Pic: John W Banagan / Stone via Getty Images
Flying or Falling: Have 2019’s top 10 explorers maintained their momentum?
Mining
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In March, COVID-19 prompted a substantial ‘correction’ which impacted most stocks on the ASX.
The bourse has since recovered much of those losses, but with many countries around the world just starting to emerge from COVID-19 lockdowns the economic outlook post-pandemic remains hazy.
Now, increased global tensions between #2 economy China and pretty much everyone else also makes it an interesting time to be small cap investor.
A number of sub-$400m market cap miners and explorers enjoyed monster gains last year. Of our top 10 — dominated by goldies and porphyry explorers — six have ridden out the volatility to make additional gains in 2020, while four have lost ground.
#1 Spectrum Metals (ASX:SPX)
2019: +1300%
2020 (YTD): +153.5% (acquired by Ramelius Resources)
From $5m to +270m market cap: Spectrum is proof that dreams do come true for ‘bottom-of-the-barrel’ spec stocks and their shareholders.
The $1m acquisition of the historic Penny West gold project in early 2019 proved to be a very, very good one for the former shell company.
In February 2020, $1.4bn market cap gold miner Ramelius (ASX:RMS) launched a successful off-market takeover bid for the company worth one Ramelius share for every 10 Spectrum shares, plus 1.7c cash per Spectrum share held.
And due to Ramelius’ strong share price gains this year, that deal now values Spectrum at about +19c per share.
#2 Andromeda Metals (ASX:ADN)
2019: +683%
2020 (YTD): +31%
Andromeda is not a gold explorer and still managed to add to its massive gains in 2020.
Its main goal is to rapidly develop the Poochera project (51 per cent ownership) in South Australia into a ‘world-class’ halloysite-kaolin mining operation.
The main markets for halloysite are the ceramics and also the petroleum industry, but there are emerging uses in things like nanotube technologies and cancer therapeutics.
This is a low capex project with a short timeline to operation, Andromeda says.
2020 highlights include an updated scoping study in April which increased net present value (NPV) and life of mine (LOM) cashflows by 31 per cent to $544m and $1.049bn, respectively.
That’s based on a measly LOM capital expenditure of $75m. A more detailed project pre-feasibility study was targeted for completion sometime this month.
#3 Magmatic Resources (ASX:MAG)
2019: +500%
2020 (YTD): +57%
The stock has been one of the most prominent early winners of the East Lachlan porphyry copper-gold rush, up almost 2000 per cent since early September last year.
In early September, ~$5m market cap Magmatic Resources was finalising an uninspiring WA gold project acquisition and, simultaneously, the demerger of its flagship East Lachlan copper-gold porphyry assets in NSW.
Porphyries are multigenerational monsters responsible for ~60 per cent of the world’s copper, most of its molybdenum, and significant amounts of gold and silver. But Magmatic had struggled to get investors on board.
Now its moment of truth time as Magmatic finally drills the Lady Ilse porphyry copper-gold target near Boda.
The first diamond drill hole was completed at ~1km depth in late April, with assays due within weeks.
#4 Hot Chili (ASX:HCH)
2019: +391%
2020 (YTD): -50%
Hot Chili is an advanced porphyry hunter based in Chile.
In early December, Cortadera delivered what the explorer called “One of the Best Global Drill Results of 2019” — 972m grading 0.5 per cent copper and 0.2 grams per tonne (g/t) gold from surface.
While momentum has been stymied by COVID-19 in 2020, the company could be back on track following a ~$9m cap raise.
On May 18 Hot Chili said updates on a drilling re-start at Cortadera and resource modelling were expected in the coming weeks.
#5 Stavely Minerals (ASX:SVY)
2019: +375%
2020 (YTD): -38%
In late September, Stavely hit a monstrous shallow, very high-grade intersection of 32m at 5.88 per cent copper, 1g/t gold, and 58g/t silver at Thursday’s Gossan.
The market’s verdict? Stavely immediately leapt ~330 per cent to $1 per share, peaking at ~$1.42 per share in mid-October.
It’s been mostly downhill since then, with the stock now at 63c per share.
But the opportunities to grow this discovery at depth and along strike are enormous, says Stavely, which is searching for a porphyry motherlode.
The main focus for now is on an intensive resource drill-out in the shallow portion of the discovery, leading towards a maiden resource estimate in the second half of this year.
#6 Atrum Coal (ASX:ATU)
2019: +365%
2020 (YTD): -30%
While the advanced Canada-based coking coal explorer rebounded from that broad-based selldown in late March, it still trades below its late 2019 peak.
Still, there’s plenty of investor interest. In April, Atrum successfully raised $22m at an issue price of 23c per share to complete a pre-feasibility study (PFS) on its Elan project in Canada.
Of this $22m, rich-lister and existing shareholder Tim Roberts from Warburton Group tipped in $7m.
This will give him a ‘blocking stake’ of 19.9 per cent in the $115m market cap company.
This study is due for completion in mid-2021, subject to the “length and extent of COVID-19 related operating restrictions.”
#7 Celamin (ASX:CNL)
2019: +362%
2020 (YTD): -50%
Celamin was in the investor doghouse due to a multi-year dispute with its partner in Tunisia over a tidy looking phosphate project.
But last year it got the final win. No appeals. This dodgy partner will now be forced to pay ~$US4.4m or hand over 100 per cent of the project.
Then a local court hearing designed to compel the return of Celamin’s interest in the Chaketma project was delayed until May due to COVID-19 shutdowns.
The hearing is now done and dusted, the company says, with a further announcement about the outcome expected this month.
#8 Tietto (ASX:TIE)
2019: +292%
2020 (YTD): +17%
The Abujar gold project in Côte d’Ivoire keeps getting bigger.
The current 2.2moz high-grade resource could soon be a distant memory as Tietto charges through a 50km drilling program.
In May, the company uncovered more high-grade gold – including 5m at ~14g/t – in step out drilling.
This “large, high-grade gold system” remains open along strike and down dip, Tietto managing director Dr Caigen Wang says.
“The next steps are simple – drill deeper and along strike to test the depth and strike potential of these high-grade shoots,” he says.
A resource update is due in Q3, the company says.
#9 Magnetic Resources (ASX:MAU)
2019: +278%
2020 (YTD): +142%
Magnetic has been a standout performer again in 2020.
The explorer has been quietly plugging away at the very significant Hawks Nest 9 (HN9) gold discovery, near Laverton in WA.
So far, it has uncovered three shallow and distinct gold zones at the project, which continues to show early stage similarities to some of the region’s biggest multi-million-ounce gold deposits.
The discovery of multiple shallow dipping zones – most recently a mineralised porphyry feeder zone up to 70m thick – supports Magnetics’ theory that it is sitting on a 7moz Wallaby lookalike.
At the nearby Wallaby deposit these zones have been defined down to 1500m depth.
READ: George Sakalidis — finding significant deposits where the ‘big guys’ can’t
#10 Capricorn Metals (ASX:CMM)
2019: +267%
2020 (YTD): +26%
It’s a pretty good time to be a WA gold mine developer, but this particular company has an interesting back story.
It has taken repeated management shuffles, failed takeover bids and a major financial restructuring exercise to get Capricorn back on track with its key asset, the Karlawinda gold project in WA.
Development of this fully funded ~120,000oz per year project is now underway. The company is targeting commissioning in the March quarter next year.
