Raisings aplenty as miners move fast to feed the quacking ducks
10th November 2017
Cash news, rather than exploration news, commanded the most interest on the Australian stock market over the past week with a flood of pre-Christmas capital raisings as small miners rushed to capitalise on strong investor-interest in the resources sector.
Once-troubled Eastern Goldfields led the way with a plan to pull in a fresh $30 million, followed by Australian Mines seeking $20 million, Peel Mining and Triton Minerals $6 million each and Reedy Lagoon $2.5 million.
A number of other corporate moves had a similar aim of raising capital, including Lithium Australia spinning off its graphite subsidiary BlackEarth Minerals and Gascoyne Resources locking in cash flows by forward selling 82,000 ounces of gold at $A1660 an ounce.
Less straight forward is a plan by gold miner Blackham Resources to re-finance $36.7 million in debt, a proposal which the company hopes to complete by Monday.
With the Christmas slowdown looming and mineral prices high, there’s a fair chance that next week will see a repeat of the share issues and other forms of capital raising with Peel flagging that its planned spin-off, Saturn Metals, will be seeking $7 million before the end of the year.
A low-key operator, Peel has been in the news for all the right reasons over the past few weeks thanks to exploration success at its flagship Mallee Bull copper project near Cobar in NSW and a highly-promising discovery in the same area at the Wagga Tank project.
Recent drilling at the Southern Nights discovery within Wagga Tank included a spectacular assay of 31.02% zinc, plus 12.05% lead, and useful grades of gold and silver, over a 21-metre intersection.
It was that drill hit which enabled Peel to raise its fresh $6 million almost overnight via a placement to professional and institutional investors at 40c a share, a price 5c below the prevailing market, but more than double the share price of three months ago.
Peel was not alone in enjoying a good week. Nugget explorers in the Pilbara and cobalt explorers with assets around the world also benefitted from investors interest.
However, the nugget story could be entering what might be called interesting times with surface exploration, such as picking up nuggets, trenching and rock-chip sampling, being replaced by the ultimate arbiter of whether a discovery is valuable or not – drilling.
Until now, drilling has been very light in the Pilbara nugget field, for several reasons. Firstly, it’s very difficult to actually drill a nugget-gold discovery because a conventional drill bit is not sufficiently wide to provide a valid sample, and secondly because the story is too good to mess it up with unsuccessful drilling.
Segue Resources was the latest explorer to join the nugget rush, posting pictures of nuggets from what it described as outcropping conglomerate of the “Witwatersrand Basin equivalent Mallina Basin” – an interesting comparison of South Africa’s richest goldfield with a piece of the Pilbara.
Investors were excited on Monday when Segue reported, lifting the stock from 7.1c to a 12-month high of 10.5c, before enthusiasm faded with the stock last trading at 7.8c.
Other nugget stocks also started to shows signs of fatigue as investors wait for drill results. Rumble Resources, which rose from 2.5c in June to 9c in mid-October, remains around that price today. Primary Gold slipped this week from 5.4c to 5c and Castle Minerals eased back from 6.2c to 5.2c.
Leaders of the nugget rush, which means first movers and those potentially with the best ground, continued to rise, led by Artemis, which added 14c to 51c. DGO did even better with a 69c rise to $2.23 and Kairos rose by 3c to 10c after reporting visible gold in conglomerate at its Croydon project.
Other news and market-moving events in the resources sector included:
- Archer Exploration, Riedel Resources and Blackstone Minerals enjoying reasonable price rises thanks to their exposure to cobalt projects. Archer did best, effectively doubling from 7.5c to 14c after reporting a high-grade rock chip samples at its Yarcowie project in South Australia. Riedel added 1.8c to 8c after saying it would fast track exploration at its Carmenes project in Spain and Blackstone gained 9c to 50c thanks to an expansion of its exploration target at the Little Gem cobalt and gold project in the Canadian province of British Colombia.
- Syrah Resources, one of the leading graphite stocks, continued its strong rise with another 35c added during the week to trade around $3.71, with Credit Suisse continuing to tip a future price of $6.60 as first production nears – setting the scene for a clash of investors because the stock remains heavily short-sold with 22% of its capital reported to have been shorted, down from 28% a few weeks ago but still a hefty vote of no confidence in the share price.
- Centaurus Metals staged a useful comeback after a long period in the doldrums, almost doubling from half-a-cent to 1c in early trade yesterday before easing back to 0.8c after reporting enhanced confidence in its Salobo copper and gold project in Brazil.
- Ventnor Resources added 0.8c to 2.2c for one of the more unusual reasons - investor interest in a silica project near Eneabba on the west coast of WA. Silica is simply a pure form of sand, a very basic product enjoying strong demand on construction projects in Asia – and a commodity tipped by London-based Bernstein Research for a strong future.
- Perseus Mining confirmed confidence in its Yaoure gold project in the African country of Ivory Coast with investors lifting the stock’s share price to 33.5c, but with analysts at the investment bank, Citi, tipping a future price of 52c.
- Zinc Mines of Ireland saw its share price double on Wednesday to 0.8c, before easing back to 0.6c after reporting thick and high-grade zinc mineralisation at its Celtic Tiger project in Ireland, and
- Auroch swam against the cobalt tide. Shedding 2c to 24c despite reporting additional evidence of cobaltite at its Tisova cobalt, copper and gold project in the Czech Republic.
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