The coronavirus outbreak has jolted the market, and the major asset classes across the board are facing pressure in the wake of prevailing negative sentiments among market participants. The equity market is under pressure with the S&P/ASX 200 index down over 20% from its recent high.
Taking cognisance of other asset class performance, it is comforting to know that the gold prices have barely budged and trading shy of 8% from the recent high, a major beat and thus behaving true to its “safe haven” tag.
Interestingly, many market participants attribute the recent fall in gold prices to investors selling gold to cover margin calls/losses in other parts of their portfolios. Thus, the fall is more technical in nature than structural.
Encouraging Gold Chart Patterns- A Bullish Flag
Gold recently broke out of a bullish flag pattern and as per technical analysis theory, the gold prices are anticipated to reach levels of $2,800 in the near term.
Depreciating Home Currency Augurs well for Gold Players
The Australian dollar has also faced coronavirus brunt, with the currency hitting 11-year lows recently against the U.S. dollar. AUD hit levels of 0.63 before recovering to 0.65. The weak AUD bodes well for the ASX gold players with higher realised export value.
With bullish gold projections and currency advantages, it becomes pertinent to look at small-cap ASX listed gold players, who are well-positioned to capitalise on the growing positive sentiments for companies backed by the right assets at the right time.
Let’s have a look at 8 ASX listed Small-cap Companies.
Alice Queen Limited-An Advanced Explorer Targeting A Plethora of Gold and Copper Projects in Australia
Alice Queen Limited (ASX:AQX) is an advanced gold and copper explorer, developing several exploration and mining opportunities while focusing on advancing its portfolio of highly prospective projects in Queensland and New South Wales.
AQX Key Projects–
Flagship Horn Island Gold Project
- An earn-in and joint venture agreement with St Barbara Limited.
- Based on an airborne geophysical survey and surface soil sample program, AQX has unveiled high priority targets for follow up for the project.
Yarindury and Mendooran Projects - Highly Prospective Cu/Au Porphyry Project
- Enhanced prospectivity of these projects in the North Molong Belt, owing to a significant discovery in the nearby area.
Recently, AQX received binding commitments from investors for a $ 3.88 million capital raising program, targeted towards funding the Company’s drilling activities at its assets in New South Wales (NSW).
The excellent returns (100%) of the Company over the last one year and significant progress of key projects, along with increasing price of its asset - gold, opportunities in the global market and higher export volumes of Australia, Alice Queen seems as an attractive player in its market.
AQX is trading at $0.014 on the ASX as on 13th March 2020, with a market cap of $13.97 million.
Great Southern Mining Limited-Capitalizing Over Strategic Opportunities
Great Southern Mining Limited (ASX:GSN) a mining exploration company based in Western Australia, primarily focusses on gold, copper exploration and evaluation through its projects in Queensland and Western Australia.
GSN’s Strategic Moves
The Company’s strategy of acquiring valuable assets across Australia turned out to be a driver of GSN’s prospects. One of such acquisition being the most valuable and prospective 100%-owned Cox’s Find Gold Project in August 2019. The project is said to have huge potential reflected by high grade intersections in its second leg of results.
In November 2019, GSN made a strategic decision to significantly expand maiden drilling program at the Project and has recently applied for expansion through highly strategic tenement. Prior to this, GSN initiated a tenement wide shallow Geochemical Aircore drilling program on a 100 metre by 50 metre grids at the Project.
Location of additional exploration license application (Source: Company's Report)
Under its all-round strategy for ensuring effective operations and management, GSN appointed Mr Mark Major as the Chief Operating Officer.
Proposed Issue of Securities
GSN has also proposed the issue of
- 800,000 fully paid ordinary shares at a deemed price of $0.032 per share;
- 2,000,000 listed options exercisable at $0.05 per option on or before 04 September 2022 to be issued at a deemed price of $0.013 per option;
During the half year ended 31 December 2019, the Company’s total assets increased from $239,453 on 30 June 2019 to 1,174,848 on 31 December 2019.
GSN is trading at $0.041 on the ASX as on 13th March 2020, with a market cap of $15.33 million.
Kaiser Reef Limited – Right Time, Right Place, Right Commodity, a Junior Gold Explorer Set to Storm ASX
Kaiser Reef Limited (ASX:KAU), the new Gold explorer entrant to the ASX that holds interests in the Stuart Town Gold project in the New South Wales.
The Stuart Town mining district is located on the East Lachlan belt, one of the hottest mining grounds. The au courant audience must know that the Lachlan belt is the most sought mining ground and is being pursued by all industry majors.
Stuart Town – Perfect timing for the right project
The Kaiser Reef’s Stuart Town mining ground lies between the Alkane’s recent Boda discovery and the Newcrest’s Cadia & Ridgeway operations, Australia largest Gold mine.
Kaiser Reef’s Stuart Town Gold Project in the mining ground of NSW Source: Kaiser Reef
The Alkane’s mega Boda drill on the large intrusive system resulted in a broad intercept of 502 metres with 0.48g/t gold and 0.20% copper from 211 metres downhole, The Newcrest’s Cadia mine produced 913,000 ounces of gold at an AISC (All-in Sustaining Cost) of $132 an ounce. The region hosts multiple gold mines with the presence of multi-commodities, thereby earning significant by-product credits and reducing the cash costs.
Limited or Insignificant drilling has been conducted on the Stuart Town mining property so far with no mining recorded beyond 65 metres. The project hosts a potentially large intrusive system, without any significant exploration record.
Kaiser Reef has planned a systematic exploration plan to identify and schedule the exploration programs, with further geophysical & geochemical programes on the property leading to the metallurgical testing, in order to execute the project efficiently, in times when the Gold market is booming.
IPO & Returns
Kaiser Reef raised a total sum of $4.5 million through an initial public offering of 22,500,000 shares at an issue price of $0.20 per share, the subscription to which closed earlier than its tentative closing date of 7 February 2020, following the overwhelming response from the investors. The Company listed on the ASX on 27 February 2020 with ticker KAU. The IPO was one of the leanest, and since listing the stock has provided a return of ~30%.
KAU is trading at $0.190 on the ASX as on 13th March 2020, with a market cap of $6.19 million.
King River Resources Limited- Developing Existing Resources and Exploring New Horizons
King River Resources Limited (ASX:KRR), is a Perth-based speciality metals explorer, with a portfolio of wholly owned tenements covering ~2,534km2 and applications pending for ~878km2 in the East Kimberley region in Western Australia. Additionally, the Company has wholly owned tenements in Northern Territory.
Apart from progressing the development of its world-class Specialty Metals project, KRR is also engaged in other exploration projects for copper, gold and silver.
The Company has completed a Reverse Circulation (RC) drill program at its wholly owned high-grade Mt Remarkable gold project, covering surface rock sampling, reconnaissance exploration and ground magnetic survey. Drilling targeted the Trudi vein, in addition to veins identified during reconnaissance exploration.
Best drilling results include –
- From the Trudi vein, 7m @ 0.85g/t Au including 1m @ 2.42g/t Au in strong quartz adularia veining
- From the Jennifer North vein, three holes intersected gold mineralisation on a quartz adularia vein
KRR is trading at $0.025 on the ASX as on 13th March 2020, with a market cap of $31.22 million.
Kingwest with Right Assets at Right Time
Kingwest Resources Limited (ASX:KWR) is a Australia-based mining and exploration entity, whose key focus is the development of its highly-prospective Menzies Gold Project (MGP). Situated 130km to the north of the Super Pit in the Western Australia’s Goldfields, Menzies is one of the highest-grade and significant scale Australian gold fields.
What makes Menzies a High-Grade Gold Project?
The MGP has noted historical production of over 800,000 ounces of gold at 19 g/t Au which includes 150,000 ounces at 2.6g/t Au from open cuts in the 1990’s and 650,000 ounces of gold at 22.5 g/t Au from underground prior to 1950.
The MGP includes multiple high-grade deposits and has considerable exploration upside and production potential. Hosted along the Menzies Shear Zone, all deposits of MGP are situated within granted Mining Leases and are 100 per cent owned by Kingwest.
Moreover, it offers an opportunity to the Company to enter production phase with minimal CAPEX due to availability of water, power and technical skill support and, its proximity to established process plants allowing rapid production.
Drilling Commenced at Menzies
Recently, the Company has commenced ~8,300m drilling program (Reverse Circulation and Diamond core) at the project’s three known deposits - Yunndaga, Lady Shenton and First Hit, which is likely to be completed in May 2020.
The Company is targeting high-grade extensions to the existing known mineralisation within these deposits via its exploration drilling activities at the MGP. It has also developed exploration targets for these main mineralised systems, which are quantified in the below table:
Subject to the results of this drilling program, the Company will undertake further drilling (including Resource Definition drilling) later in 2020.
KWR is trading at $0.095 on the ASX as on 13th March 2020, with a market cap of $12.19 million.
Middle Island Resources Limited- The Phoenix Amongst the Gold Miners
Middle Island Resources Limited (ASX:MDI) is Australia’s emerging, under-valued developer/explorer in the buoyant gold market, which is exploring gold frontiers at its flagship Sandstone gold project.
The Company’s 100%-owned Sandstone gold project consisting of 180 sq. km and comprising a fully permitted processing plant of 600,000tpa capacity and all associated infrastructure on granted Mining Leases, is its strongest force in the current record gold market.
A low Capex Project- Sandstone Project
Interestingly, the Sandstone project is a low capex project as it has an existing processing plant which can be refurbished at a cost of just $10.3 million (comprising contingency and owner’s costs) within five months. It is imperative to note that designing and constructing a similar-capacity processing plant will cost ~$60 million and take at least a year.
Sandstone Processing Plant (Source Company Website)
Its Sandstone project has significant current JORC 2012 Indicated & Inferred Mineral Resources of 123,000 ounces, and an underground Exploration Target of 24-34Mt @ 1.1-1.4g/t Au representing 900,000 to 1.5M ounces gold.
Going Strong Technically and Operationally
The Company is continuing with one of the largest gold drilling programs in 2020 at Sandstone to define further open pit Mineral Resources at fourteen gold targets and deposits.
Recently, it has identified a potentially significant new 600m gold target at the Sandstone gold project via ~1,800m aircore drilling program concluded in January 2020, which will be tested under the continuing drilling campaign as part of the Phase I RC program.
The Company will employ the additional Mineral Resources obtained from the drilling campaign to its Sandstone stand-alone PFS, which is in the process of update. The PFS update is expected to be finalised in mid-2020, which along with record $ gold price is likely to underpin the long-awaited mill recommissioning decision, with a genuine likelihood of gold production by early 2021.
Middle Island is well on track to commence production at its Sandstone project in line with its overarching strategy, backed by strong support from an active global investor, Mr Stephen Copulos and a highly skilled management team.
In addition, the Company’s newly identified Barkly IOCG Super-Project in NT and successful $2.8 million capital raising strengthens its position in the buoyant gold market.
MDI is trading at $0.008 on the ASX as on 13th March 2020, with a market cap of $12.36 million.
Musgrave Minerals – Western Australian Gold Pioneer Developing Flagship Cue Project
Musgrave Minerals Limited (ASX: MGV) is an active Australian gold explorer, focusing on the Cue Project in the Murchison region, WA, hosting considerable gold and copper deposits.
Musgrave has reported remarkable success at Cue with high-grade gold discoveries at Lake Austin North and Break of Day, along with high-grade intersects at the new Break of Day link-lode and Mainland-Consols.
Expanding Gold Resources
The Cue Project witnessed the total gold resources increasing to 6.45Mt @ 3.0g/t Au for 613koz Au, following latest Lena’s Mineral Resource update, representing 112% uptick from the previous Mineral Resource (July 2017). The update also marked 72% increase in Indicated resources, with 28% increase in gold grade to 2.3 g/t AU.
MGV is currently targeting expanding the gold resources through extensional drilling and discovery, thereby aiding studies that will determine a sustainable path to near term development. Musgrave recently reported financial turnaround.
MGV is trading at $0.074 as on 13th March 2020, with a market cap of $32.45 million.
Ora Banda Mining Ltd- Advancing Six Gold Projects in the Prolific Eastern Goldfields of Australia
Ora Banda Mining Ltd (ASX: OBM) a gold exploration company, is focused on unlocking maximum value from its highly-prospective land tenure, The Davyhurst Gold Project, which is a “District Scale” project spanning 1,336 km2 of highly prospective greenstone belt covering a 200 km strike. Ora Banda is conducting high impact exploration, resource definition and upgradation activities to define a mine plan at the five priority targets - Riverina, Waihi, Callion, Siberia and Golden Eagle with Mineral Resource of 11.9Mt @ 2.8g/t for 1.05Moz, located across six sub project areas.
There is favourable infrastructure in the vicinity including Extensive Road Network (Rav 10 Rated), 160 Room Camp, Admin buildings, Core Shed, Workshops, Airstrip, etc. with a 1.2Mtpa Processing Plant that has a low start-up costs, with a cost to replace circa of $ 100 million and a recommissioning cost of ~$ 8.5 million, estimated on a EPCM basis.
Davyhurst Processing Plant (Source: Investor Presentation)
Most importantly, Ora Banda has been receiving encouraging results from its drilling activities that continue to build upon its Robust Resource Inventory of 23.8Mt @ 2.6 g/t for 2 Moz Au at Davyhurst. A Feasibility Study is being is nearing completion for release in early 2H 2020 while a Definitive Feasibility Study (DFS), underpinning a “capital light” production restart”, is being targeted for Q3 CY2020.
The company is well capitalised with ~ $ 23 million cash and no debt and aiming to commence production by Q1 2021.
OBM is trading at $0.110 on the ASX as on 13th March 2020, with a market cap of $70 million.
Market is there to serve you, not to guide you- Benjamin Graham
ASX 200 VIX Index, the barometer for measuring market volatility is spiking for the past few weeks, largely on back of the coronavirus fears.
Market participants across the globe are fearful and seeking safety over returns, however prudent investing calls for investors to look for opportunities during times like these by following their investment framework and reap benefits over the long term.
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