MoneyTalks: Is a rerate around the corner for these 3 explorers?
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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.
“The market is a device for transferring money from the impatient to the patient.” — Warren Buffett, allegedly.
“I like this quote because if there’s one attribute that’s critical in the junior mining sector, it’s patience,” Simon Popple says.
Last year Popple picked three ASX-listed small cap explorers – Metalicity, Nex Metals and Mandrake at 2c, 6c and 8c per share, respectively.
Until recently, these stocks had underperformed but Popple believes there’s potential re-rating news in the pipeline for all three. Here’s why.
Both these companies have a stake in Kookynie, a high-grade gold exploration project about 180km north of Kalgoorlie in WA.
Metalicity is ‘earning into’ the Kookynie project. Once the company has met the criteria it will own 51 per cent, with Nex Metals holding the other 49 per cent.
“I was [previously] concerned that Metalicity might have to fight a case in the US courts — I really like the asset but was worried about the court case,” Popple says.
“I’m pleased to report that this case has been dismissed.”
On 4 February Metalicity announced drilling had restarted at Kookynie, with two drill rigs operating.
Visible gold was intersected in the first hole at the high priority Cosmopolitan prospect, ~100m from the historic high-grade Cosmopolitan mine workings.
This hit indicates possible extensions to the historic high-grade mineralisation.
“Back in the day, the Cosmopolitan mine produced 360,000oz at a very high average head grade of 15 grams per tonne (g/t),” Popple says.
“Please don’t get too excited because these are [only] some of the first holes drilled by Metalicity in and around the Cosmopolitan gold mine to test extensions.”
However, the omens are certainly good.
“I must stress, this could be a complete fluke – probably one reason why the shares did not move when it was announced – but if a lot more gold can be found (which will require more drilling), the shares should start to pick up,” Popple says.
“We should know more about Cosmopolitan in a few weeks.”
Another small explorer with a market value of around $38m.
Mandrake has tenements to the east of Chalice’s mammoth Julimar nickel-copper-PGE discovery – the reason Popple liked them in the first place.
In March 2020, the very first hole at the Julimar project hit 19m at 8.4g/t palladium, 2.6 per cent nickel and 1 per cent copper.
The discovery sparked a ~2,500 per cent gain in the Chalice share price, from 17c to $4.38 currently.
The ‘drill-ready’ Newleyine prospect is in the bottom right corner of Mandrake’s Jimperding project.
“Newleyine is a well-developed target with the hallmarks of Julimar-style mineralisation,” Popple says.
“Through recent work including surface geochem, mapping, ground mag, FLEM and AEM they have identified three targets which they’ll shortly be drilling (probably this month).”
Following a recent heliborne electromagnetic survey (EM) covering the entire permit, Mandrake has identified several EM conductors that are associated with magnetic anomalies interpreted to be due to mafic or ultramafic intrusive rocks, which are known to host the PGE-Ni-Cu mineralisation at the Gonneville intrusion (Julimar).
The EM survey has generated a pipeline of eight targets where follow-up work is underway to develop drill targets, Popple says.
“The managing director told me the new EM prospects ‘are as good, and in some instances better, than Newleyine’,” he says.
Drilling of the new EM targets is likely to take place in Q3 – if they continue to stack up, says Popple.
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.
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.
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