Kristie Batten: Hot Waratah builds on Diggers buzz

One of Australia’s top mining journalists, Kristie Batten, writes for Stockhead every week in her regular column placing a watchful eye on the movers and shakers of the small cap resources scene.

If there was one “buzz” stock at this year’s Diggers & Dealers Mining Forum in Kalgoorlie, it was Waratah Minerals (ASX:WTM).

The company was a late addition to the Monday morning program, replacing Spartan Resources following the completion of its takeover by Ramelius Resources (ASX:RMS).

That same day, Waratah announced that extensional drilling at its Spur gold project in New South Wales’ East Lachlan region had returned multiple zones of visible gold at Consols.

The standout hit from hole 62 was 208.7m at 1.17 grams per tonne gold from 514m, including 89m at 1.96g/t gold, including 38m at 3.61g/t gold.

The hole indicated a major extension of the Spur Gold Corridor north of the Essex Fault by a further 500m to around 1.5km along strike.

The intercept sent Waratah shares surging by as much as 50% that day, making it the sudden darling of Kalgoorlie.

In his conference wrap, Bell Potter Securities analyst David Coates described Waratah as justifiably the “talk of the town” and its announcement as the biggest news to come out of the conference.

Waratah managing director Peter Duerden described the sudden attention as “surreal and a bit of a blur”.

“It felt like we belonged in the room,” he told Stockhead.

“Sometimes you feel a bit awkward going to those conferences, but it’s a proper, real story and pretty exciting.”

Genuine discovery

Blue Ocean Equities analyst Carlos Crowley Vazquez maintained his speculative buy rating and lifted his price target by 30c to $1.50 per share – more than double Friday’s closing price.

“Waratah has shown that a disciplined and systematic drilling program across its Spur epithermal gold project can also be bold and exciting,” he said.

Crowley Vazquez sees similarities between Spur and Evolution Mining’s 2.74 million ounce GRE46 gold discovery at the Cowal operation.

“GRE46 and Spur are both in the East Lachlan Fold Belt, on the margin of major complex intrusive systems with similar stratigraphy, present early-stage albite-hematite alkalic porphyry alteration with gold in epithermal veins/pyrite stringers,” he said.

He sees a pathway to a material resource at Spur of more than 3Moz of gold and says recent results have increased the probability of a discovering a system similar to Cowal.

Spur is also just 12km from Newmont Corporation’s 34 million tonne Cadia mill, which processes gold-copper ore from Australia’s largest underground mine.

As well as Newmont and Evolution, Fortescue, Gold Fields and AngloGold Ashanti are also active in the region.

“It is sort of the land of the majors, mainly, but there’s a couple of good junior stories as well, around the exploration, discovery phase,” Duerden said.

“It seems to be especially the case in New South Wales, where every now and again, a discovery hit might happen and it’ll just remind everyone that it’s quite a major mineral province.”

Funded for growth

Last week, Waratah raised $30 million via a placement to institutional, sophisticated and professional investors.

New shares were issued at 57.5c each, a 7.1% premium to the five-day volume-weighted average price.

Waratah already has three drill rigs working at Spur but Duerden said the funds would allow it to accelerate activity and firm up its understanding of the system.

“We’ll start to do a combination of resource drilling and extensional drilling, which got everyone excited with such a … bold discovery extensional result [from] hole 62,” he said.

“It’s really pointing to a significant gold system and we’ll get the drilling in and around that now and we’re able to hit it on multiple fronts and commence more (of) that systematic resource drilling as well.”

Duerden said the focus would very much remain on discovery rather than resource drilling and there was no timeline set for an initial resource at this stage.

“We’re quite keen to keep it as that exciting discovery story – that’s what it is,” he said.

“We haven’t seen the margins of the system, so until we feel like we’re seeing the overall size of the system, we won’t be messaging that.

“It’s just that we’re in a position now to do a bit of both that methodical resource work that has to ultimately get done, but I guess just highlighting the focus is still very much on that extensional drilling.”

Waratah still has six drill holes pending and Duerden said the market can expect strong news flow from the company.

“A continuing expansion of the known system, which has sort of been about an 18-month journey so far, and we’ve just been building it out and doing that systematic work with occasionally surprising the market,” he said.

“And just making sure we’re drilling multiple exploration fronts, having a few rigs operating at least.”