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Gold glitters in perfect storm Part 3: The final five stocks to keep on your radar

Published 17-MAY-2019 09:31 A.M.


8 minute read

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In part two, we took a look at Bellevue Gold (ASX:BGL), Dateline Resources (ASX:DTR), EganStreet Resources (ASX:EGA), Kingston Resources (ASX:KSN) and Mako Gold (ASX:MKG).

Today, we examine the remaining five gold stocks that could give you more bang for your buck than the top end of town.

Nusantara Resources

Nusantara Resources Ltd (ASX:NUS) is a gold development company with its flagship project comprising the 1.1 million-ounce Ore Reserve and 2.0 million-ounce Mineral Resource Awak Mas Gold Project in South Sulawesi, Indonesia.

The project has over 135 kilometres of drilling completed in more than 1,100 holes, providing the group with a good understanding of the area’s geological features, an essential element in establishing a successful mining strategy.

The project is 100% owned through a 7th Generation Contract of Work (CoW) with the Government of Indonesia (GoI).

The CoW area was secured prior to the current Mining Law and has recently been amended by mutual agreement to align with the current law.

Masmindo, a wholly owned subsidiary of Nusantara, has sole rights to explore and exploit any mineral deposits within the project area until 2050.

Nusantara’s development strategy is for construction of a modern, low strip ratio open pit operation with ore processed by standard carbon-in-leach (CIL) processing delivering high gold recoveries.

Environmental approval has already been received for the project, which is favourably located in non-forestry land close to established roads, ports, airports, and grid power.

Nusantara’s second strategy is to grow the resource base and support a mining operation beyond the initial project life of 11 years.

Multiple drill-ready targets have already been outlined, extending from the three main deposits and in other areas of the 140 square metre CoW.

During the March quarter, three holes for 645 metres were drilled to test the mineralisation seen at Puncak Selatan in the surface trench work.

This is a strategically important prospect area and the drilling program has confirmed the exploration geology model, further supporting the significance of ‘over-printing’ structural systems controlling mineralisation.

The resultant geological interpretation of this first-phase drilling has now provided full confidence to progress with the proposed geophysics program in the near mine area in the June quarter.

Near-term catalysts include developments regarding project financing, as well as completion of the Salu Bulo extension geophysics program and advanced metallurgical testing.

Nusantara has been well supported in the last week with positive sentiment towards the gold price perhaps contributing to a share price increase of more than 10%.

Prodigy Gold

Shares in Prodigy Gold NL (ASX:PRX) surged more than 25% on Thursday morning, hitting a high of 11 cents after the company signed a binding Exploration Farm-in and Joint Venture Agreement (JV) with Newmont Exploration Pty Ltd, a wholly owned subsidiary of Newmont Goldcorp Corporation.

As the world’s largest gold miner, Newmont’s entry will assist Prodigy in advancing its exploration program at the Tobruk Project in the Tanami province of the Northern Territory.

Under the agreement, Newmont Goldcorp is to sole fund up to $12 million in exploration expenditure to earn up to a 70% interest in the Tobruk Project, and provide a total of $2.5 million in cash payments to Prodigy Gold.

The agreement covers Prodigy Gold’s tenements and tenement applications at the Tobruk Project, adjacent to Newmont Goldcorp’s Callie Gold Mine.

Importantly, Newmont Goldcorp has a long and successful history in the Tanami area including the development of the nearby Callie Gold Mine into a world-class gold deposit.

Exploration work at Tobruk will commence in the June quarter.

Prodigy Gold now has more than $33 million in funding agreements from JV partners to accelerate discovery across the company’s entire exploration portfolio, including JV’s with Independence Group (70/30) and Newcrest Mining (earn-in stage) that have already generated high-quality targets which are currently being drilled.

Key logistical advantages include the 450 kilometre gas pipeline to the Newmont Goldcorp Granites Plant recently constructed and the Federal Government’s commitment to upgrade the Tanami Track, which will improve the economics of any future discoveries.

With near-term exploration to be conducted at Tobruk, as well as Prodigy’s Lake Mackay joint venture project with Independence Group (ASX:IGO) there are a number of potential share price catalysts on the horizon.

Strategic Energy Resources

While Strategic Energy Resources Ltd (ASX:SER) isn’t a pure gold play, its high-quality gold and copper-gold assets, one situated in the Olympic Dam IOCG (Iron Oxide Copper Gold) corridor and the other in a highly prospective region of North Queensland, make it too good to pass over.

Regards the former, SER was awarded an exploration licence (EL6335) in April for a landholding 60 kilometres north-east of Oz Minerals’ (ASX:OZL) prolific Prominent Hill copper-gold mine, situated in the IOCG province of South Australia.

This is one of the most economically viable mining regions in the world, courtesy of the by-product credits from gold production.

As well as Prominent Hill, Oz Minerals also has the Carapateena copper-gold project which lies to the south-east of Olympic Dam.

A recent scoping study showed that the mine could produce approximately 120,000 tonnes of copper per annum at all in sustaining costs of about US$0.95 per pound, implying a healthy margin of about US$1.80 per pound based on the current copper price.

Deposits in this region have historically yielded large, long life production, a good reason to keep an eye on SER.

However, investors focused on assets that are more of a pure gold play would be impressed with SER’s Saxby Gold Project in the Mt Isa province of Queensland.

The Saxby Gold Project is the most significant gold exploration prospect in the north-east Mt Isa Province region.

Historic drilling includes high grade intersections of 17 metres at 6.75g/t gold and 15 metres at 9.09 g/t gold in two holes 190 metres apart.

SER is targeting gold mineralisation hosted in basement rocks buried beneath younger sedimentary cover of the Carpentaria Basin.

Preparations for drilling are well advanced with management expecting to commence around July.

Several potential joint venture partners have conducted thorough due diligence on the Saxby project, but in the absence of a joint venture partner, SER will sole-fund the upcoming drilling program.

Saturn Metals

Shares in Saturn Metals Ltd (ASX:STN) have increased more than 50% since April.

The company raised $1.5 million on Wednesday by way of a share placement priced at 21 cents per share with the funds to be used to accelerate a drilling program at its Apollo Hill Gold Project near Leonora in Western Australia.

Management anticipates that this will lead to an upgrade in the Mineral Resource which currently stands at 20.7 million tonnes grading 1 g/t gold for 685,000 ounces of gold.

Strong support for the company was apparent as professional investors participated in the placement.

Furthermore, the fact that the company has since traded at a premium to the placement price is encouraging.

In terms of Saturn’s forward outlook, the aggressive targeting of high-grade gold mineralisation around recently discovered shallow intersections bodes well for the company.

These included 13 metres at 5 g/t gold from 74 metres and 10 metres at 5.8 g/t gold from 46 metres.

The extension of the current lode, combined with the introduction of higher grade ore should substantially improve project economics.

There could also be share price catalysts in the offing as assays are pending for 18 recently finished reverse circulation and diamond drill holes.

Venus Metals Corporation

In mid-April, Venus Metals Corporation (ASX:VMC) entered into a purchase agreement to acquire a combined 90% interest in two highly prospective tenements in Western Australia.

The tenements, owned by well-respected mining identity from Paynes Find, Mr Doug Taylor, and his wholly-owned company, Murchison Earthmoving and Rehabilitation Pty Ltd (MER), are Currans Find (ML 57/641) and Pinchers (ML 57/642).

VMC is purchasing a combined 90% interest in the tenements alongside joint venture partner Rox Resources Ltd (ASX:RXL), and will act as manager of the JV.

Taylor will hold the remaining 10% stake.

The two tenements are strategically important for VMC, located in the central part of the Youanmi Project within and surrounded by VMC-RXL joint venture tenements.

This is a highly prospective area as Currans Find lies along strike and only five kilometres from the high grade Penny West Deposit where a promising new discovery was made in early March, followed up by the release of outstanding early stage assay results, including 5.0 metres at 28.9 grams per tonne gold.

Venus has been quick to reap the benefits of the venture with Taylor having recently identified near surface untested strongly gold mineralised quartz reefs at Currans Find.

Reverse circulation drilling at Currans North and Currans has yielded high-grade results from relatively shallow depths including 3 metres at 9.2 g/t gold and 1 metre at 6 g/t gold.

There could be share price catalysts on the horizon with management expecting to be in a position to commence a drilling program in the near term which will target untested sections of gold bearing lodes.

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S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.

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