Northern Star’s 2.3Moz upgrade starts flood of pre-Diggers releases

Plus, the whiff of a big find at Jundee, Geopacific starts re-rating on Kula success, Tawana set to fly through lithium’s open window and Slovakian gold hopeful to bang IPO drum in Kalgoorlie
4th August 2017
Barry FitzGerald

Diggers & Dealers kicks off in Kalgoorlie next week with the biggest roll up in five years expected. The 2000-plus mining and finance types due to rock up are doing so with the hope of divining something they did not already know, thrown in with a liberal dose of bonhomie.

But the fun police at ASIC insist nowadays that companies release market sensitive information when it comes to hand.

So other than what can be garnered from some hard work around the bars at Kalgoorlie’s watering holes away from the ASIC spies, much of the “news” nowadays gets announced to one and all on the ASX platform before the bash gets underway.

And so it has been this week, the stand out example being Northern Star’s (NST) announcement that it had increased its gold reserves by 2.3m ounces at a knockdown cost of $A24 an ounce to 3.5m ounces.

Northern Star closed 4% higher at $4.67 in response, reflecting the fact that had it come in with an increase to 3m ounces, the market would have been disappointed, and had it come in 4m ounces, the market would have been ecstatic.

Mind you, there was a big hint in the announcement that while the increase to the mid-point of 3.5m ounces was impressive stuff, the market should really be looking to the stars with what could be a game-changing discovery called Zodiac at its Jundee operation.

Generated from a 3D seismic survey, the Zodiac discovery has the “potential to significantly expand the known parameters of the world-class Jundee gold deposit,’’ Northern Star reported.

“Early indications suggest it has significant potential to extend mine life further than known reserves and resources.” The discovery hole at Zodiac returned multiple mineralised intersections over a 200m downhole interval some 1km south of the Jundee mine.

Northern Star, chaired by Bill Beament, takes to the D&D stage on Monday at 3.45pm (Perth time). Expect those in the room to be hanging on every word on Zodiac which apart from anything else, goes to Beament’s long-time chant that Australia’s gold mines have a lot more gold to give up, it’s just that the gold will be in deeper underground locations and that the exploration effort has to be made to find it.

Another price sensitive announcement to hit the screens ahead of D & D was the news from Red 5 (RED) that it was kicking off the next round of consolidation in WA’s goldfields by buying the Darlot mine from South Africa’s Gold Fields for $18.5m in cash and shares and the King of the Hills gold deposit from Saracen (SAR) for $16m.

It comes as Red 5’s Siana gold mine in the Philippines has had to be parked up as a result of that country’s mining policy madness. But more than that is that the deals signal that the much anticipated second wave of consolidation in the gold sector is underway, with other deals to follow.

Underpinning it all is the more realistic asking prices for gold assets in the wake of the $A200 an ounce fall in the gold price in the past 12 months.  

    

Geopacific (GPR)

Geopacific (GPR) managing director Ron Heeks had a top spot for a booth in the giant marquee at D&D last year. It was right next to the first stopping point for the wheelbarrows of beers on offer after the long days of company presentations.

No such luck this year, with Geopacific’s booth this year to be found at the rear of the marquee. Still, Heeks is one happy boy given the group’s takeover bid for Kula Gold (KGD) is now in the home straight with acceptances at last count coming in at 69.3 per cent.

RMB was the latest of the big block shareholders to accept the offer, which puts Geopacific well and truly in the driving seat to make the development of a 120,000 ounce-a-year gold mine on Woodlark Island in PNG a reality after years of delay under Kula’s stewardship.

Kula did a great job with community engagement but it has to be said that after having spent $100m on the project, Kula – a glamour float in 2010 – was as far away as ever from having a producing mine on its hands. The guys at Geopacific have built 10 mines in six countries, so it can be taken as read they won’t be messing around on what is a rare development opportunity in the regional gold space.

The market is awake to that and the re-rating of the $40m Geopacific (3.6c a share) is underway now that it has Kula in the bag. Where it pulls up in the re-rating will be interesting to watch. That can be said because comparable ASX gold companies Gascoyne (GCY) and Eastern Goldfields (EGS) have market caps of $147m and $163m respectively.

OK, they don’t have PNG addresses.  But some of the world’s great gold mines do. Just ask Newcrest, owner of Lihir, which is now knocking on the door of annual production of 1m ounces.

 

Tawana Resources (TAW):

St Barbara’s Bob Vassie is headed to Kal to make a presentation to the assembled throng on Tuesday.

Given he has turned around the fortunes of St Barb’s since becoming CEO in  2014, it will be one of the best-attended presentations, even if it is hard up against lunch and the lure of a refreshment down the road at the Palace.

But today’s interest is in Vassie’s decision to take up a non-executive directorship at Tawana Resources (TAW).

It comes as Tawana moves towards production at the Bald Hill lithium and tantalum mine in WA, with first production from the restarted (tantalum) operation slotted for first production early in the new year.

If ever Tawana was looking for an endorsement of its Bald Hill plans it just got it in a big way with the appointment of the highly-rated Vassie. He is presumably on board with the notion that Bald Hill will be in production long before a lot of the ASX-listed lithium hopefuls get even close.

And while there is undoubtedly a window of opportunity for new supplies, it will slam shut once the incumbents in the industry complete their expansions and the committed new projects hit their straps. Tawana will have got through the window long before then.

 

Prospech Ltd:

There is probably no better place to drum up support for a mining float than among those holed-up in a place like Kal for D&D.

And that’s why Jason Beckton is headed off to D&D, seeking to put the finishing touches to a $7.5m initial public offering of a one-third stake in Prospech, which will have an enterprise value of $12.3m on listing, probably in early September.

The IPO is said to be filling up nicely, which is no surprise given Prospech‘s focus – high-grade epithermal gold in Slovakia.

Like some other central European countries with 1,000 year-plus mining histories, Slovakia is something of an exploration hotspot, with a supportive government and fiscal regime attracting western companies eager to apply some modern-day exploration techniques to the country’s undoubted mineral potential.

Things have been slow since the Velvet revolution in 1989 saw the break-up of what was communist Czechoslovakia. But it’s building up a head of steam, with Tolga Kumova’s European Cobalt (EUC) another ASX-listed company recently attracted to Slovakia’s modern-era mining potential.

Prospech has managed to secure control of a high-grade historic goldfield sitting inside a caldera and thanks to the government’s digitisation of historical mining data, it has been able to set itself an exploration target of 2.8-6.8m ounces of gold and 290m ounces of silver.

Its ground surrounds a profitable 25,000 ounce-a-year gold mine owned by another group which obviously stands as a toll-treatment option for what Prospech comes up with. It plans to hit the ground hard so news flow on being listed is expected to be strong.

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