Money Talks: Which mining stocks are hot (and not)?
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.
Over the past year Popple, who specialises in junior mining companies, has highlighted nine ASX mining and exploration stocks with growth potential.
All nine of them have performed well since.
“As I write, the share prices are $2.20, $1.37 and $5.52. I’m glad to say, I’m hanging on to all three of these,” Popple says.
“These have also had a good run with shares prices moving up to 99.5c, 23.5c and $1.52 respectively.”
Popple has now sold Pantoro. Although it could go a lot higher, especially if the gold price takes off again, the company is currently refurbishing a mill, he says.
“Clearly, this could all go to plan … or there could be problems ahead. As I’ve already made some money, I’d rather watch this one from the sidelines.”
Popple has now sold these three stocks as well. Here’s why.
“Newcrest has some fantastic assets,” Popple says. “Unfortunately (as far as I’m concerned), two of these — Lihir and Wafi-Golpu — are in PNG.”
In April, the Papua New Guinea (PNG) government denied an application from heavyweights Barrick Gold and Zijin Mining to extend the mining lease at the 600,000oz Porgera gold mine.
While this doesn’t impact Newcrest’s operations in the country, it does add an extra layer of jurisdictional risk.
“There’s a lot of legal action going on – and I don’t know what’s going to happen,” Popple says.
“I was hoping it would be resolved quickly…. but that does not appear to be the case. It could be a complete non-issue, but I would personally take my money off the table.”
Like Newcrest, St Barbara operates a mine in PNG.
Simberi is forecast to produce around 110,000oz of gold this year, Popple says.
“To provide a bit of perspective, Leonora (St Barbara’s Australian mine) is forecast to produce around 175,000oz and Atlantic Gold (Canadian) about 100,000oz,” he says.
“So as things stand PNG accounts for around 29 per cent of their production.
“Clearly, nothing may happen. But again, I’d rather take my money off the table — just in case.”
It’s important to re-iterate that things could be fine, Popple says, but given the issues faced by Barrick Gold and Zijin Mining, “institutional shareholders may be put off and allocate their capital elsewhere”.
Silver Mines owns the Bowdens project in New South Wales, which — with a mineral resource of 275 million ounces of silver equivalent — is one of the largest undeveloped silver projects in the world.
Silver Mines is a bit different than the previous two, Popple says.
“I love silver [and] I think it could really take off,” he says.
“My issue with Silver Mines is to get into production, they need to build a very long water pipeline – I believe it’s about 58km.”
This is very achievable. But the pipeline is going to cost a lot of money and require several approvals; not only from the authorities, but also from the other landowners.
“There will be a lot of moving parts,” Popple says.
“Not only will you want assurances that these permissions will be provided, but you’ll also need to be confident that the silver price will hold up … for a long time.
“In a few years, this project could become a no brainer, but for now there are some risks I’d rather not take.”
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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