Sipa is leveraged for success and set to drill on the doorstep of Rio Tinto’s giant copper discovery
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Special Report: Sipa Resources (ASX: SRI) is staking its claim as one of the explorers best positioned for discovery success in Western Australia’s white-hot Paterson copper province.
The Perth-based junior was a first-mover in the Paterson district, throwing down well before all the recent hype surrounding Rio Tinto’s much-vaunted Winu copper-gold discovery.
It’s now one of the only companies outside of Rio Tinto with granted tenements and exploration programs under way, with its western tenement boundary sitting just 10km from the site of the Winu find.
“Sipa has the largest and closest granted land-holding in the North Paterson district to the Rio Tinto discovery,” says the company’s managing director, Lynda Burnett.
Burnett started out in the industry working as an underground mine geologist at the Paterson Province’s famous Telfer gold mine.
“Plus, we have active exploration programs on foot, and a new drill program about to commence, so we are well and truly in the mix in terms of giving ourselves a good chance of making a breakthrough,” she says.
Sipa has just emerged from a 1-for-12 capital consolidation, with its shares trading this week for the first time on a post-consolidation basis.
The newly-revamped capital base has crunched the shares on issue to just 142 million, meaning that the stock is now highly leveraged to any whiff of exploration success.
Plus, following a recent capital raising, Sipa has over $3.9 million in cash and an impressive share register which includes Sydney-based property and hotel mogul Ervin Vidor as its largest shareholder with a 17.6 per cent stake.
Vidor, well-known as the founder of the Toga hotel group (now TFE Hotels), has been a long-term supporter of Sipa’s, topping up his stake over the course of this year by investing over $1.27 million in the explorer.
“We believe in the prospects of Sipa and the integrity and competence of its management and board,” Vidor told Stockhead earlier this year.
“As a long-term investor, we regularly review Sipa’s on site activities and exploration methodology, and remain committed to our investment at this time,” he said.
He’s been joined on the register recently by prominent Melbourne investor, deal-maker and biotech guru David Williams, who now holds 2.6 per cent through his vehicle Moggs Creek Pty Ltd.
The top 20 shareholders hold 40 per cent of Sipa’s shares, meaning it is tightly held and well leveraged for exploration success.
With Rio Tinto reportedly operating 11 rigs at the Winu discovery, investor interest in the region is once again on the rise.
Rio Tinto said in its recent June Quarterly report that results from Winu “continue to indicate wide intersections of vein-style copper mineralisation associated with gold and silver beneath relatively shallow cover” and that the mineralisation remains “open at depth and to the east, north and south”.
Newcrest has recently commenced drilling at its Havieron joint venture with London-listed Greatland Gold.
Sipa has already identified a similar mineralisation signature to the Rio Tinto discovery at its Obelisk prospect, which it has progressed over several field seasons.
However, all eyes will be on the implications of a new EM dataset acquired from a recently completed SkyTEM airborne electro-magnetic (EM) survey.
This survey essentially uses high-voltage electric current to detect accumulations of conductive metal sulphides hidden beneath cover, providing drill targets.
The geophysical technique reputedly played a big role in the Rio Tinto discovery, so there will be considerable interest to see what it says about Sipa’s adjacent ground.
Drill testing of new targets generated from the EM survey at the Obelisk and Aranea prospects will commence in August.
“They are exciting targets and we are really looking forward to seeing what our drilling can deliver,” Burnett says.
“This is without doubt one of the most exciting new discoveries in Australia, if not the world, and we are right near the epicentre,” she said.
“What’s even more exciting is that we know we have a similar mineralisation style on our tenements, we have some new red-hot geophysical and geochemical targets, and we’re about to test them with up to 4,000m of drilling.
“This is what frontier exploration is all about.”