Blue-chips stocks have underperformed in 2016, so it makes sense to look beyond the traditional blue-chip stocks and also focus on the small-mid cap sector. Above all, companies with a focus on gold mining and exploration have outperformed the broader market. Australian gold and base metals exploration company Alice Queen Limited (ASX:AQX) is one of those companies that many have not heard of yet.
Incorporated in February 2012, Alice Queen listed on the Australian Securities Exchange in November 2015 via a reverse takeover (“RTO”) with Callabonna Resources Ltd (ASX:CUU).
One of Alice Queen’s flagship projects is Horn Island, a brownfield’s project, incorporating an abandoned open pit that was mined between 1987-89. Certified resources have yet to be defined. The Horn Island Project is situated mainly within open tropical eucalypt woodland or forest and is serviced by existing road and electricity infrastructure. Alice Queen has subsequently focused on exploration incorporating the former open pit and surrounding locale.
However, further upside stems from the upcoming activity at the grass roots exploration project ‘Looking Glass’. The project has never been explored for gold or base metals in its underlying basement rocks. Whilst Alice Queen has sufficient funding to complete upcoming drilling, we note that a future resource delineation drilling program is beyond the scope of Alice Queen’s current capital budget, and hence will require additional funding. Drilling is subject to technical risks and there is no guarantee economic mineralisation will be encountered.
The company is now planning to drill further holes in 2016 and upcoming activity across Alice Queen’s portfolio could galvanise interest towards the stock if outcomes are technically favourable.
Alice Queen offers speculative exposure to gold and base metal markets through a combination of exploration assets covering known mineralised structures and grass roots opportunities. With upcoming high impact drilling at Looking Glass representing the major near term value driver, and the company valued at less than $5million we believe it makes sense to keep an eye on this stock.