After 20 years of little to report, resources group Jervois is re-invigorated with a new board led by well-regarded banker Steve van der Sluys. With interests in nickel, cobalt, scandium and gold, the stock is moving. And Breaker’s gold discovery is starting to catch the eye of cashed-up producers.
Jervois (ASX:JRV) has been knocking around the junior end of the mining market since before most of us were born.
And it was involved in some grand old tales over the decades that would make great reading in a book one day. But the truth is the stock has not been worth knowing about for the past 20 years or so.
But all that has changed with a new board and management team wresting control of Jervois last year from long-time gate-keeper and octogenarian Duncan Pursell.
Pursell’s reign lasted 28 year years which has got to be some sort of record in both the junior and senior ends of the market.
But he was seen off in fairly acrimonious style and it has got to be said that there has been no looking back by Jervois shareholders.
The market is waking up to the fact that the cleaned-up and fixed-up Jervois is one asset-rich outfit. And more to the point, it is now in the control of a bunch of guys with individual 40-year experience in how juniors should go about maximising their value and share price.
All that has been reflected in the wriggle-on in Jervois’ share price of late. It has motored on from 5c a share in the opening months of the year to 9.6c, valuing the ordinary shares at $14 million.
Where the share price is going to pull up is anyone’s guess but what can be said is that a quick assessment of the asset base quickly arrives at a 20c a share valuation, plus the sort of upside that the weighting of Jervois’ assets to the battery materials sector might be expected to deliver over time.
Little wonder then that the new guard at Jervois was able to easily pull in $1 million from a recent placement of shares at 6c each to a group of professional and institutional shareholders brought together by BW Equities. Melbourne’s bustling Tolga Kumova is believed to have taken a whack.
A run through of the asset base tells the Jervois story. But just as important is the new board and management team that is calling the shots – Steve van der Sluys (executive chairman), John Joseph Byrne (director) and John Newton (director).
Van der Sluys has a 40-year career as banker to and as a director of mining and metals businesses. Of particular interest to Jervois was his lead role in the $375m Queensland Nickel float in the early 1990s, his involvement in BHP’s acquisition of the Ravensthorpe nickel project and his principal financial advisor role to Anaconda Nickel’s $1.4 billion Murrin Murrin nickel-cobalt project financing.
Byrne has more than 30 years experience wheeling and dealing and building mines. Mining house Cambrian was one of his big successes, with the London-listed group starting out with a couple of million pounds in 2002 ahead of its takeover in 2008 for 148m pounds. He was a financial journo too, way back. But we won’t hold that against him.
Newton is a well-known money many with 40 years’ experience in stockbroking, accounting, corporate finance and property development.
Back to Jervois’ asset base. It’s a mix of direct mining assets and royalty interests.
At Young in NSW, the company owns the NiCo project which as its name suggests is a nickel and cobalt project. It has a published resource of 82m tonnes grading 0.79% nickel and 0.06 per cent cobalt. Because of the interest in such resources courtesy of the Syerston nickel-cobalt-scandium project of the $400m Clean TeQ in NSW, the new guard at Jervois has made it a focus, with an updated resource estimate in the works.
And talking about Syerston, the same rocks that underpin Clean TeQ’s project run in to Jervois’ Flemington scandium project next door. Australian Mines (ASX:AUZ) has the right to buy the project for $6m plus a royalty of 1.5 % on any production.
The AUZ acquisition is by payments of $500,000 every six months, with the next payment due in September. Scandium – aluminium scandium alloys are tipped to be all the rage in the aircraft industry in years to come – is the key focus at another Jervois asset, a royalty on the Nyngan deposit in NSW being advanced by Canada’s Scandium International (SI).
The royalty held by Jervois is a beauty – 1.7% of the value of the scandium and all other metals produced from the deposit. Assume a $US20,000 a kilo price for scandium and it could generate a handy $US1.3m a year for Jervois, based on SI’s suggested production profile.
Rounding out the asset portfolio – all of which the new guard will be seeking to monetise or add value to in some way or another – is a royalty on the Bullabulling gold deposit in Western Australia now owned by China’s Zinjin, owner of the nearby Paddington treatment plant.
The royalty covers 84 per cent of the 3.75m ounce gold resource and entitles Jervois to $30 an ounce on the first 400,000 ounces of production and $20 an ounce on additional production for the life of the mine. It is not a producer and Zinjin’s intentions are not clear.
But you would have thought there is some negotiating room around what Jervois might take to cash in its Bullabulling chips, as an option that is.
Jervois’ new guard gave a hint recently where it would be looking to create value elsewhere in the junior mining space when it took up a 10.3% placement in Tassie tin developer Elementos (ASX:ELT).
Elementos is trading at all of 0.6c. It plans to re-open the historic Cleveland tin mine. There are a couple of common themes here. Firstly, Elementos is led by Andy Grieg, a former boss of the mighty Bechtel’s global mining unit.
And then there is tin being part of the battery materials mix that Jervois’ NSW nickel-cobalt interests deliver in abundance.
Coming in for Breaker
The flood in quarterly exploration results has yet to yield a discovery to get the blood racing. But there have been a few that are works in progress.
Breaker Resources (ASX:BRB) is one of them, with its quarterly adding to the potential for its Bombora gold discovery under cover at Lake Roe in WA, 100km east of Kalgoorlie, to shape up as something special.
Breaker’s own read on drill results in the June quarter was that the open-cut and underground mining potential of Bombora had been “materially upgraded”. People who know how to plot-up these things agree.
But there are still those out there waiting for the infill drill program along the 2.2km strike of the discovery to confirm it is all hanging together, as mining types would say. Breaker has been big enough to acknowledge that.
So it keeps drilling away on a closed-spaced basis in the lead up to making its maiden resource estimate late this year. Breaker closed on Thursday at 66c for a market cap of $87m against which it is holding cash of $7.3m.
If for nothing else that big gold discoveries have been few and far between in recent years, it could be one to watch ahead of the maiden resource estimate. Growth hungry and cashed-up gold producers already have it on their radar.
One of Australia’s leading business journalists, Barry FitzGerald, highlights the issues, opportunities and challenges for small and mid-cap resources stocks, and most recently penned his column for The Australian newspaper.