Resources Star On The Gold Coast
I had the pleasure of attending Read Corporate’s Resources Rising Stars (RRS) conference on the beautiful Gold Coast a few weeks ago.
For those that might be unfamiliar with the event, the annual investment get-together (now in its twelfth year) is a gathering of emerging resource companies on the one hand - and independent investors (mostly self-funded retirees) on the other.
Throw in a few independent analysts, financial advisors and resource sector journalists – and you have a successful recipe for a truly unique, informative and useful conference in what is a wonderful and relaxed setting – the Royal Pines Resort.
And as an added bonus, the two-day affair is fully catered and free for attendees.
This time around there were more than 600 investors and a total of 23 presenting companies. As a resources analyst who’s typically accustomed at conferences to being confronted with hordes of service companies and all manner of hangers-on, RRS is truly a refreshing change.
What was most notable about this year’s event was the quality of the companies that attended. Due largely due to the high rate of attrition in the resources sector as a result of dwindling cash balances and poor performers, it really is a case of ‘survival of the fittest.’
This year’s RRS featured the best grouping of junior resource companies that I’ve so far come across. In essence, the vast swathes of ‘dead wood’ in the market are now being cleared, allowing high-quality emerging companies - with cash, real projects and high-quality management – to have their stories properly heard.
So what was my verdict on the best presentations? Well, that’s a difficult one – as there was a wide range of companies encompassing different commodities, geographic locations and stages of evolution. At the end of the day, what might suit one investor might not necessarily be so appropriate for the next.
What I found heartening though was the overall quality of projects was extremely good, with companies having definite strategies about how they were going to advance their projects and generate shareholder wealth.
So here is my stab at the best three RRS conference opportunities.
Pilbara Minerals (ASX: PLS): the company is generating strong market interest and importantly share price appreciation as a result of aggressive exploration, appraisal and pre-production activity on its Western Australian lithium and tantalum assets. Lithium in particular is in the headlines as a result of its use in new-age technological applications, particularly energy storage in high-tech batteries.
Managing Director Neil Biddle advised in his presentation of a sizeable boost in the Pilgangoora Inferred lithium resource of 229%, together with a 56% increase in the Indicated resource. The increases were based on a program of infill drilling that has targeted the previously-untested Western and Central pegmatite systems, which remain open at depth and along strike.
The results were well received, with the stock hitting an all-time high of $0.32 during the course of the conference. The stock has since continued its strong share price run, hitting a fresh all-time high of $0.40.
Pilgangoora has now been confirmed as the world’s second largest lithium deposit - and even more significantly one of the highest-grade deposits globally – with the added advantage of having a significant tantalite component that can help reduce operating costs by providing a valuable by-product credit.
The company now has sufficient confidence in the scale and quality of the deposit to press ahead with a Feasibility Study – with key elements of this work already well underway – as Pilbara aims to get the project into development as quickly as possible. Its production strategy will be supported by near-term production and cash flow from its soon-to-be-commissioned Tabba Tabba tantalum project.
Orinoco Gold (ASX: OGX): Managing Director Mark Papendieck painted a very attractive picture of a company that’s steadily transitioning from gold hopeful to gold producer in early 2016. Orinoco represents a higher-risk/higher-reward investment opportunity due to the high-grade nature of its Brazilian gold projects.
Its flagship Cascavel gold project will see initial development of a small-scale/low-cost start-up mining operation, with plans to increase both the resource base and mine-life through cash flow-funded exploration. This will minimize both initial capex costs and overall risk exposure. Just as importantly the company has assembled a highly-experienced underground mining team.
Evidence of growing market interest is reflected in Orinoco’s strong share price performance, hitting a 2-year high during the course of the conference around $0.18, before climbing further to its current price around $0.23. There appears to be a re-rating taking place ahead of Cascavel production, with all project timelines so far being met. Another major benefit is the fact that the Brazilian Real gold price is the best-performer in the world at present, thus boosting project economics – outshining even the Australian dollar gold price.
Cascavel forms part of its broader Faina Goldfields Project, encompassing around 300 sq km within Central Brazil. Simultaneous with ongoing development and eventual production, Orinoco is assembling an attractive pipeline of exploration and growth opportunities. The company is confident that the mineralised gold system likely extends south from its developing Cascavel mine (1M oz resource potential) and north from its Sertão project (1M oz resource potential), with numerous gold anomalies in between.
Kibaran Resources (ASX: KNL): there’s been a lot of hype surrounding the graphite space over recent years, with all sorts of bold claims about escalating demand growth via new-age energy storage applications applications in modern-day batteries. Kibaran’s Managing Director, Andrew Spinks, is not one to become involved in over-the-top self-promotion – in fact he’s quite the opposite, preferring to let his company’s project credentials speak for themselves.
Kibaran maintains a quality portfolio of Tanzanian graphite projects at varying stages of maturity, in a country that boasts a solid mining history that includes graphite mining and production. Importantly, Kibaran’s board has always demonstrated a highly-commercial attitude to advancing Kibaran’s graphite projects, choosing to align the company with high-quality partners and maintaining a conservative approach to promotion and project timelines.
Kibaran’s share price performance reflects ongoing volatility, not only within the junior resource sector, but specifically the graphite sector. This volatility however masks what has been an extraordinarily strong 12-month period for the company, comprising high-grade drilling results, exceptional metallurgical test-work results, an upgraded JORC resource, the release of a Scoping Study, the completion of feasibility and project evaluation studies, along with the formalizing of an off-take deal with ThyssenKrupp.
Kibaran appreciates the value of first-mover advantage in the burgeoning graphite industry and accordingly is seeking an accelerated path to production for its high-grade, low-impurity flake graphite. Whilst other companies are talking, Kibaran is doing – culminating this year in off-take agreements with ‘real’ customers in ThyssenKrupp and also funding negotiations with ‘real’ lenders in the form of German banks.
All in all it was a great conference and the quality of presentations was first-class and there were many other stories that will be of interest to investors. The geographic scope was broad and included Australia, Africa and South America - whilst the commodity spread comprised gold, nickel, zinc, niobium, graphite, bauxite, lithium, diamonds, potash and mineral sands. I therefore urge you to take a look at the Resources Rising Stars website and click on the following link to be able to access all presentations http://resourcesrisingstars.com.au/infopage/gold-cost-conference-2013
I look forward to seeing you on the Gold Coast at RRS in 2016!
Resources Rising Stars Wrap Up Interviews
|Ian Levy from Australian Bauxite||Chris Tziolis from Rum Jungle Resources|
|Trevor Matthews from MZI Resources||Paul Poli from Matsa Resources|
|Stephen Keenihan from Transev Energy||Glenn Dovaston from Millennium Minerals|
After a decade as a broking resources analyst with Intersuisse, Gavin helped establish the Fat Prophets Mining Report during 2005, writing and producing the report until he established MineLife during late 2010. He writes about mining and energy companies via his MineLife reports.
Disclaimer: Gavin Wendt, who is a director of Mine Life Pty Ltd ACN 140 028 799, compiled this document. It does not constitute investment advice. In preparing this report, no account was taken of the investment objectives, financial situation and particular needs of any particular person. Before making an investment decision on the basis of this report, investors and prospective investors need to consider, with or without the assistance of a securities adviser, whether the information is appropriate in light of the particular investment needs, objectives and financial circumstances of the investor or the prospective investor. Although the information contained in this publication has been obtained from sources considered and believed to be both reliable and accurate, no responsibility is accepted for any opinion expressed or for any error or omission in that information.