Canada’s moribund junior mining and exploration market is providing rich pickings for ASX juniors looking for a bigger future away from the crowed scene back home in Oz.
No one is quite sure why the Canadian junior market is so stuffed.
Maybe it is a hangover from the cannabis bubble, the tech craze, or an investor reaction to a hollowing out of technical nous leaving the players without direction. There is also the issue of promoters and life-stylers rather than fair dinkum explorers being thick on the ground.
It’s OK to promote but when the story stays the same year after year, investor fatigue sets in, as it has.
Whatever the case, Toronto has ceded the junior space to the ASX. An impossible thought 10 or 15 years ago, but here we are.
One of the biggest beneficiaries of late has been Steve Parson’s FireFly Metals (ASX:FFM) with its pick up last October of the Green Bay copper-gold project near Baie Verte in mining-friendly Newfoundland.
Green Bay has a recent production history but its owner fell on hard times when it couldn’t recapitalise, making it a victim of the Canadian rot for listed juniors.
FireFly acquired the project, which has had $250m spent on it in the past, for $65m in a staged share and cash deal, and recently pulled in $52 million from an equity raising to do what Parsons did with a flourish at Bellevue Gold – use the drill bit to create serious value.
Parsons is no rush to bring Green Bay back into production. But he is out to create value with the drill bit, à la Bellevue, FireFly is deep into a 10,000m drilling program and it will be no surprise if a 40,000-60,000tpa long-lived copper project is the end result of the arrival of the boys from Oz.
The market is hungry for copper stories and has latched on to FireFly, driving its market cap to $335 million (69.5c) in quick fashion.
FIRETAIL RESOURCES (ASX:FTL):
All that is by way of background to today’s particular interest – Firetail (ASX:FTL) – which traded in Thursday’s market at 7.9c for a market cap of $13.3 million.
It has just done a Firefly/Parsons deal of sorts to acquire an 80% interest in the historic York Harbour copper-zinc-silver project, also in Newfoundland.
The location and the word “fire’’ in the company is pure happenstance. But the intent is the same – create value with the drill bit .
The mineralisation at York Harbour is of the VMS type like that at Green Bay. It was a high-grade producer way back (1898-1913) but has not had $250m spent on it in the modern era like Green Bay.
It is best thought of as an advanced exploration project which is likely to light up once Firetail gets busy with an airborne EM survey, something standard in VMS hunts nowadays but something the property has missed out on to date.
What exploration there has been in recent times focussed on shallow and near (old) mine locations and returned impressive hits like 29m at 5.25% copper and 9g/t silver, and 24.3m at 2.77% copper, 9.3% zinc and 18g/t silver.
Still, Firetail intends to first take in the bigger picture before punching in some holes. The project comes with approvals for 50 holes in hand. So newsflow is likely to be fast and thick.
It is interesting stuff given Firetail’s modest market cap. But the company is also in the hunt for big time copper-gold in Peru, including a joint venture involving the $US29 billion Barrick.
Apart from anything else, the addition of York Harbour to the portfolio with its expected strong newsflow, balances off what can be an intermittent newsflow out of the Peruvian projects due to the slow process there in securing drilling approvals.
Triangle Energy (ASX:TEG):
It’s always good for a junior to have an angle to pitch to investors. In the case of onshore North Perth basin oil and gas explorer Triangle Energy (ASX:TEG), there are currently three. It’s all in the name if you like.
Last mentioned here back in April 2023 when it was a 1.7c stock, Triangle popped to 2.1c earlier in the week before going into a trading halt pending a decision by Federal Resources Minister Madeleine King on the ageing Cliff Head oilfield in the offshore Perth Basin.
It is presumed King is going to give the OK for Cliff Head to be converted in to a carbon capture and storage (CCS) operation. That would be great news for Triangle, which plans to sell its interest for $15m in stage payments/royalties on the basis that CCS approval comes through.
Triangle’s exit would also liberate it from the ever-closer abandonment and rehabilitation costs should Cliff Head end its days as a small oil producer rather than a CCS operation.
Encouraging CCS is a plank in the government’s recently released gas strategy. So far the cupboard is pretty bare other than Gorgon. So Cliff Head could well be the next one to get up.
The second angle and the reason for the original interest in Triangle is its involvement in North Perth Basin gas/oil exploration.
The company is a 50% partner and operator in the long-awaited Booth 1 exploration well to be spudded next month. This has a best estimate resource potential of 279Bcf of gas (100%).
Based on recent Perth Basin gas dealmaking by Gina Rinehart, Chris Ellison’s Mineral Resources (MIN) and others, 1Bcf has a value of about $1 million to $2 million. Triangle’s (undiluted) market is $36m.
Completing the triangle of angles, there has been market chatter of late that Rinehart is eyeing off Strike Energy (ASX:STX). Among its many other assets, it is a 25% partner in Booth.
Rare Earths:
The European Commission has followed in the footsteps of the US by imposing extra duties of up to 38.1% on imported Chinese electric cars from July.
China said the move smacked of typical protectionism and would damage China-EU economic co-operation and the stability of the global automobile production and supply chains.
The mention of supply chains was fearsome stuff given China has particular measures at its disposal, perhaps most notably in the rare earths space. Without rare earth magnets, the EU and US auto industries would suffer something shocking.
Lots of chatter about the potential for retaliation to involve rare earths, more in diplomatic circles than equity markets. But if retaliatory action through its control of rare earths becomes Beijing’s preferred measure, it will be game on in rare earth equities.
