Recent Updates On Three Mining Stocks – GSM, AUL & OBM

S&P/ASX 200 Materials (Sector) provides investors with a benchmark that reflect those companies constituting S&P/ASX 200, which are classified as material sectors and sub-industries. In the past three years, the index is up by 21.61%.

S&P/ASX 200 Materials (Sector) (Source: S&P Website)

Golden State Mining (ASX: GSM)

On 28 June 2019, Golden State Mining (ASX: GSM) reported that reverse circulation drilling was commenced at the Light of Asia deposit at its Cue Gold Project in Western Australia. GSM also reported few updates on Four Mile Well Project and Cuddingwarra.

Drill Area Location at Light of Asia North & South (Source: Company’s Announcement)

Cue Gold Project – Light of Asia North & South

The drill program of Light of Asia North & South was designed to test the extensions of the high-gold mineralisation intersection at 18GSLARC0006 (drill hole), which hosts 3m at 20.1g/t (from 64m), including 1m at 56.6g/t. Further, the intersection is 500 metres north to the main Light of Workings, and the program also extends to the testing for strike extension of the mineralisation to the south of main workings. GSM expects to undertake 1,000m of reverse circulation (RC) drilling to target extensions of the historic high-grade workings.

Four Mile Well Project

A geochemical sampling program was started by the company to infill & follow up on a number of anomalies defined by the miners in the past. It was reported that GSM expects to target the similar mineralisation found at the Lancefield Mine (Prod.1.3M Oz) ~10km to the south, and assay results are expected by July.

Cuddingwarra

A geochemical program would be commenced at the Cuddingwarra project located ~15Kms west of Cue Townsite. It was reported that the program targets to evaluate various untested geophysical targets, and GSM expects to complete the program early July and assay results are expected in August.

On 28 June 2019, GSM’s stock last traded at A$0.075, up by 7.143% from the previous close. The performance of the stock in the past three months and one month is -26.32% and +14.75%, respectively.

Austar Gold Limited (ASX: AUL)

On 28 June 2019, Austar Gold Limited announced the completion of initial maiden Inferred Mineral Resource estimate for the Rose of Denmark mine. The Rose of Denmark mine in within MIN5299 ~70km southeast of Mansfield in Eastern Victoria, and it is wholly-owned by Austar Gold Limited.

JORC Mineral Resource

As per the release, Austar Gold collaborated with Mining One Consultants Pty Ltd to estimate a maiden Inferred Mineral Resource at the Rose of Denmark mine. Also, it is considered that the resource consists of Inferred Resources only due to the preliminary nature of the exploration and inherent uncertainties while defining the mineral structures. Further, the Inferred Mineral Resource utilised input from 2,900m of drilling from 69 diamond drill holes (ROD001 to ROD061), which were completed by the company, and five historical diamond drill holes (ROD1205, ROD1207-1209 and ROD1212) drilled in 2012. Final tonnage and ounce are below shown in the figure.

Final Tonnage & Ounce (Source: Company’s Announcement)

Exploration Target

According to the release, following the estimation of maiden Inferred JORC Resource for the Rose of Denmark mine, Austar Gold also completed the estimation exploration target for the mine. Also, the exploration target was estimated through the current resource exploration drilling data, resource block modelling data, and calculated historical production figures. Furthermore, the exploration target was to a nominal depth of 300 metres below the level of the main adit, which had been estimated to be in the range of 100,000 to 200,000 tonnes at a grade within 5 – 8 g/t Au for ~ 16,000 to 51,000 ounces of contained gold.

Reportedly, due to insufficient exploration to estimate the mineral resource, the exploration target is conceptual in nature, and the company expects that additional exploration might result in the estimation of a Mineral Resource. Also, future exploration would be undertaken to determine the veracity of the target, and Austar is working on exploration budgets to enable follow-up drilling in the near-term. In addition, the company mined to the depth in excess of 800 vertical metres at several dyke bulges hosted gold deposits in the Woods Point – Walhalla goldfields.

Follow Up

Austar Gold reported ongoing analysis would be undertaken to identify higher-grade area having positive potential, which could be extracted through the underground mining methods. Further exploration would identify the other near-mine opportunities to enhance and grow the resources identified as of now.

Near Term Developments

Reportedly, limited mining continues at the gold-bearing structure above the Rose of Denmark adit, which would allow more enhancement to the geological structural model of deposit; meanwhile, it would produce additional mil feed for the morning star process plant. In addition, the company is engaged with Victorian EPA for the discussions of a formal discharge permit approval process for the most appropriate form of water treatment process on the site. Importantly, additional tests and studies are underway, which would allow the company to apply for a formal mine work plan required for unlimited mining via an unconventional decline.

On 28 June 2019, AUL’s stock closed flat at A$0.004. The stock in the past one year and YTD gave a return of -42.86%. However, the stock gave a positive yield of 33.33%.

Ora Banda Mining Limited (ASX: OBM)

Ora Banda Mining Limited (ASX: OBM) formerly Eastern Goldfields Limited was reinstated to the ASX on 28 June 2019, following a successful recapitalisation process. On 25 June 2019, the company changed its name to Ora Banda Mining Limited from Eastern Goldfields Limited (ASX: EGS) following the shareholder approval at the company’s general meeting of shareholders held on 7 June 2019. OBM also reported few updates pertaining to the capital structure and drilling plans.

Capital Structure

According to the 28 June 2019’s announcement, Ora Banda has 485,719,962 shares on issue, and out of these shares on the issue 114,540,262 of these subject to voluntary escrow. Further, the details of the capital structure are below, which had been detailed in the announcement dated 26 June 2019.

New Capital Structure (Source: Company’s Announcement)

Activities

It had been reported that work on the ground was commenced, and core samples from several previously drilled holes at the high-grade Waihi area were not assayed while drilling due to funding constraints. Currently, the core samples are at the assay laboratory for analysis, and the assay results are anticipated in the coming weeks.

Un-Assayed Drill Holes (Source: Company’s Announcement)

Position

As per the release, the balance sheet of the company is strong now that is free of all debt and creditor claims. Currently, the gold prices are at near record highs (+A$2000/oz) – Ora Banda is very well capitalised with 15 million in cash to progress in the planned resource drill out, definitive feasibility study and regional exploration program.

In a market update released on 19 June 2019, the company advised the shareholders and option holders that the shareholders approved the consolidation of issued capital as 15 securities to be consolidated to 1 security, which occurred on 20 June 2019.

New Dawn

The company released a presentation for the general meeting held on 7 June 2019. According to the presentation, a group of supportive stakeholders that includes shareholders, creditors and New Board would provide a clean de-risk start for the company. Ora Banda would focus on capitalising on the strategic and prospective landholding through detailed mine planning and exploration & resource definition. Furthermore, the company would target a robust Definitive Feasibility Study (“DFS”) to underpin future project development, which is expected to complete by 2H 2020 – it would be first opportunity to optimise the ore delivery schedule and maximise cash flow while ensuring strong and de-risked foundation.

Creditor’ Settlement & Capital Raising

According to the presentation, the company’s major secured creditor and key financier, Hawke’s Point Holdings I Limited proposed the Deed of Company Arrangement (DOCA); subsequently, creditors voted in favour of DOCA in February 2019. Furthermore, all claims and debts existing against the company’s pre-administration were extinguished on DOCA completion. The settlement included a payment of $13.3 million in cash, from proceeds of the proposed Capital Raising and an issue of 1,393 million shares (pre-consolidation basis). On 28 May 2019, the company had announced the completion of $30 million capital raising, and the control over the company was returned to the Directors.

On 30 April 2019, the company announced a capital raising plan to raise in the range of minimum $30 million to maximum $40 million, which was sufficient for the company to be debt free and well-funded for the strategy. According to the presentation, the capital raising comprised two aspects an Entitlement Issue and Converting Note. Also, the entitlement issue aimed to raise ~$7.6 million while the converting note issue aimed to raise the aggregate of $30 million to $40 million. Furthermore, the offer price and conversion price was 1 cent per share (a pre-consolidation terms), which was similar for the entitlement issue and converting note issue.

On 28 June 2019, OBM’s stock closed flat at a price of A$0.16. In the last 12 months period, the stock has given a negative return of 63.81%.


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