Barry FitzGerald
It’s easy to get wrapped up in a big thematic.
And when that big thematic that has delivered for several years (yes, we’re talking about you lithium) suddenly finds itself unable to perform, it’s just as easy to get a little jaded with the stocks involved, and head to the TAB.
Garimpeiro gets it. In fact, he agrees that “95% of the exploration juniors” actually don’t deserve your attention.
“But those with active drilling programs that come up with the goods do.”
In fact, talk of the death of the junior explorer is very much premature. They never went away, and when they come up with the goods, “funding for their confirming work always follows”.
Here are two that have walked the talk so far in 2024.
Venture Minerals (ASX:VMX – 1.8c, $39.8m MC): Has from 0.7c a share at the start of the year to 1.8c mid-week for a market cap of $37.5 million.
It’s got a lot going for it, led by an industry veteran in Andrew Radonjic, and a wide range of projects from tin and iron ore in Tasmania to Julimar/Golden Grove-type prospects in WA.
The current fire under it though has been a clay-hosted rare earths hit in its home state of WA, including a “headline’’ hit of 48m grading 3,025ppm rare earths.
Venture reckons the hit is the highest grade clay-hosted rare earths exploration result in Australia.
High-grade hits in clay-hosted settings are good for sure. And 48m is nice and thick too.
But what has got Garimpeiro’s explorer-watching mates excited is the potential scale of the thing. There’s good reason behind Venture calling it “Jupiter”. And Venture has tested only a small part.
With Geraldton to the west, Lynas’ Mt Weld concentrator to the east, and the Iluka/Australian taxpayer refinery being built at Eneabba to the southwest, there’s no better place to be located with a promising project on your hands.
Turaco Gold (ASX:TCG – 12c, $70m): This West African gold explorer has come up from 7c in November when it agreed to acquire a 70% interest in the advanced Afema gold project in Cote d’Ivoire.
Cote d’Ivoire is where ASX champion of West African gold, the $2.3 billion Perseus, has two operating mines producing at sub-$US1,000/oz.
The Afema project has been idle since Canada’s Teranga Gold was overtaken by the $US4.1 billion and London-listed Endeavour Mining in early 2021. The cash and shares deal for Turaco to pick it up also saw Endeavour become a 9% Turaco shareholder.
Previous work at Afema yielded “typical West African stuff – consistent, shallow and broad mineralisation encountered along 2.9km of strike and remaining open”.
Plain English version – ounces can quickly build-up into a big resource. The usual play in that part of the world is then mine the high-margin ounces, or get taken over.
Turaco boss Justin Tremain knows all about the latter. He was previously managing director of Exore Resources which was taken over by Perseus for $65m.
Broker upgrades
Wilsons Advisory
Did somebody say ‘six-bagger in 12 months’? Yes. Wilsons Advisory did, whacking a a 12-month price target of 40c on Rumble Resources (ASX:RTR – 6.6c, $46m MC), which was trading midweek at 6.6c.
Rumble is hunting zinc-lead at its early stage Earaheedy project, 110km northeast of Wiluna in WA.
Wilsons believes zinc has been somewhat ‘forgotten’ in the battery material/electrification thematic which has taken off in recent years.
Last week, Rumble announced more significant high-grade Zn-Pb sulphide mineralisation has been intersected along strike of the Mato Prospect discovery at Earaheedy.
The latest drilling highlights a potential 3km x 3km area of high-grade Zn-Pb mineralisation, highly prospective, and likely to lead to additional resource growth.
“This resource places Earaheedy as one of the largest zinc sulphide discoveries globally in the past decade,” said Wilsons.
It’s relatively low grade stuff. But Wilsons believes “the open cut nature of any potential operation … will help to ameliorate the grade impact.”
Jarden Research
Finally something for lithium fans to stack into their hopium pipes. Jarden Research has rated Pilbara Minerals (ASX:PLS – $4.21, $12.68bn MC) a Buy, with a price target of $4.30 (vs current price of $4.10).
Despite falling lithium prices in 2023, Jarden notes PLS still generated a cash margin of $176m from operations, or $118m after sustaining capex and capitalised mine development costs.
“We calculate an AISC for the quarter of ~US$620/t, compared with current spot prices of ~US$800-900/t, a ~44% cash margin for the quarter and a ~27% cash margin even at depressed spot prices,” said the note from Jarden.
Jarden says that supports its long-held view that PLS’ Pilgangoora operation can become embedded in the second quartile of the cost curve.
“Further, Pilgangoora is free of any joint venture complications or vested interests that may impact assets that are located even lower on the cost curve,” said Jarden.
The views, information, or opinions expressed in the interviews in this article are solely those of the interviewees and do not represent the views of Stockhead. Stockhead does not provide, endorse or otherwise assume responsibility for any financial product advice contained in this article.
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