Guy on Rocks: WA gold juniors in the spotlight with new finds around old mines
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‘Guy on Rocks’ is a Stockhead series looking at the significant happenings of the resources market each week.
Former geologist and experienced stockbroker Guy Le Page, director and responsible executive at Perth-based financial services provider RM Corporate Finance, shares his high conviction views on the market and his “hot stocks to watch”.
While it’s more of the same on the resources front, with gold prices continuing to climb alongside the number of COVID cases, we are starting to see more numbers around how the virus is impacting base metals production.
“We’re starting to get a better handle on production cuts worldwide, particularly in base metals, with tin leading the charge in terms of refined metal cuts,” Guy Le Page told Stockhead.
“The biggest base metal cuts have been zinc, at around 4 per cent, followed by copper, and to a lesser extent lead at around half a per cent.
“But we’re going to see more of that and obviously everyone is watching South America in respect to a lot of those production cuts.”
Last week Le Page pointed to a forecast 20 per cent drop in nickel production for 2020 and the expectation that around 50,000 tonnes per annum of copper would likely be taken out of the market due to mine shutdowns during the pandemic.
On the macro front, Le Page said there were some interesting GDP numbers coming out of China.
Projected growth for the second quarter is 1.5 per cent but is heading to 6 per cent by the fourth quarter of 2020, Le Page says.
Iron ore continues to hold strong as steel demand also picks up in China.
“We’re seeing quite strong steel demand, which is up 7.2 per cent year on year,” Le Page said.
“Steel imports are down about 34 per cent and there was a 4 per cent increase in iron ore imports on the back of a dramatic drop in South American imports, so that bodes well for Australian iron ore.”
There has been quite a bit of news flow this week from the gold juniors on new discoveries around old mines.
First on Le Page’s radar this week is Great Southern Mining (ASX:GSN), which is drilling the historic high-grade gold mine at Cox’s Find, located 70km north of Laverton in WA.
Cox’s Find is a shear-hosted Archean orogenic gold project located in the Duketon greenstone belt.
The deposit is covered by three mining leases that cover a past producing open cut mine, which produced 77,000oz of gold at nearly 22 grams per tonne (g/t).
“While [Great Southern] has got a [market] cap of about $40m, there still seems to be a bit of upside in that price because they’re getting hits of 8m at 9g/t, 2m at 36g/t and 5m at 14g/t,” Le Page said.
“We’re seeing significant depth potential and increasing or similar grades. It’s not too deep – a couple of hundred metres below surface — and they’re continuing to pick up very high-grade results.”
Le Page added that Great Southern also had a number of targets along strike that had never been drill tested.
“There is several kilometres of strike potential along strike from Cox’s Find, both south and north, so that’s pretty encouraging,” he said.
“I think you’re seeing good [share trading] volumes there and that will continue to attract a lot of interest. I think that’s one to watch.”
Also catching Le Page’s eye this week is Metalicity (ASX:MCT) after it hit more near-surface high-grade gold at its flagship Kookynie project in WA.
In the past three months the company has rocketed over 1000 per cent to 3c.
This week’s highlights included hits of 4m at 16.3g/t from 42m and 9m at 5.7g/t from 35m from the first 11 holes of a 44-hole program at the Leipold prospect.
“This is the first phase of this drilling program they’ve done,” Le Page explained.
“They’ve got several parallel lodes they’re chasing but look extremely interesting. They’ve got about seven prospects to follow up.
“I think the best results are coming from the Leipold project, all sort of within 150-200m of surface, so open cuttable.”
The Leipold prospect sits just south of the old open cut mine of the same name and is “open along strike and in every direction and down dip”, Le Page says.
“It’s been a pretty good week for the WA gold explorers, continuing to find extensions to old mines. So with gold up over $2500 Aussie we’re in pretty good shape at the moment.”
Le Page also proffered some updates on a few of his previous picks.
Gold explorer Vango Mining (ASX:VAN) recently banked another $17m after completing a placement at 8c per share.
Le Page says the junior is now trading around 9c and has seen some good trading volume in recent days.
“I think that’s pretty good buying,” he said.
Moho Resources (ASX:MOH), meanwhile, has started drilling the Crossroad prospect, part of its Burracoppin project.
Burracoppin is located within a gold-rich, but very underexplored, area of the Wheatbelt region of WA.
Moho is also due to start a drilling program at its Silver Swan North project near Kalgoorlie.
“So that’s had some pretty good volume and picked up a bit,” Le Page noted. “We’re optimistic of that mining approval coming through in the next 30 days.”
Moho is trading around 8c, giving it a market cap of about $4.5m.
And finally, Tribune Resources (ASX:TBR) is set to release a resource for its Adiembra gold project in Ghana in late July.
“So a lot of news coming out, a lot of new discoveries and as I said last week I thought we’d gone to another level in this mining boom and it’s only getting stronger,” Le Page said.
At RM Corporate Finance, Guy Le Page is involved in a range of corporate initiatives from mergers and acquisitions, initial public offerings to valuations, consulting and corporate advisory roles.
He was head of research at Morgan Stockbroking Limited (Perth) prior to joining Tolhurst Noall as a Corporate Advisor in July 1998. Prior to entering the stockbroking industry, he spent 10 years as an exploration and mining geologist in Australia, Canada and the United States.