While retail investors have been eager to get into the Pilbara gold story, institutional investors are taking a watch-and-wait approach, says a senior Citi Group analyst.

“For the most part I think the story so far is a little bit too early-stage and a bit too risky for most of them to have a go at,” says Trent Allen, who heads up Citi’s mining and metals research.

Artemis Resources (ASX:ARV) and Canadian partner Novo Resources, who were responsible for the initial discovery of the conglomerate-hosted gold in July last year, faced some early difficulties with drilling and confirming economic viability of the nuggetty gold at their Purdy’s Reward project.

The issue for larger investors is threefold: the challenge of resource definition; mining reserve definition and mining method and consistency of earnings in the longer term.

“Most investors at the institutional level need to think about evaluation because of course they have their own investors,” Mr Allen told Informa’s Pilbara Conglomerate Gold Conference in Perth on Thursday.

“They have their own consultants and they have to justify everything they do.

“There is certainly gold there and it has scale, but we just need to see more information about where the gold is concentrated and how to extract it.”

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Institutional investors are nevertheless watching closely, says Mr Allen — as are some of the bigger gold players.

“They’re very aware of course of what’s going on,” he said. “I can see some consolidation perhaps coming in the sector at some stage.”

In the meantime though, the Pilbara gold players needn’t worry because there are other ways they can raise cash.

“You’ve got other sources of funding, for example retail investors. Private equity can take a longer view of things,” Mr Allen explained.

About 13 of the 20 Pilbara gold stocks monitored by Stockhead are trading at a premium compared to this time last year.

“You could have made money in the conglomerate gold space over the past 12 months,” Mr Allen noted.

“Over the 12 months you would have lost 5 per cent on the stocks I have been looking at, but if you came into that same basket on the day of the Novo presentation in Denver, you’d have made 28 per cent instead.

“At one stage you would have been up by 177 per cent, that’s on average, and some stocks did a lot better than that. So there was money to be made there.”

ASX Code Name 3-month price change (Jan-Mar) 12-month price change Price Mar 21 (12pm AEDT) Market Cap
TAR TARUGA GOLD 1.1 3.66666666667 0.21 24111620
TNO TANDO RESOURCES (*listed Nov 2017) 0.918367346939 1.35 0.47 14335259
CZR COZIRON RESOURCES 0.555555555556 1.33333333333 0.028 44638780
SPX SPECTRUM RARE EARTHS 0.181818181818 0.444444444444 0.013 7754701.5
SRK STRIKE RESOURCES 0.0666666666667 -0.0857142857143 0.064 9301393
DEG DE GREY MINING 0.0322580645161 1.46153846154 0.16 46339364
VKA VIKING MINES 0 1.35294117647 0.04 11921279
MRR MINREX RESOURCES -0.0684931506849 0.0625 0.068 6236352
CHN CHALICE GOLD MINES -0.0810810810811 -0.0285714285714 0.17 45711800
KAI KAIROS MINERALS -0.116279069767 0.027027027027 0.038 30960618
VXR VENTUREX RESOURCES -0.117647058824 0.948051948052 0.015 50378084
IPT IMPACT MINERALS -0.117647058824 -0.4 0.015 18503518
WWI WEST WITS MINING -0.125 -0.222222222222 0.021 15792649
MZN MARINDI METALS -0.166666666667 -0.559471365639 0.01 19585060
DGR DGR GLOBAL -0.24347826087 -0.42 0.087 52120460
RTR RUMBLE RESOURCES -0.267605633803 1 0.052 19130478
ARV ARTEMIS RESOURCES -0.294642857143 0.795454545455 0.1975 122183768
DGO DGO GOLD -0.296296296296 1.2105875509 0.76 7656996
SUH SOUTHERN HEMISPHERE MINING -0.453846153846 0.577777777778 0.071 6044665.5
HDY HARDEY RESOURCES -0.615384615385 -0.875 0.005 5840317.5