Barry FitzGerald: The gold, nickel juniors cashed up and worth watching
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Investor support for mineral explorers is running hot.
Close to two-thirds by number of last week’s capital raisings on the ASX were for junior explorers with a good story to tell.
COVID-19 restrictions are pretty much out of the way for the explorers and they have been keen to tap the flood of investor money to underpin their 2020 field seasons.
Remembering that exploration is a high-risk business, investors have been pumped by the high-reward gold and nickel discoveries like those by De Grey (ASX:DEG) and Legend Mining (ASX:LEG), among others.
De Grey is now a $1bn company on the strength of its Pilbara gold discovery, while Legend’s value has shot to $340m in response to its nickel discovery in the Fraser Range.
That’s $1.34bn all up. A year ago, the all-up value of the two explorers was less than $100m.
It’s no surprise then that investors are busy looking for the next De Grey or Legend — or the next Chalice Gold Mines (ASX:CHN) (nickel), Stavely Minerals (ASX:SVY) (gold/copper) or Alkane Resources (ASX:ALK) (gold/copper) for that matter.
Break it down over the last month or so, and the hot money has been for high-grade gold exploration in Western Australia and Victoria, nickel sulphide exploration in WA, and gold/copper exploration in NSW’s Lachlan Fold Belt.
The Lachlan Fold Belt has been covered by Stockhead in depth, leaving Garimpeiro to go off in search of some names worth watching in the other categories: WA/Victoria high-grade gold, and WA sulphide nickel.
Drilling had to be underway or about to start on potentially high impact programs, and the companies had to be cashed up for the programs from recent capital raisings.
Rumble was mentioned here on January 29 when it was trading at 7.4c on the strength of a strategy based on a sort of “high-grading’’ of its exploration opportunities.
Under the strategy a project that doesn’t shape up gets moved on quickly, while those with the most potential are matured into drilling prospects on a 100 per cent basis, or in a joint venture where others are providing the cash.
The strategy has matured to the point where Rumble now has five prospects
that will be drill tested this year, with the first being the high-grade Western Queen gold prospect in WA.
Rumble recently raised $6m from a placement at 9.3c and its shares have motored on to 14c in anticipation of what might come from the 12,000m Western Queen drilling program, and what is to follow at the other prospects later in the year.
Victorian high-grade gold explorers have been on the tear of late.
Canadian explorers and investors have been pouring dollars into the hunt for the next “Fosterville’’, and the market caps of the key players has taken off.
None of that has rubbed off on long-time Victorian explorer Dart which last traded at 9c for a market cap of $6.5m, not yet anyway.
Last week it raised $918,000 at 8.5c a share for a drilling program at its Buckland and Sandy Creek gold projects in north-eastern Victoria, where it has worked up some interesting high-grade gold targets.
Last week’s raising was not big. But it didn’t need to be as Dart likes to be careful with shareholder funds. It recently acquired a drilling rig for $14,000, parked up in a Melbourne western suburb for the drilling program.
A Tassie drilling crew is being brought in to operate the rig, which after a spray of the obligatory yellow paint probably has a replacement value of around $1m.
Exploring in Victoria requires companies to acquire “vegetation offsets’’ which can be costly. Dart has set up its own offset land bank, saving itself $1.6m in the current program.
Being frugal doesn’t change the potential of the rocks being drilled. Needless to say, Dart’s modest market cap means there would be a leveraged response to drilling success.
St George Mining
A geophysical breakthrough has prompted St George Mining to kick off a deep drilling program at its high-grade Mt Alexander nickel-copper sulphide project in WA.
The geophysical work identified large conductors at depth which could be the down plunge extension of the already proven shallow mineralisation.
The program comes as St George also works towards defining a resource at one of the many high-grade and near-surface nickel discoveries it has made along Cathedrals Belt at the project, as a precursor to establishing a “starter’’ mining operation.
The market likes the story, with support coming in the form of capital raisings at 8c a share which took cash-on-hand to $9m. St George last traded at 11.5c.