.

The falls are quite remarkable given the Aussie gold price actually edged higher in the month on the weaker US exchange rate to be some $A240/oz or 10% higher than its level a year ago.

Still, sentiment has been shot by the retreat in the US price, and confirmation in recent weeks that the local industry is being hit by cost increases and labour shortages. No doubt about that, but at least the smartz inside Wyloo reckon there could be value to be had.

Wyloo was offering $1.48 for Regis which had been trading at $1.30. Big name brokers had been valuing Regis at around $1.75 before the Wyloo action. While Wyloo didn’t get its targeted 15% fill, its attempted raid did force a 7.7% pop in Regis’ share price in Friday’s market to $1.40.

Most other gold stocks also posted gains.

Not to the same extent, but clearly indicating that if it was good enough for Australia’s richest man to be dabbling in the gold stocks following last month’s savage sell-off, it could be good enough for the rest of us.
 

Right on Cue?

Garimpeiro does not pretend to be in the same league as the brains trust behind Wyloo but he did mention two weeks ago that as times were tough in the market, he was looking for somewhere to hide for a while.

Gold was the go and the intent was to secure some leverage to the upside that exploration success by juniors can provide independently of gold price moves.

He consulted his Perth crew and they came up with the explorers Pacgold (ASX:PGO) when it was trading at 62.5c, and Wia Gold (ASX:WIA) when it was 7.6c.

PGO is back at 55c while Wia has edged higher to 8.4c. They are evolving exploration stories which the Perth crew are continuing to follow.

Garimpeiro’s Eastern States crew were a bit miffed they weren’t consulted two weeks ago. So they got their chance this week.

Apart from mentioning Pacgold again, they came up with two new names they said they were watching – the advanced WA gold explorer Musgrave (ASX:MGV), and the newly arrived WA gold producer Calidus (ASX:CAI).

Musgrave rose 6% to 26c on Friday but remains below its price a month ago of 30c. It recently achieved critical mass for a standalone development at its Cue project in WA’s Murchison thanks to a 41% increase in the resource to 927,000 ounces.

Exploration for more of Cue’s above average grade ounces continues. But there are plenty of established producers in the region who wouldn’t mind adding the ounces to their own bank of resources.

That’s a long way of saying Musgrave is a likely takeover target, particularly at these lower levels.

Calidus eased 2.5c on Friday to 58c. It was 85c a month ago. So the re-rating on it becoming a gold producer Garimpeiro has talked about previously has well and truly not happened.

Confirmation at some point that its new gold operation in the Pilbara is hitting all of its targets will go a long way to getting a re-rate going.
 
The views, information, or opinions expressed in the interviews in this article are solely those of the interviewees and do not represent the views of Stockhead. Stockhead does not provide, endorse or otherwise assume responsibility for any financial product advice contained in this article.

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