Melbourne’s bustling mining investor Tolga Kumova, formerly of Syrah graphite fame, is set to reveal he has snared 9% of WA gold explorer Draig Resources. Plus, London insto climbs aboard Sandfire neighbour and copper explorer Auris while a host of imminent newsflow could see emerging gold producer Explaurum re-rated.
More often than not it pays to know who has taken up shares in a placement rather than just knowing the quantum and pricing of the fund raiser.
But because it is not generally the done thing to disclose the recipients, the only way of knowing who the new guys on the register are is if they have gone over the 5% disclosure rule.
Occasionally the news just gets out anyway. And so it was this week with Draig Resources (ASX:DRG) and its $3.3m placement at 5c a share to fund a two-phase drilling program at the old high-grade Bellevue gold project, some 175km north-west of Laverton.
Turns out that Melbourne’s bustling mining investor Tolga Kumova, formerly of Syrah (SYR) graphite fame, took a big lick of the stock, which will see him listed as a 9% shareholder. Nothing on the ASX platform just yet but there will be.
Like the sweep of Melbourne and Sydney funds that put their hand up in the placement, Kumova is backing home the idea that the long over-looked Bellevue has more to give, and that it has now got the right management team to make it happen.
The management team is led by Steve Parsons following his success in making the ASX-listed West African gold stock Gryphon Minerals a $100m takeover buy for Canada’s Teranga Gold last year.
Bellevue has a rich recorded production history of about 800,000oz at a grade of 15 grams of gold a tonne. It produced its last gold in 1998 and not much has happened since. The gold price at the time did not help and there wasn’t the willingness to look for extensions of the high-grade lode beyond the truncating Highway fault at 450m deep.
But back then they didn’t have the bagful of modern-day geophysical sensing techniques to apply to the hunt, something from which Bellevue with its quartz veins within sulphides should benefit.
Draig is now mobilising a drill rig to site to get on with a phase-one drilling program which will chase up shallow high-grade targets along strike as well as confirming the gold potential of the historic tailings and what would have previously been classified as waste ore in a low gold price environment.
The second phase later this year will start punching in 500m-plus holes to test the deeper targets to come from the geophysical work. In a mining market where grade pressure has started to become a concern, it would be nice to see some high-grade stuff on offer.
Draig traded yesterday at 8.1c, giving it a market cap of $25m on the expanded capital base.
London says roger to Wodger
Bryah Basin explorer Auris Minerals (ASX:AUR) is another junior to have got a placement away in recent days ($1.68m at 8c a share).
It volunteered that the placement was “primarily to one UK institutional fund’’ without saying who it was. It can be said that the UK fund was from the JP Morgan stable, which is a big name to have when your business is early-stage exploration.
The big thinking types in London obviously like the thought that Auris just might be on to something at its Wodger prospect, which could eventually be of interest to Sandfire (ASX:SFR).
Sandfire owns the DeGrussa copper-gold mine elsewhere in the Bryah, where additional reserves would be welcome sometime in the 2020s, assuming its own on-going exploration doesn’t add to known deposits in the VMS copper-gold region, which it probably will.
Drilling at Wodger, owned 80% by Auris and 20% by Fe Ltd (ASX-FEL) on a free-carried basis, has returned some juicy hits and got really interesting recently when re-logging of one hole turned up evidence of primary sulphide copper mineralisation in the form of visible chalcocite between 211-213m (2m at 7.35% copper).
Follow up drilling is being planned at Wodger, as well as at the Cuba prospect closer to DeGrussa, and at Cashmans, 100km south-west of DeGrussa. Auris last traded at 7.5c, valuing it at $28m.
Golden flourish for Explaurum
Explaurum (EXU) seems set to finish off the year with a flourish thanks to the release of an updated resource upgrade in the first week of September for its Tampia gold project near the wheat belt town of Narembeen, 300km by road east of Perth.
Then the first week of October should see the release of a scoping study into a development of the project, originally a 1987 discovery by the long-gone BHP Gold.
It’s best to wait for the releases, but its seems clear that Tampia is set to be confirmed in the twin announcements as a 1 million ounce-plus deposit capable of producing 100,000 ounces-a-year from a development costing something less than $130m.
A re-rating of the stock – it last traded at 13c for a market cap of $49m – would be on the cards if all that comes to pass. That is doubly so if, as expected, it is confirmed that Tampia’s high-grade mineralisation from surface means a super quick capital payback thanks to costs of $A500 an ounce or less in the opening years.
First production would seem possible in the first half of 2019 unless of course one of the growing band of growth-hungry and cashed-up gold producers out there decides that it should own Tampia and that it should be developed to a timetable that suits the new owner.
The coming resource upgrade to something north of 1 million ounces compares with the long-in-the-tooth previous estimate for Tampia of 310,000 ounces which was on the small side of things to get any potential predators interested.
The new estimate should change that, particularly as Explaurum has added a gravity signature overlay to the geochemical signature BHP Gold used to find Tampia beneath the wheat fields.
It has thrown up a whole bunch of new exploration targets that could add to the Tampia story over time.
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.