Every small cap investor has run the ruler over a stock and asked ‘why is this explorer such a bargain? What’s wrong with it?’.

There are many reasons why a company’s share price may be improperly priced in the market relative to competitors, says experienced Far East Capital analyst Warwick Grigor. Here are two of them.



There are many examples of small companies with projects that look good on a spreadsheet, but they hang around for many years without going anywhere, Grigor says.

“Often the biggest roadblocks for these companies are lack of effective leadership or lack of credibility and therefore lack of confidence in the future,” he says.

“We saw with Venturex how this can change overnight.”

For years VXR had struggled to get its Sulphur Spring copper-zinc project up and running.

Then, last year, ex Northern Star (ASX:NST) boss Bill Beament joined the board of VRX – now DEVELOP Global (ASX:DVP) – after cornerstoning a big $58m funding package to advance its Sulphur Springs copper-zinc project towards production.

DVP would also be a bespoke mining services company, he said, focused on underground mining and decarbonisation.

It is now building Bellevue Gold’s (ASX:BGL) 200kozpa mine which will be one of the highest-grade mines in Australia and “the lowest GHG emitting on a per ounce basis”, DVP says.

The stock is up 375% since Beament joined the team.



With over 650 mining and exploration stocks on the ASX, there is intense competition to attract buyers. Effective promotion is very important.

“You can judge how effective the promotion is by the number of punters talking the stock up and the performance of the share price,” Grigor says.

It helps if the projects have technical merit, but even good promotion can overcome weakness on this criterion, up to a point, Grigor says.

“There are many examples of companies that perform well in the market on projects that are essentially rubbish,” he says.

“As an analyst I look for companies and projects of merit that have been mispriced in the market, whereas I look for good promotion when I am wearing my traders’ hat.”

Celsius Resources (ASX:CLA) has both, he says – a project of merit coupled with not-so-great promotion.

CLA’s main game is the monster MCB copper-gold project in the Philippines.

A Scoping Study for the project announced December 2021 eyed the development of an 22,000tpa copper, 27,000ozpa gold copper-gold operation with a 25-year mine life.

Highlights from the Scoping Study includes a Post-tax NPV (8%) of US$464m and IRR of 35%, assuming a copper price of US$4.00/lb and gold price of US$1,695/oz.

Initial capital expenditure was estimated to be US$253m with a payback period of ~2.7 years.

“What I really like about Celsius is its very low market capitalisation of only $20m notwithstanding it has a large project with sound economics that could support a mine life of > 50 years,” Grigor says.

“Everyone is telling us that we need a dramatic increase in the supply of copper to meet the challenge of alternative energy. This project is exactly what the copper world needs now.”

It is an institutional-sized project in a penny dreadful shell, Grigor says. The company needs to start promoting itself as an institutional stock in waiting.

“You can assume that management will work hard to remedy the under-pricing of the stock with a campaign to communicate the merits of MCB,” he says.

“It will take time to get the message across, so it is likely to be a process rather than an instant re-rating, but the ball has started rolling.”