This year has been a tough slog for gold explorers. Geopolitical and market uncertainty exacerbated by cost inflation, a limp gold price and assay turnaround delays have turned life at the junior end of the precious metals sector into something that feels like long COVID.
The seasoned investor knows markets and commodities are cyclical and that, in a soft environment, a company’s performance and the strength of its projects are the better metrics for valuation. As the lithium juggernaut showed this year, those companies laying strong foundations now are best positioned to capitalise once broader investor interest returns.
BMG Resources is one of those under-the-radar players working hard to establish strong foundations, with a just-completed third major drilling campaign at its Abercromby gold project near Wiluna proving there is plenty of upside in an underexplored pocket of Australia’s second-most productive gold region.
Cash coffers topped up, Rox Resources is eyeing a pre-feasibility study for its Youanmi gold project near Mt Magnet while Lykos Metals – just one year into its ASX journey – is connecting the dots at its Sinjakovo project in Bosnia-Herzegovina having uncovered three more highly prospective polymetallic shears at the Zekil-Erak prospect.
At Abercromby, BMG (ASX: BMG) is targeting a maiden resource at the high-grade Capital prospect where the recent seven-hole, 4000m diamond program expanded the known mineralised corridor to at least 1.3km. Results from the 5,700m regional aircore program hint at repeats of the Capital structure to the south at its three targets Barrack, Archer and Capital South.
Managing director Bruce McCracken told delegates at the RIU Resurgence conference in Perth this week systematic exploration was consistently delivering high-grade gold results yet only scratching the surface at Abercromby.
Capital hosts a large mineralised system consisting of two primary lodes over a 1.3km strike that remains open in all directions. Importantly, Abercromby is surrounded by profitable gold mines, established infrastructure and operating plants. Preliminary metallurgical test work shows the ore to be free-milling while results from further test work are expected within the next month or so.
“The project sits in the heart of what is a very significant gold producing region. There’s a lot of great projects in production of significant scale throughout the region,” Mr McCracken said.
“We have a very modest enterprise value at this point. So we represent very good buying, particularly with the resource potential and strong results we have been achieving at the Abercromby project.
“We represent great leverage to the gold market when it turns, which it will.”
Rox’s (ASX: RXL) new managing director Rob Ryan told investors in a webinar on Thursday that its flagship Youanmi project had all the makings of a highly-profitable gold mine.
As a historic mining operation, Youanmi benefits from established access routes, proximity to infrastructure and a ready made decline. Since acquiring Youanmi in 2019, Rox’ success with the drill bit has seen the mineral resource grow to 3.2 million ounces at a discovery cost of just $7/oz.
As Mr Ryan told Investor Insight, the recent scoping study prioritised the higher-grade portion – around 5 g/t – of Youanmi’s resource with the intention to generate a path to early cashflow.
Scoping studies, based on $100 million in pre-production cap-ex, have focused on Youanmi producing 71,000oz annually as a mix of gold-in concentrate and carbon-in-leach bullion for a total output of about 569,000oz over an eight-year mine life.
The company’s $4 million capital raising this month contributes to Rox being funded to carry out the pre-feasibility study and, in parallel, resource conversion drilling as it pursues a maiden reserve at Youanmi. Retail investors have their chance to get in at the 16.5¢ placement price through the share purchase plan, which could raise another $1 million, while Rox is also eyeing another $3.8 million from the planned sale of its 10 per cent stake in takeover target Cannon Resources.
At its first AGM since listing on the ASX late last year, Lykos (ASX: LYK) chairman Stephen Allen told shareholders in Perth the successful soil and rock chip sample programs and high-impact drilling completed at its portfolio of battery and precious metals projects in Bosnia-Herzegovina were laying the foundations for a meaningful discovery in Europe’s most prospective mining region – the Tethyan Metallogenic Belt.
The year’s standout project, Sinjakovo, has given the Lykos geology team plenty to chew on. This week Lykos reported the identification of three new polymetallic shears from the first trench of a five-trench program at the Erak locality, within the Zekil-Erak prospect.
These new shears follow up on the previously announced Erak 1 and Erak 2 shears, where rock chip samples returned grades up to 12.61 g/t gold equivalent and up to 2.89 g/t gold equivalent, respectively.
The three new shears were identified in the first fully excavated trench – measuring about 1.1km. Rock chip sampling continues, with a sample near one of the zones returning the exceptional result of 58 g/t gold equivalent.
Lykos said that with access roads into Sinjakovo now complete, the company was ready to crack on with the drill bit through the European winter period, which should provide plenty of newsflow for investors in Australia this summer.
