Barry FitzGerald: Why long over-looked Venturex is popping up on investor radars
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Long over-looked Venturex Resources has popped up on investor radars, writes Barry Fitzgerald in his weekly Garimpeiro column.
Venturex Resources (ASX:VXR) is attracting investor attention as it pushes to become a Pilbara copper-zinc producer with a potentially exciting exploration effort to find the region’s next big orebody.
Strong copper and zinc prices are behind the group’s new found pep, as is the recent appointment as managing director of well-regarded mining engineer Ajanth (AJ) Saverimutto.
AJ is a builder of things — not unlike two of his former classmates at the WA School of Mines in Kalgoorlie, Bill Beament and Stuart Tonkin who head up 19 per cent Venturex shareholder Northern Star.
AJ is best known for leading the privately-owned group that acquired the mothballed Beta Hunt nickel-gold mine near Kalgoorlie and returned it to production ahead of the revitalised operation being acquired by Canada’s Royal Nickel Corp in 2016.
“I enjoy building things. And that is what attracted me to [Venturex’s Pilbara project] Sulphur Springs,’’ AJ told Stockhead.
“It has got the right grade and scale attributes, and it’s had a huge amount of work done on it over the years when metal prices were not so favourable. It is pretty close to being shovel-ready now.’’
Left behind in the valuation stakes
AJ’s excitement about his new gig is not reflected in the market’s current rating of Venturex.
At its last sale price of 1.2c a share for a market value of $43 million, Venturex has been left behind in the valuation stakes by its ASX copper and zinc peers.
That is despite the development-ready status of Sulphur Springs at a time of bumper zinc prices, and stronger copper prices.
It is also despite a previously released value engineering study (a definitive feasibility study is in the works now) pointing to a $166 million development with average annual production of 32,000 tonnes of zinc and 12,000 tonnes of copper (in concentrates).
Copper production costs were estimated at a robust US58c a pound (after zinc credits) over an initial mine life of 12 years.
If current prices of $US1.47/$US3.14 a pound respectively are plugged in, the NPV soars.
It is little wonder then that in recent months Venturex has been the subject of broker reports suggesting price targets on the stock at more than twice its current level of 4c a share.
To get there Venturex needs to clear some key de-risking events — not the least of which will be arranging project finance.
AJ intends clearing the de-risking events with his characteristic enthusiasm for getting things moving.
“We have accelerated progress of the project towards first production and hope to finish our feasibility study shortly,’’ he said.
“And we are also finalising our approvals to conduct both open pit and underground mining (the open pit is a new addition to the approvals process) which has the advantage of giving us immediate access to ore, and a lower operating/capital cost with a significantly shorter payback period.’’
A new leg to the Venturex story takes shape next month with a new exploration program to find the next Sulphur Springs deposit which is of the volcanogenic massive type, which tend to occur in clusters.
Venturex has identified nine new likely electromagnetic geophysical targets it will be testing over time, both near mine and along the 27km of prospective ground along the Panorama VMS trend.
The renewed greenfields exploration effort after years of absence is bound to be closely watch given the telling impact a new find could have on the Sulphur Springs project economics.