After gold’s stellar run over the past decade from $275 to $1,500 an ounce, many investors who were slow to get on board are kicking themselves over missing the boat.
However despite the recent volatility and a raft of downgrades to forecasts for commodities prices, many analysts are still gold bulls. HSBC analyst Jim Steel wrote in a note to clients that the bull market in gold “remains essentially intact.” The bank lifted its 2011 gold price target to $1,525 from $1,450 and increased its 2012 forecast to $1,500 from $1,300 per ounce. “Gold prices have retreated from record highs…but they should remain buoyed by investor concerns about the global economy, geopolitical risks, high commodity prices, easy monetary policies, and fiscal profligacy,” said Steel.
And with analysts such as Steel and Marc Faber – who recently said ‘I’m deferring any new purchases of the beneficiaries of the inflation trade, except for gold’ – forecasting gold to stay at or near record highs there may still be plenty of opportunity for the intrepid individual treasure hunter who seeks to make his or her fortune at a lucky strike. Fortunately, you don’t have to toil in the hot sun with a heavy pick and shovel nowadays. You just have to invest in the right exploratory mining company at the right time.
This week we look at several smaller companies exploring the mineral-rich areas of Western Australia and New South Wales that are currently offering shares to the public prior to listing on the ASX. Additional information is available in the prospectus for each company. The issue price of all shares offered is 20 cents per share.
888 Resources Ltd has entered into an agreement with Oroya Mining (ORO) for the right to earn an initial 70% interest in the Beaufort Gold Project. When 888 Resources issued its prospectus in April 2011, the company noted that “Gold recently reached a price of US$1458 an ounce and the price per ounce has increased 29% in the past 12 months.” Since then, gold has topped US$1500/oz. The Beaufort Project has produced 1.1 million ounces of gold from alluvials, with no primary source discovered to date. The Project covers approximately 125 sq. km. within the Victorian Gold Province. 888 Resources offered 10 million shares, together with one free attaching option for every four shares allotted. The offer will close on 27 May 2011, and 888 Resource is expected to list on ASX 15 June 2011.
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Aurelia Resources Ltd has agreed with Amex Resources to acquire 90% of certain copper and gold leases in the Eastern Goldfields region of Western Australia, Kalgoorlie. Exploration at Breakaway Dam has established a large, sulphide-rich system that may host economic copper deposits. Aurelia’s other exploratory projects in the region include gold projects Tambourah, Lady Mary and Bonnie Vale North, as well as the Hampton nickel-gold project. Independent geologist Allan Younger stated, “All five projects are in tectonic and geological settings with the potential to host significant deposits of gold, copper or nickel and remain under-explored by modern exploration techniques, and therefore warrant further examination.” Aurelia Resources offered 15 million shares, together with a 1 for 2 loyalty option to be offered all shareholders approximately three months after listing. The offer will close on 27 May 2011, and Aurelia Resources is expected to list on ASX 17 June 2011.
Naracoota Resources Ltd has acquired rights over 13 tenements in the Horseshoe Range of Western Australia, as well as all three tenements in the Fraser Range. Both projects are within the Peak Hill Goldfield of the Gascoyne Region. “The Horseshoe Project has been worked since 1897 and consistently produced good gold grades,” first from alluvial mining then from hard rock, said the company. Independent geologist Brian Davis stated that “there are several reasons why the Horseshoe lease has excellent potential for underground gold resources,” including at least three orientations of auriferous quartz veins. Naracoota offered 25 million shares. The offer will close on 20 June 2011, and the proposed ASX listing date is 24 June 2011.
Rumble Resources Ltd has entered into option agreements with Venture Minerals (VMS), Scott Wilson, and Sammy Resources Pty to acquire controlling interests in the Paulsens South Project, the Bulong Project, and the Forrestania Project respectively. The exploration company’s focus is on gold, but Rumble has identified potential economic base metal opportunities as well, particularly in the Forrestania region which has produced considerable strikes of high-grade nickel as well as gold. All projects are in Western Australia with operating mines in close proximity. Rumble offered 12 and a half million shares. The offer will close on 10 June 2011, and the proposed ASX listing date is 24 June 2011.
Commissioners Gold Ltd has a portfolio of six gold exploration projects in the Eastern Lachlan Fold Belt of New South Wales. It owns 100% of four of the projects, 50% of one project, and 70% of another. Independent geologist Peter Goldner characterised the resources component of the projects as “high risk,” noting that the inferred mineral resource in the Cowarra Project was of modest grade and no resources had been defined for the other projects. However, Goldner added that “all of Commissioner’s areas contain the appropriate geological setting for the development of the deposit styles being sought.” He suggested that the Cowarra Project’s main potential was as “a series of proximal small-tonnage medium to high-grade gold deposits that together could aggregate into a medium-sized resource.” Commissioners offered 22 and a half million shares. The offer will close on 25 May 2011, and the proposed ASX listing date is 10 June 2011.
Mining Group Ltd has licenses to earn up to 70% from the Boorara and Teutonic Projects in Western Australia with potential for gold, silver and base metals. It has also applied for a license in the Lake Christopher Project, which is prospective for gold, diamonds and uranium. Independent geologist Donald V. Horn said of the Boorara Project, “In general, the Project area appears underexplored utilising modern exploration techniques.” Of the Teutonic Project, Horn said, “Whilst modern gold exploration has been extensive in the region, there appears not to have been any systematic modern exploration for base metal mineralisation on the Project to date.” With regard to the potential uranium deposits in the Lake Christopher region, Mining Group stated that the “approval processes for uranium mining are more rigorous than conventional mines” and noted the risk that “should economic deposits of uranium be discovered, the necessary government approvals may not be granted, or may be significantly delayed.” Mining Group offered 12 and a half million shares. The offer will close on 3 June 2011, and the proposed listing date is 24 June 2011.
Remember, exploratory mining is an exciting but high-risk investment. The potential rewards are great, but if you aren’t prepared to lose your entire investment, steer clear. This is particularly true given recent commodities price volatility, and the downside risk in play after a 10-year gold bull run – the combination of which may see some IPOs simply flop.