Tim Treadgold: Who’s bringing a little bit of El Dorado to Perth for LADU this week?
It’s hard to imagine a more international mining conference than the one starting in Perth today, with the star attraction being a London-listed company with Australian management, exploring for copper and gold in South America.
SolGold, one of the companies scheduled to present at the two-day Latin America Down Under (LADU) forum, has another claim to fame – it has attracted strong financial support from two of Australia’s mining majors, BHP and Newcrest.
Most interest in SolGold, which is headed by Brisbane-based businessman, Nick Mather, centres on its Alpala project in Ecuador which has returned some of the best drill results ever obtained at the northern of the Andes mountains which host a number of the world’s biggest copper mines.
The hole which sticks in the minds of investors, and which lured BHP and Newcrest onto the SolGold share register, was No.12. It returned a staggering 1560 metres (yes, you can measure it in kilometres) of material assaying 0.59% copper and 0.54 grams of gold a tonne – with a richer core of 1044m grading 0.74% copper and 0.54g/t gold.
An update on SolGold’s work in Ecuador on Wednesday from country manager, Jason Ward, promises to be one of the best attended sessions, not only for an overall update on Alpala but for fresh news about the promising Porvenir discovery which has also revealed highly encouraging assays.
Not a country which has ever lit up the radar screens of many Australians, largely because of its complex politics, Ecuador is starting to act like a magnet for explorers keen to follow SolGold. Two of Australia’s iron ore billionaires, Gina Rinehart and Andrew Forrest, are also staking out claims.
Until recently South America and Australia had few points of contact, a fact easily explained by distance, history, language and the sometimes-overlooked point about South America being made up of 12 countries – which have not always had friendly relations with each other, and often have difficult governments.
A shared background in natural resources has closed the gap somewhat between Australia and South America, though most of the work has been done by big companies able to manage the multiple risks of doing business in a foreign jurisdiction. BHP and Rio Tinto have been the leaders, through copper investments in Chile, and iron ore in Brazil (with mixed results).
Building on the copper connection has been a slow-motion affair with gold explorers blazing a trail, as they so often do, followed by lithium project developers keen to get a foothold in the brine lakes of the high Andes.
Slow as the flow of Australian explorers and capital has been to South America, there has been an even slower drift the other way with Brazil’s iron ore champion, Vale, taking a modest position in coal and Chile’s lithium champion, SQM, putting a foot on an Australian lithium asset through a joint venture with takeover target Kidman Resources.
Building on that thin history is the aim of LADU, a conference which can appear to attract greater diplomatic interest than corporate with a pack of ambassadors making the trek to Perth.
But for investors there is a lot more to be gained by following what the companies have to say with first cab off the corporate rank being Troy Resources (ASX: TRY) which appears to have found new life in the Ohio Creek gold project in Guyana.
The attraction of Guyana is its lightly explored interior and a theory that the Guyana Shield geological structure is related to the West African Shield on the other side of the Atlantic, a region littered with world-class goldmines.
The latest drilling at Ohio Creek has returned encouraging assays that include 44m at 3.5g/t from a depth of 73m.
Other companies allocated time on the podium include:
E2 Metals (ASX: E2M). Adding an Argentine gold exploration asset to its Australian interests has put a spark in E2’s share price which has been a silent star on the ASX this year, tripling from 8c to recent sales at 25c. Epithermal-vein style gold is E2’s target in the mining friendly southern State of Santa Cruz, home to a number of international gold majors. At the Veta Blanca project rock chip samples have yielded gold assays as high as 7.46g/t plus 7510g/t of silver.
Hot Chili (ASX: HCH). Early promise of a major copper discovery in Chile faded for the Perth-based company which at one stage in 2010 saw its shares rocket up from 18c to 70c, before fading to less than 1c late last year. Life returned early this year after a fresh capital injection and encouraging news from the Cortadera copper discovery where a number of wide zones of mineralisation have been encountered with the latest results featuring 20m at 1.2% copper plus 0.5g/t of gold from a depth of 40m.
Ausquest (ASX: AQD). A small company with big friends, Ausquest has amassed a large tenement position in Peru where it is working with South32, the BHP base-metals spin-off. In most cases, Ausquest does the in-country leg work with South32 providing the capital in return for a big slice of the assets. One of the most closely watched projects is Cerro de Fierro which has shown the potential to become a significant iron-oxide, copper-gold (IOCG) discovery.
Meteoric Resources (ASX: MEI). Moved into Brazil earlier this year on the hunt for high-grade gold in Brazil after acquiring assets from Crusader Resources. Results from the Juruena prospect have included eye-catching gold assays of 10m at 101.1g/t and 3.6m at 554.3g/t, and
Tempus Resources (ASX: TMR). Joined the rush into Ecuador earlier this month with the acquisition of three mineral concessions in the same district as the Fruta del Norte gold project being developed by Canadian-listed Lundin Gold.
Other presentations at the conference will come from Azure Minerals, Dark Horse Resources, Latin Resources, Emu NL, and the Canadian major, First Quantum Minerals.
But the presentation which ought to have mining-company investors paying closest attention will come from corporate adviser, Sean Russo, managing director of Noahs Rule who is listed to speak on the challenge of raising capital in a tough market for small companies.
The title of his talk is a clue to the content: “With debt plentiful and equity scarce, prospective miners need to turn their thinking upside down” – a warning that some companies might be tempted to fund their future work with debt rather than equity, a potentially difficult move for any business.