Gold is the ‘perfect commodity for juniors’, says Torque Metals boss
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The head of soon-to-be-listed Torque Metals reckons gold is a safe bet for juniors.
“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.”
Gold is selling for just under $1680 an ounce at the moment.
Mr Finch reached this conclusion after several years of trying his hand at other commodities such as graphite, iron ore and uranium.
“Many years ago, I was in graphite — ahead of my time, but I did learn a lot about the graphite market and one of them was never to go into it again,” he explained.
“The reason is because it is what they call an industrial mineral … and for a junior company to be successful with these industrial minerals, you’ve either got to find it and sell it onto an end user or you’ve got to develop your own marketing team.”
By comparison you can run a gold company “very adequately” with three people and the “odd contractor”, Mr Finch noted.
And when it comes to bulk commodities like iron ore, companies have to think about building rail, ports and roads — which can be a costly exercise.
Torque, however, has two gold projects near the town of Southern Cross in the Yilgarn goldfields of Western Australia.
The company is in the process of completing a $4.5m to $7m IPO, which is due to close on Friday.
While 2018 has been a lot harder to raise money than last year for junior resources players, Mr Finch says Torque has seen growing interest from investors.
“It’s a very difficult market of course, but we’re being very persistent,” he said.
“From some sectors there has been some very good responses.”
Torque has had a good response from investors in Sydney and a “lot of interest” from investors in Queensland.
Interest from Western Australian investors has also started to pick up in the last couple of days.
Sign of a gold-rich area?
A point of interest with Torque’s gold projects is that they also host tellurium and bismuth.
Globally about 40 per cent of tellurium is used in the production of solar panels.
It is also used in various electronics products — which is a key driver for the increase in demand for tellurium.
Market forecasters estimate the tellurium market will witness compound annual growth of 3 per cent between 2018 and 2022.
Bismuth, meanwhile, is mixed with other metals — such as lead, tin, iron or cadmium — to form low-melting alloys. These alloys are used in fire detectors and extinguishers, electric fuses and solders.
Mr Finch says very few gold projects host tellurium, but the commodity is usually found in large gold mining regions like Kalgoorlie in WA.
“The occurrence of tellurium with gold only occurs in a few places and one of them is Kalgoorlie,” he said.
“So there is a sort of loose connection with the large gold mining areas where you get not only gold but associated minerals with it like bismuth and tellurium.
“But the fact that it’s there and it’s also there in Kalgoorlie makes our area of significant interest – well, it certainly does to me anyway.”
If Torque can eventually produce tellurium along with its gold, it offers the potential for a by-product credit that could reduce the costs of processing.
“Often the association is silver,” Mr Finch noted.
“The smelting and refining process is usually quite often paid for by the amount of silver that comes out of that refining process.
“But there are other minerals as well, one of which in our case would be tellurium. Now if we can gather that tellurium there is probably a market for it.”
Torque is hoping to make its ASX debut on December 12, trading under the ticker “TOR”.