Barry FitzGerald: Argonaut and Garimpeiro agree – these two gold explorers are hot for 2024
Leading gold stocks have failed to fire-up in response to the metal again breaching $US2,000/oz and heading off in to record territory.
Many of them will actually close out 2023 lower than their April/May highs when gold first traded at more than $US2,000/oz. And those that will end the year higher than where they started will only do so by a thin margin.
Buying the physical metal would have delivered a superior return of around 12%. But there’s only so many Perth Mint gold ounces that can be stuffed in to the sewing box at home for safe keeping.
It’s why Garimpeiro has long been a fan of the leveraged returns that successful exploration can deliver compared with the vanilla ups and downs of gold producers depending on what the gold price is doing.
When exploration success can be matched up to heightened investor interest because the gold price is in record territory, all the better.
Some of that thinking came through in a year-end note by Argonaut on explorers that spent 2023 adding value to their projects via the drill bit.
It nominated six stocks, three of which it does not have a rating on – Carnavale (ASX:CAV), Ora Gold (ASX:ASX:OAU) and Spartan (SPR). The other rated three – and Argonaut’s valuation of them – were Magnetic (ASX:MAU, $1.80), De Grey (ASX:DEG, $1.69) and Wia Gold (ASX:WIA, 13c).
“The inclusion into this note considers not just resources added, but resource additions from projects where we have a high conviction of the project progressing to production,’’ Argonaut said.
“For some of these names this value has been recognised in the share price, for others we are yet to see this value materialise.’’ Argonaut said.
Garimpeiro read the note on the same day he was hitting up his Perth and east coast spooks for gold explorers worth watching in 2024. There were two names that kept popping up that were also on the Argonaut list – Ora and Magnetic.
So they have done enough already on the exploration front to attract the interest of Argonaut as well as having the potential for more exploration excitement in 2024, according to Garimpeiro’s spooks at any rate.
ORA GOLD (ASX:OAU): It is trading at 0.6c for a market cap of $34 million. Led by Alex Passmore, Ora has been creating interest over the thick and high-grade exploration hits at its Crown Prince project, 15km northwest of Meekatharra.
Some smart types have been nibbling away at the stock but it has pretty much traded sideways since June. Watch out for a steady flow of assay results, with assays pending for 45 holes drilled in November.
Best results from holes drilled in October and reported last month included 1m at 69.3g/t from 226m, 11m at 3.93g/t from 114m and 2m at 6.36g/t from 135m. The results were from the SEB or south-eastern orebody.
There is a history of high-grade gold at the location. Back in the late 1800s the oldtimers mined 2oz dirt (62.2g/t) as their reward for coping with the dust, heat and flies. The SEB is open along strike to the north and drilling has encountered mineralisation below 200m.
There are five existing treatment plants owned by others in the region so a low capex toll treatment operation is on the cards. Or one of the mill owners buys the project, or the company.
A maiden resource estimate for the SEB lode is in the works, with Argonaut tipping 125,000-145,000oz grading 6-7g/t.
“Importantly the resource will be a shallow high-grade open pit development which are exceedingly rare in WA,’’ the broker said.
MAGNETIC (ASX:MAU): It is trading at $1 for a market cap of $245m. The company is led by its founder George Sakalidis, a geophysicist who previously enjoyed serious success in the WA mineral sands space.
That Sakalidis is now enjoying some serious success in the gold space is reflected in Magnetic’s share price doubling since June, and Argonaut’s $1.80 valuation on the stock.
It has a 1.23 million ounce resource near Laverton from deposits along the Chatterbox shear zone. Drilling at the Lady Julie North deposit has been the game-changer with its thick and good grade intersections.
Its resource estimate was recently upgraded from 204,000oz to 852,000oz at a grade of 2.02g/t, with more potential at depth. It’s more than enough to get busy on a standalone development or a low capex toll treatment with one of the nearby mills.
Sakalidis has been open about assessing all “potential transaction options.’’
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