Barry FitzGerald: Gold reigns supreme but silver, copper have investors curious

Gold continues to dominate thinking in the junior mining market. But brokers specialising in the juniors report investors are increasingly inquiring about gaining exposure to silver and copper.

The step up in inquiries reflects the strong price performance of both metals since their mid-March lows when asset classes of all types took a battering in the great COVID-19 sell-off.

Silver has popped 55 per cent higher since mid-March to $US18.70 ($26.90) an ounce, carrying it beyond its 2019 average of $US16/oz. Copper has marched 36 per cent higher to $US2.86 a pound, also up on the 2019 average of $US2.72.

Unlike gold, neither metal is shooting the lights out just yet.

But there is the prospect that the two could go higher still in response to global economic stimulus packages (silver has lots of industrial applications on top of its gold-like hedging properties).

So the hunt is on for ASX-listed juniors which offer leveraged exposure to the two metals.

Garimpeiro has settled on Mithril (ASX:MTH) for silver (and gold) exposure, and a little thing called Caravel (ASX:CVV) for copper (and gold, nickel and platinum/palladium).

MITHRIL

Mithril got a mention here on December 15, when it was trading at 0.8c a share, as one to watch as it pivoted from exploration in Australia to the high-grade potential of its Copalquin gold-silver project in Durango state, west Mexico.

Garimpeiro noted that Mithril was seen to be Bolnisi Mark II, a reference to Bolnisi Gold which was taken over in 2007 for $1.4bn after major exploration success at its Palmarejo silver-gold project in the neighbouring state of Chihuahua.

Former Bolnisi management and backers are back for a repeat performance, using Mithril as the vehicle after a board and management overhaul last year.

Mithril has moved up to 2.5c a share since that December mention. On the way through it has raised funds to get cracking with a drilling program that is due to kick-off next week.

Mithril Resources (ASX:MTH) share price chart:

Copalquin covers a 70sqkm mining district with 32 historic high-grade gold and silver mines along the Sierra Madre trend, home to some of Mexico’s biggest mines.

The initial program involves 5,500m of drilling. The drilling will test a number of target areas, with the initial aim being to confirm some impressive results by previous explorers.

Mithril CEO John Skeet told Garimpeiro that there was a good reason for the strategy of initially testing multiple targets.

“We don’t want to get bogged down in one particular area. It is an entire district so we want to make sure we know what the promise of the key targets is before we bed down and get on with resource estimation work,’’ Skeet said.

The first hole will be at the La Soledad prospect. Previous exploration by a Canadian junior intersected a new vein that yielded super high-grade gold and silver beneath the old workings.

The hole will aim to replicate the results, with drilling to then take place along strike to test for extensions.

It is a similar strategy with drilling that will follow at the nearby El Refugio prospect. In the same general area, drilling at the El Cometa prospect is planned to test its shallow high-grade potential.

First results are about four to six weeks off depending on how quickly the lab can turn them around. Drill testing of the historic San Manuel target on the other side of the valley is likely in November.

CARAVEL

Caravel’s copper credentials comes from its ownership of one of the biggest undeveloped copper resources in Australia at its namesake project in WA’s southwest Yilgarn region.

The 1.86-million-tonne copper resource is big all right but its low grade means copper prices north of $US3 a pound will be needed before it comes into its own.

It is trading at 4.7c for a market of $9.2m and importantly, it has just added to its story by moving on new exploration areas in the broader southwest Yilgarn region.

Caravel Minerals (ASX:CVV) share price chart:

The new areas leverage off the extensive database the company has assembled over the years in the region.

The region has become an exploration hotspot recently thanks to Chalice’s (ASX:CHN) Julimar palladium-nickel-copper discovery, 60km to the southwest of the Caravel copper deposit.

The new ground covers nickel-copper-platinum group metals targets, as well as copper-gold targets. Drilling is planned in the current quarter and given the company’s modest market cap, it could be one to watch.