Money Talks: Could any of these 3 ASX explorers be the next $1bn success story?
Stockhead taps an extensive list of experts in Money Talks, our regular drill down into the stocks investors are looking at right now.
Today, we hear from Simon Popple of UK-based Brookville Capital.
Picking the right stock is important. It’s also important to know when to sell, Simon Popple says, because that’s when you make money.
“In September 2019 I told you about Silver Lake Resources (when the price was 94c), and Chalice Gold Mines (22c),” he says.
“Today the prices are $1.88 and $3.75 respectively.”
That’s a nice uptick in the value of Silver Lake and a whopping gain of around 1600 per cent for Chalice, which now has a market cap of $1.12 billion.
Here are three new stock pick ideas from Popple. Two relate to the same gold project but, as you’re about to see, it could be prudent to have fingers in both pies.
Although they’re two different companies, from an investment perspective Metalicity and Nex Metals are really all about one project: Kookynie.
The buzz around the historic, high-grade Kookynie gold project in WA lit a fire under their respective share prices earlier this year.
Between 1896 and 1922 a gold mine at Kookynie produced 360,000 ounces at an average head grade of 15 grams per tonne (g/t) gold.
These days, a grade of 6 g/t is often considered a good for an Australian underground mine.
“Recent exploration has found a wide range of grades including some as high as 100 g/t gold at less than 80m, suggesting an open pit (where a lower grade is normally profitable) could be very attractive,” Popple says.
It’s important to stress that Metalicity have a ‘farm in’ agreement with Nex Metals for the Kookynie project, Popple says.
To gain 51 per cent of the project Metalicity must spend $5 million within and up to five years.
“In September 2020 Metalicity raised $5m, so are well positioned to meet the ‘farm in’ criteria,” Popple says.
But there is some pending litigation against Metalicity to muddy the waters, Popple says.
The legal proceedings from within the US state of Minnesota concern the company’s previous activities when it operated as ‘Portland Orthopaedics’.
Advice to date is the action has no merit and the company is seeking the plaintiff to withdraw the action or for the action to be struck out, Metalicity says.
“[But] litigation can be nasty,” Popple says.
“I’d normally walk away from this situation. But the grades are so good — I can’t.
“Providing the litigation is fine, I would hope that most of the value is in Metalicity – because following the successful execution of the ‘farm-in’ agreement, they would control the project.
“But if anything goes wrong, then a small stake in Nex Metals could be a useful ‘Plan B’.”
Popple sees this as a long term play.
“If they are able to keep adding high grade gold to their resource, I hope shareholders would be well rewarded. Particularly if the gold price starts to take off.
“Remember – you can’t print gold!”
Mandrake’s Jimperding project lies about 30km east of Chalice Gold Mines’ world class Julimar nickel-copper-PGE discovery.
Mandrake applied for its 140sqkm exploration licence on 4 March 2020, just prior to the Julimar discovery hole announcement and before Chalice pegged over 2,000sqkm of ground contiguous to the Jimperding project.
That’s some good timing. Herein lies the attraction of Mandrake as an investment opportunity, Popple says.
“The licence is expected to be granted before Christmas (but this is obviously a risk),” he says.
“I’m hoping for a “pop” in the share price when it’s announced.
“They will be drilling the three recently identified targets at the Newleyine prospect at Jimperding before the end of the year.”
Mandrake also holds a promising gold project in the Northern Territory called Berinka.
“Prior to the Julimar discovery this was their flagship asset, but the exciting results that Chalice has delivered at Julimar has meant this has taken a bit of a back seat to Jimperding,” Popple says.
At Berinka, drilling to date indicates gold grading up to 6 g/t, silver up to 69 g/t and copper to 3.1 per cent.
“I should point out that although this is an incredibly high grade of copper, it’s just from one drill hole. (But if) it turns out that there’s a lot of high-grade copper – that could also be exciting,” he says.
“They are planning to carry out some drilling in May 2021 with a steady stream of results coming thereafter.”
After completing his MBA at Birmingham University in 1993, Simon joined the corporate finance team at Singer & Friedlander working on small and mid-cap mergers and acquisitions. In 1997, he joined the senior banker team at ABN AMRO before moving into their corporate finance department in 1999, where he specialised in private equity. He then became head of investment management at Strutt & Parker’s Real Estate Financial Services before becoming a director of Topland, one of Europe’s largest private investment companies.
In 2008, he set up Brookville Capital, a capital-raising business which subsequently won mandates with, amongst others, Bunge, the Bank of China (Suisse) and Fleming Family & Partners. He now writes the Brookville Capital Intelligence Report which covers gold and silver mining stocks.
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