Barry FitzGerald: Two junior gold explorers that are putting the project huggers to shame
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Garimpeiro has long wondered why there are so many project huggers in the junior exploration space.
Too many juniors have a half-decent project that might or might not make it to the development stage, and that’s all they focus on.
Lack of funding to step beyond the company’s single project focus is the most used reason why the junior does not spread its wings and add other possibilities to the portfolio.
But Garimpeiro suspicion is that for many, it is all about retaining funds for job preservation rather than working harder for their investors.
Project hugging is fine when the project has the scale, and supporting commodity prices, to have a defined pathway to production.
But Garimpeiro reckons that is no excuse for not doing more. And if a lack of funding is the excuse, then the project is likely not worth developing anyway.
So today we’re taking a look at two companies that stand out from the crowd by being active at their flagship projects while also adding in new opportunities, delivering investors more bang for their buck in the process.
The two chosen today are Rumble (ASX:RTR) and Kingston (ASX:KSN), trading at 42c and 20c, respectively. There are other examples amongst the 600-plus listed juniors, but not as many as Garimpeiro would like to be the case.
The common thread between Rumble and Kingston is that they both have flagship assets of scale but they are not resting up while the projects move through the resource definition/definitive feasibility study stages.
Nope, both have found other things to be doing while continuing to advance their flagships, adding to their appeal for investors when compared with others with a single project focus, and an eye to the long Friday lunch.
RUMBLE: Rumble is not quite a junior anymore with its $260 million market cap. A 13c stock a year ago, its rise through the ranks is courtesy of its major Earaheedy zinc-lead-discovery where four drill rigs are whirring away to confirm its Tier 1 credentials.
Earaheedy was a product of Rumble’s strategy of working on a pipeline of exploration projects. If a project doesn’t shape up it gets moved on and is replaced with a new exploration play. The strategy paid off big time with Earaheedy.
Working through prospects in the pipeline with the drill bit and replenishing the back end with new prospects has continued under the guidance of its technical director Brett Keillor, a veteran award-winning geologist.
So while Earaheedy remains very much the company’s focus, new projects that might well deliver the company a second major discovery are being worked through the system.
There was an example of that during the week with Rumble’s exploration update on its Munarra Gully project near Cue in Western Australia. Drilling co-funded by WA taxpayers returned visual copper sulphide mineralisation in all six holes.
Interesting in itself but real interesting if the pending assays also return gold-silver values as anticipated. Assay results are expected early next year. If it shapes up as a potentially major copper-gold find, Rumble will get cracking.
If not, it gets moved on and the company rolls in another exploration play Keillor and the rest of the gang reckon is worth a shot.
It all goes back to Garimpeiro’s preference for companies working hard at delivering more bang for the investor’s buck.
KINGSTON: It owns one of the biggest gold resources of any junior on the ASX – the 3.8 million ounce (1.35 million ounce reserve) Misima project on the island of the same name in PNG.
A study into the development of a 130,000 ounce-year project at sub-$1,200 an ounce costs for an initial 17 years is due in the March quarter next year.
It’s enough in itself to keep the average junior as busy as it would like to be. But Kingston has nevertheless added another leg to its story – the historic Mineral Hill gold-copper project in NSW’s Cobar Basin.
Misima remains very much the company’s focus, as might be expected when Kingston’s current $60 million market cap is compared with other ASX gold producers with more than 100,000 ounces-a-year credentials.
While Misima continues its advance to production, Kingston has called on its spare capacity to take on the Mineral Hill opportunity.
Mineral Hill was problematic for previous ASX owners, more at the corporate level than the mining operation itself.
It is being picked up for $22.7 million in a shares and cash deal with the privately held US mining investor Quintana which stepped in three years ago when the previous owner went bust. Quintana has since returned Mineral Hill to gold production from a tailings retreatment operation.
Kingston expects to see 40,000 ounces of gold production over 29 months from the retreatment operation while it works on returning Mineral Hill to hard-rock gold and copper production.
While it is an immediate production story, there is some serious exploration upside on the tenements, something which took a back seat when previous owners were tight for cash.