Four reasons why the future is looking shiny and bright for gold junior Lefroy Exploration
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Special Report: Lefroy Exploration has amassed an under-explored, highly sought after 600sqkm land package just 50km from Australia’s gold capital of Kalgoorlie in WA.
Here’s a few reasons why investors are excited about this junior explorer heading into 2019.
Lefroy (ASX:LEX) holds about 600 square kilometres of highly prospective tenements, right next to some of Australia’s most prolific gold producers.
On one side is Gold Fields’ 350,000 ounce a year St Ives operation, and on the other, Silver Lake Resources’ 150,000 ounce a year Mt Monger gold operation.
The St Ives camp also surrounds the Beta Hunt underground mine, where operator RNC (TSX:RNX) recently discovered one of the “richest and most prolific gold veins ever found”.
In less than a week, a Canadian miner had unearthed more than 9000 ounces of gold from about 500m underground.
The haul was worth about $16 million — that equals half the market cap of RNC found in less than a week.
2. Major miners want a piece
Lefroy formed a company-making partnership – called the Western Lefroy Joint Venture — with major miner and prolific explorer Gold Fields in June.
Gold Fields, the biggest gold explorer in WA, can earn up to a 70 per cent interest in the project by spending up to a total of $25 million on exploration within 6 years.
It’s a big deal which validates the quality and prospectivity of Lefroy’s project.
And Lefroy won’t need to pay anything at Western Lefroy until Gold Fields has spent its $25 million.
In a June research note, well respected geologist and analyst Chris Baker said this was a transformational deal for LEX.
“Gold Fields can spend up to $25m over a 6-year period on exploration aimed at discovering a new gold system that can provide feed to its 4.5mtpa [gold processing] plant,” he said.
“The success case would see LEX participate in 30 per cent of the resources, reserves, and production from any new discoveries.”
3. Top-notch team
Another aspect to Lefroy which makes it an interesting company — the high-profile board.
Lefroy is chaired by Gordon Galt, a former chief executive of Newcrest and a founder of the resource-fund management specialist Taurus with fellow Lefroy Non-executive Director Michael Davies.
Lefroy Managing Director, Wade Johnson, is a former Australian exploration manager for the big US goldminer Newmont. The Lefroy exploration effort is supported by highly experience geologist and Non-executive Director Geoff Pigott , who was formerly Head of Exploration at Aquila Resources.
Finding people with the background of Galt and Johnson is unusual for a company of Lefroy’s size, Tim Treadgold writes.
This experience shows — Lefroy was able to capitalise during the gold price downturn when some mining companies left the area and relinquished ground.
That enabled the company to pick up the vacant, highly prospective land – knowing that the gold price would soon turn around.
4. Gold is always a good bet
A volatile global outlook for 2019 makes gold the place to be, analysts say.
Chris Weston, head of research at Pepperstone Financial told Bloomberg that gold would be a favoured safe haven in 2019.
French bank Natixis reckons gold – which is selling for a healthy $1680 an ounce at the moment — could head to about $1840 an ounce next year.
And for juniors, gold is a safe bet says the head of soon-to-be-listed Torque Metals.
“I’m a gold bull because it’s easy, because I don’t have any problems selling gold anywhere in the world,” managing director Ian Finch told Stockhead.
“All I’ve got to do is refine it to four nines [99.99 per cent] and it’s saleable anywhere in the world at the top price.
“It’s a very simple and well understood technology and that’s why I love gold. It’s the perfect commodity for juniors.”