Genesis boss warns CGT shake-up will starve exploration

As Genesis Minerals (ASX:GMD) boss Raleigh Finlayson settled into his economy seat on a Virgin flight back to Perth on Wednesday after his luncheon address to the Melbourne Mining Club, he should have been well pleased with himself.

In an industry that lacks a natural leader, Finlayson earned his stripes by attacking Canberra’s capital gains tax changes, saying junior explorers risked being starved of investment dollars to make the next discoveries.

He said that without a carve-out for exploration, Canberra was in danger of killing the golden goose, remembering that the gold sector has become a serious taxpayer thanks to the rise in the gold price to elevated levels.

But there’s constant pressure to continuously replace mined ounces by finding new resources and reserves to sustain future production – a job explorers excel at.

“Exploration companies are funded from retail investors, not institutions. Very few institutions will put money in, so where’s that (project) pipeline being funded?

“I just think that hasn’t been properly considered as part of these tax changes,” Finlayson said.

As serious as the challenge could become for juniors trying to raise exploration dollars post Canberra’s proposed changes, it was Finlayson’s commentary around the spurned $38 billion mainly scrip bid for Northern Star (ASX:NST) by the out-of-Africa Gold Fields that really got the interest up.

Finlayson knows more than most about Northern Star.

His former gold vehicle Saracen acquired a half share in the Kalgoorlie’s Super Pit from Barrick in 2019 before merging with the then Bill Beament-led Northern Star in 2021, after it had acquired the remaining 50% of the Super Pit from Newmont in 2020.

Finlayson was Northern Star’s managing director for a while and later moved on to fire up a then sleepy Genesis, now an $8.3 billion company that’s due to complete the $6.15 billion acquisition of Vault in November.

Finlayson holds some legacy shares in Northern Star and made it clear on Wednesday he does not think the takeover attempt by Gold Fields will fly.

He said he was not convinced Northern Star shareholders will want Gold Field’s scrip. “So, I think there needs to be an increase in the cash component if that’s to happen,” Finlayson said.

He also cast doubt over Gold Fields’ claim that a takeover of Northern Star would generate synergies of US$4-US$5 billion, even though it has yet to conduct due diligence (DD).

The Genesis bid for Vault is claiming A$2 billion in synergies – after three periods of DD in the lead up to the bid – because of the proximity of the combined group’s Leonora-Laverton assets.

“Gold Fields have come out with a proposal with synergies without doing DD, so it’s obvious to be cynical about that,” Finlayson said.

“I think it was reasonably opportunistic, frankly,” Finlayson said.

Moving along, Finlayson flagged a new era of non-core asset sales by the major gold producers, which would provide mid-tier producers with an avenue to grow production.

He said that Northern Star was a likely seller of non-core assets whether Gold Fields has its way or not, and that Genesis too would likely be doing the same after the merger with Vault is complete.

“We’re exploring and evaluating the different scenarios – whether it be a sale or vending these assets into a SpinCo.

“I think there's an opportunity there, because what's happened is there are currently ten gold companies in the ASX 100 for the first time in history.

“That's an unhealthy number of gold companies, frankly,” Finlayson said.

“But what it's done is it's left a void back in the traditional ASX200-ASX300 space.”

He said the shedding of non-core assets could be a way to create value “through multiple means, not just on the mothership”.

It is how Saracen, Northern Star and Genesis got their start.

Great Southern Mining (ASX:GSN)

Talking about Gold Fields, it is one of the more committed of the big miners to greenfield exploration in Australia.

And while its tilt at Northern Star is going nowhere fast unless it ups the ante, the greenfields effort just might be about to deliver a major consolation prize.

“Might” is the operative word there, as it’s early days.

But there is no doubt exploration circles were buzzing on Thursday about an update from junior explorer Great Southern Mining (ASX:GSN) on the completion of a diamond drilling program at the Mt Dillon prospect in north Queensland.

It’s part of the broader Edinburgh Park project in which Gold Fields has an option to spend $15 million to earn a 75% interest.

GSN reported two holes drilled at Mt Dillon for a total of 1,534m were “both extended well beyond the planned depths of 575m (it ended up at 762.1m) and 700m (it ended up at 772.8m) respectively”.

The junior added that geological features interpreted from drill core logging were consistent with an intermediate epithermal system. No assays yet, but the wait won’t be long – late October/ early November.

The target at Mt Dillon is a large-scale epithermal and/or porphyry target hidden beneath a preserved lithocap.

Global examples of similar set-up include AngloGold’s Quebradona in Columbia (4.26Mt of copper and 7Moz of gold) and Lepanto’s epithermal/porphyry deposits in the Philippines (20Moz of gold and 4.5Mt of copper).

Again, it is the assay results that will determine if the joint venture is on to something special at Mt Dillon or not. Either way, it is but one of the large-scale targets the pair will eventually test with the drill bit.

It is interesting stuff for GSN, with its modest market cap of $24.54 million (2.1c a share).

Having said that, the company continues to enjoy success at its Golden Boulder project on the Duketon gold belt in Western Australia. It is in the same neck of the woods as Regis’ Garden Well/Rosemont operations.

GSN said earlier in the week that latest assay results demonstrate that Golden Boulder has all the hallmarks of a large, high-grade gold discovery sitting alongside major deposits of the Duketon belt.

Best results from the latest 18 drill holes included 9m at 3.36g/t gold from 127m and 4m at 11.38g/t from 45m. The prospect remains virtually untested below 150m below surface (the 2Moz Rosemont deposit – 26km away – has gold hits down to 700m).

Drilling is ongoing and assays are pending for another 3,425m of drilling.

Again, all interesting stuff for a junior with a $24.54m market cap. It could be suggested that either Edinburgh Park or Golden Boulder come for free in GSN’s market cap.

Killi Resources (ASX:KLI)

The Nev Power-led Killi Resources (ASX:KLI) has been mentioned here previously on the strength of growing investor interest in its recently acquired Lodestone magnetite project in WA’s Mid-West.

It’s the one that came with a 110Mt inferred resource with the potential to quadruple in size in the next 12 months as the company gets busy with the drill bit.

It’s also the project with a difference, as it’s of the rare coarse-grained recrystallised-type – making it suitable for the low-cost production of a premium 68-70% iron concentrate for making direct reduction pellets used in electric arc furnaces.

The stock has been tickling up higher in recent days as the company spreads the word on Lodestone’s potential on a roadshow to North American investors.

But today’s interest circles back to the company’s West Tanami gold project in the Kimberley region of Western Australia. West Tanami sits in the WA half of the Tanami province, which on the Northern Territory side hosts monster deposits like Newmont’s 14Moz Callie gold mine.

Gold Fields has an option to earn an 85% interest in the project by spending $13 million in two stages.

Exploration work by Gold Fields started in November 2024 in a typically big company systematic way. The work has now progressed to the stage where prospects of interest have been delineated.