In a tough trading environment for the junior end of the ASX mining world, NTM Gold (ASX: NTM) has quietly signed off on a transformational fortnight that should set this emerging explorer up for a strong start into 2019.
The make-up includes happy shareholders, a new strategic investor, some excellent first-pass exploration hits at NTM’s 100%-owned Redcliffe gold project near Leonora and the prospect of drilling-fuelled regular newsflow next year.
As NTM’s managing director Andrew Muir pointed out at the company’s AGM in Perth on Wednesday: “We have flicked the exploration switch and are looking for new deposits [to supplement existing Redcliffe deposits with a combined JORC resource of 538,000oz].
“Redcliffe is in a fantastic location, we have four processing plants in the area, and our resource has a lot of upside.
“There are lots of new prospects which can be turned into deposits because – remember – less than 20% of Redcliffe has been effectively explored.
“We plan to drill the crap out of this project in the next 12 to 18 months to see where we end up.”
Muir’s message was clear and well received by shareholders at the AGM, not just because NTM’s immediate funding requirements appear sorted.
In the lead-up to the AGM, NTM announced a strategic investment by DGO Gold (ASX: DGO) in three stages:
a $500,000 placement at 4¢ each, already received by NTM;
a $1.5 million placement at 4¢ by 31 March; and
60 million options exercisable at 5¢ and 60 million options exercisable at 10¢.
The $2 million investment by DGO will give the Ed Eshuys-run active mining investor a 13.2% stake in NTM.
“NTM’s land holding has excellent brownfield discovery potential with less than 20% of the 40km of Mertondale Shear Zone being adequately explored,” Eshuys told his shareholders.
“The management and board of NTM have a clear vision on how to accelerate the discovery of substantial resources. The exploration upside combined with the known resources have the potential to support a large-scale production operation.”
In addition to DGO’s investment, NTM this week finalised a $950,000 placement, also at 4¢, to sophisticated investors including directors. Participants will receive 23.75 million 5¢ options, mirroring the investment opportunity offered to DGO. The participation in this placement by NTM directors needs shareholder approval, which should happen early next year.
The upshot is that NTM has, in rather difficult trading conditions, managed to lock away almost $3 million in immediate funding at a price that is either at market, or at a premium – depending on what starting position you take. NTM closed at 3.6¢ on Friday.
If all the options are exercised between now and 2022 – the expiry date for the 10¢ version – then NTM could receive a further $10.2 million into its coffers.
There remain significant “ifs”, typical of the exploration game, but Muir made clear at the AGM that NTM was being deliberate and systematic in its approach to maximising value from Redcliffe.
Drilling is set to resume at Redcliffe in the next few weeks with a reverse circulation program to follow up on the successes highlighted by the just-completed 18,000m aircore program.
Primary targets of the RC work will include the new Hub prospect, which investors hope will become the next confirmed deposit at Redcliffe. Other prospects include Infinity, Aliso, Redcliffe East and Bindy North.
Muir expects to complete 3000-4000m of RC before Christmas and then spend much of 2019 alternating between RC and aircore drilling. First results from the pre-Christmas work should trickle through in January.
Perhaps most pleasing from a shareholder point of view is that NTM is pushing ahead with its game plan, undeterred by market conditions that do not value much of the hard work carried out by explorers.
NTM’s cause is helped by the fact it has a simple and compelling narrative, is exploring in arguable Australia’s premier gold district – just consider Saracen Mineral Holdings’ (ASX: SAR) announcement during the week of new discoveries Atbara and Qena at its Carosue Dam operation south of Redcliffe – and has a supportive shareholder base excited about the exploration upside.