Investors ‘don’t understand’ our space, says Golden Mile chief
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The rapid rise in specialty metals on the back of insatiable demand for electric vehicles has proved a boon for ASX-listed junior explorers and emerging miners.
But a lack of understanding of this highly technical market among investors — and even those in the industry — is also proving a hindrance.
Take recently-listed, diversified explorer Golden Mile Resources (ASX: G88) for example.
The WA-focused company owns a suite of projects in jurisdictions rich in nickel, cobalt, scandium and gold. Recently, it released positive results of an initial drill program at its flagship Quicksilver nickel-cobalt-scandium project.
However, despite receiving strong interest with an oversubscribed 4.5 million initial public offering, the company’s share price doesn’t look like breaking through its 20c issue price anytime soon.
On its first day of trading back in June, the stock closed at 18.5c — 7.5 per cent below its 20c issue price — and finished trading yesterday at 13c.
The company hasn’t seen a big turnover of shares, turning over about 4 million of the 23 million shares trading since IPO.
Golden Mile’s chief executive Tim Putt told Stockhead that while he found the share price performance disappointing, he didn’t believe the company had done anything to upset the market or its shareholders.
“We have certainly delivered on a lot of the things we talked about pre-IPO and in the prospectus,” he told Stockhead.
So what does the company put the slide in share price down to?
A lack of understanding among investors of the new high-tech specialty metals.
“What I’m getting from our shareholders is they don’t understand the cobalt and scandium space that we are working in,” he said.
“With the rise of these specialty metals, we are seeing a lot of things even people working in the sector don’t know a lot about.
“When you start talking about these exotics like lithium, cobalt, scandium and you are going to hear some really interesting other rare specialty metals coming out over the next five or so years. Trying to understand that marketplace is going to be tricky for investors,” he said.
“I can understand that people have looked at these things and gone ‘well I don’t get what’s going so I don’t want to be involved’.”
Mr Putt said he had received feedback that some Golden Mile shareholders were new to the resource space and were expecting a company with more established projects.
“We had some investors who were expecting it do something like Alderan [one of the best performing IPOs of the year] or some of the other IPOs where they have come on and gone to the moon based on their share structure or the project they have got,” he said.
“We are living in a society today where everything is about instant gratification and when you have a group of projects which is essentially at the grassroots … we don’t have established resources although we have some fantastic targets in the cobalt and the gold space and certainly we have some great addresses particularly around Leonora.
“It’s a story that we are building now. Certainly, our top 30 shareholders are there a long for the ride. A lot of the trading we have seen has been smaller traders.”
Mr Putt said it was the job of company executives and others in the specialty metals industry to educate investors so they have a better understanding of the exploration and mining processes.
Three resources by Christmas
Golden Mile is ramping up exploration work across its suite of projects and expects to have three JORC-compliant resources out by Christmas.
JORC compliance refers to the mining industry’s code for reporting exploration results, mineral resources and ore reserves, managed by the Australasian Joint Ore Reserves Committee.
The company’s main focus is its Quicksilver nickel-cobalt-scandium project.
Initial drilling from the Garard prospect at Quicksilver returned wide intercepts of nickel, cobalt and scandium mineralisation across the target area.
The Gerard prospect has an exploration target of 20 to 30 million tonnes grading at 0.1 to 0.2 per cent cobalt and 0.5 to 1 per cent nickel; and 30 to 60 million tonnes grading at 45 to 75 grams per tonne scandium.
Drilling will also test the exploration target for Garard, resulting in a JORC resource for the prospect before the end of the year.
“At the moment what we are looking at doing is defining certainly the aim between now and Christmas is to define a resource at Quicksilver and potentially start some scoping work on that looking at potential pathways to production,” Mr Putt said.
Golden Mile is also progressing exploration work at its Leonora East gold project, particularly at its priority target Natasha.
“There is enough work at Leonora East that we can probably define a resource at Natasha before Christmas as well,” he said.
“There was a historical resource on our Minara nickel-cobalt project that we’ll look to bring in to JORC compliance.
“What we are looking at potentially is three JORC resources prior to Christmas.”
The company was undertaking target generation and has come up with some highly prospective targets through Leonora East area with details to be released to the market shortly.
Shares in Golden Mile closed yesterday down 13 per cent at 13c, valuing the company at around $4 million.