Barry FitzGerald: Record gold prices light up prospects for ASX junior Javelin

“Garimpeiro” columnist Barry FitzGerald has covered the resources industry for 35 years. Now he’s sharing the benefits of his experience with Stockhead readers.

The wondrous Aussie gold price of more than $5000/oz is giving junior companies a once in a lifetime opportunity to make their market cap and more by getting small brownfield gold deposits in to production.

Ideally the cashflow from a project can be turned to probing deeper and along strike with the exploration drill bit to build a bigger and better story at the mine or regionally, á la De Grey, Spartan Resources (ASX:SPR), Spectrum etc.

It’s the pathway that the once confused explorer Javelin Minerals (ASX:JAV) is now treading after bookending Kalgoorlie with two brownfields projects that were producers in the past when the gold market was in a very different place.

Past production means the mineralised systems are established and as Javelin’s executive  chairman since February last year Brett Mitchell puts it, it is not a question of finding more gold at the projects, it is how much can be found and at what grade.

Mitchell is a capital markets guy and invested in Javelin four years ago when it was doing other things. Along with some other key shareholders he led a recapitalisation and reorganisation of the company on taking its leadership.

The overriding ambition is to become a producer as soon as possible and begin to build a bigger future with the exploration drill bit.

Of the Kalgoorlie bookends, the Coogee project 55km southeast of Australia’s gold mining heartland was already in the portfolio when Mitchell took on executive responsibilities but was overlooked while Javelin was doing other things.

The other bookend is the Eureka project, 50km north of Kalgoorlie.

It was picked up from Delta Lithium (ASX:DLI) (formerly Red Dirt Metals) in a nicely timed $3 million shares and cash deal in December,  with Mitchell’s time at Red Dirt as a director helping things along.

Eureka too had been overlooked inside Delta given its switch in focus from gold when it was Red Dirt to lithium, both at the Mt Ida project area, with the Mt Ida gold leg now set to come out of Delta in a planned separate listing under the Ballard Mining banner.

Eureka

Eureka was a nicely timed pick-up for Javelin as the gold price has marched $US600/oz ($A935/oz) higher since. There has been no recognition of that just yet in Javelin’s market cap ($18.1 million at 0.3c a share in Thursday’s market).

But with Mitchell as keen as keen can be to capitalise on the bumper Aussie gold price by getting into production, initially at Eureka and hopefully inside 12 months, a re-rate for the junior is in the works.

Eureka is a high-grade exploration story as much as it is a near-term production story based on the existing 112,000oz gold resource of which 34,000oz in the indicated category sits at the southern end of the historic Eureka pit.

At $5000 an ounce, the indicated resource alone is meaningful stuff for a company with an $18.1m market cap. That goes to the earlier reference to this gold market giving juniors the opportunity to make their market caps and more.

Javelin has said it is in discussions with nearby process plant operators on a toll treating deal for Eureka. Among the options in the region is Zijin’s Paddington mill, all of 20km away down south on a sealed highway.

Growing the Eureka resource is also very much a focus. To that end Javelin completed its maiden drilling program at Eureka in April in a drill-for-equity arrangement with Topdrill, which says something about the potential exploration upside.

The drilling tested for extensions of high-grade lodes directly below the existing open pit and the high-grade hits encountered in historical drilling to the north (including a best hit of 4m at 135g/t from 53m).

Assays results from the drilling program will begin to flow in coming weeks which is all very interesting for Javelin with its modest cap.

And over at the other bookend of Coogee, Javelin has previously reported a suite of high-grade gold and copper hits in its maiden drilling program beneath the historic pit as well as confirming a northwest trending gold-copper extension.

More drilling is planned in the third quarter.

Coogee has an existing resource estimate of 126,000oz of gold and 4100t of copper and was last mined by Ramelius in 2014. In the normal course of events, Coogee alone would justify Javelin’s current market cap. But then the company speared Eureka.

The views, information, or opinions expressed in  this article are solely those of the columnist and do not represent the views of Stockhead. Stockhead does not provide, endorse or otherwise assume responsibility for any financial product advice contained in this article.

At Stockhead, we tell it like it is. While Javelin Minerals is a Stockhead advertiser, it did not sponsor this article.