Gateway’s gold find would be talk of the town … if it weren’t for Kaoko

Minerals exploration in Australia is running at record levels, as might be expected given the price strength in a raft of mineral commodities and specialty metals.

According to the Australian Bureau of Statistics, expenditure in the June quarter alone was $1.14 billion which was a hefty 17.9% increase on the previous corresponding period.

The bulk of the expenditure goes into mine life extension work and exploration at known undeveloped discoveries.

But expenditure on exploration for exploration’s sake also makes a big call on investor’s dollars, and the occasional government grant.

It is nice to see then, the success some junior explorers have had in recent days in notching up the sort of discoveries that excite the market, to the benefit of their market caps in the process.

KAOKO (ASX:KAO):

The ABS doesn’t count overseas exploration expenditure by ASX juniors.

So the exploration success announced during the week by the recently listed Kaoko (ASX:KAO) from its Chalkos copper-silver project in sunny Namibia does not exactly fit the above theme of record Australian exploration expenditure.

Not to worry, the Perth-based Kaoko headed off to Namibia looking for copper for the same reason that copper exploration back home has stepped up - copper’s move into record price territory.

Listed on May 7 after a 20c a share IPO, and trading at 74c on Tuesday ahead of its Chalkos announcement, Kaoko subsequently charged off to $2.50 by the close of trade on Thursday.

The 237% gain in two trading days carried Kaoko’s market cap to $150 million. So it is well inside the 10-bagger-plus club some four months after listing.

The rocket-like price gain was due to Kaoko’s report that the first two drill holes at its virgin Otniel prospect within the broader Chalkos project had returned broad zones of copper mineralisation from shallow depths.

DDOT002 intersected over 60m of predominantly malachite-chalcocite mineralisation, including a 32m zone of strong visible mineralisation, while DDOT001 returned over 51m of visible mineralisation, including 17m of strong visible mineralisation.

After cautioning that it is early days in the program and assay results are 4-6 weeks away, Kaoko managing director Gerard O’Donovan said: “This is a highly encouraging start to the first ever drilling of the 800km2 Chalkos project, and we are excited to continue drilling at both the Otniel and Donkey Hill prospects”.

Namibia has long been known to the ASX market for its uranium mining and exploration industry. But more recently it is proving to be a happy hunting ground ASX gold and copper explorers.

WIA Gold’s (ASX:WIA) success at its Kokoseb gold project in the country has taken it from a $35m company in 2022 to $808m while Midas Minerals (ASX:MM1) has doubled in the last six months to $320m on the strength of its Otavi copper project. Kaoko now gets added to the list.

So not all of the exciting discoveries are being made in Australia. It’s something governments need to recognise before putting up more hurdles to our greenfields explorers as exploration dollars are not restricted by borders.

Having said that, the WA goldfields continue to generate exploration excitement.

GATEWAY MINING (ASX:GML):

Gateway Mining (ASX:GML) is the example this week thanks to breakthrough exploration results at its Yandal project, about 50km from Northern Star’s Jundee gold operation.

There wasn’t a Kaoko-type response but Gateway’s share price did put on 16% to 9.5c for a $220m market cap.

The gain was a response to the news that primary high-grade gold mineralisation (41m at 2g/t gold from 104m, including 9m at 7.5g/t from 105m) had been returned from reverse circulation drilling at the Cowza prospect.

Cowza is part of an emerging gold corridor at the Yandal project consisting of about 4.5km strike at Cowza, 1.5km at Celia South, and 7km at Ward for 13km of combined strike on the same lithological contact, which remains almost entirely untested by RC/diamond drilling.

It’s getting too technical, so Gateway CEO Richard Pugh takes up the story:

“The first RC test of Cowza has delivered exactly the sort of result we were hoping this large-scale gold system was capable of producing,” he says.

“In late June, we reported the first aircore results from the main Cowza structure – an 800-metre zone that had previously gone unrecognised because historical drilling was positioned in the footwall and did not effectively test the prospective mafic-intermediate contact.

“Systematic drilling through July and August grew that initial footprint to approximately 4.5 kilometres of continuous oxide gold along the same contact, giving us increasing confidence that Cowza has the scale and geological setting to host a very significant gold system.”

He added that where the 41m intersection sits is of particular importance - directly beneath aircore hole CZAC051, which returned 8 metres at 1.9g/t gold.

“That relationship gives us a clear read-through to the many similar aircore results still sitting untested along the rest of the 4.5-km long structure,’’ Pugh said.

Strip it all back and the initial 16% share price gain in response to the primary high-grade gold hit suggests the market is starting to get on board with Gateway’s call that it is on to Australia’s next multi-million ounce gold camp.