Potentially life-changing greenfields exploration still drawing investors hungry for the next big one

Legacy Minerals among those dangling the carrot of highly-leveraged, big-scale exploration at this week’s Resources Rising Stars conference. Plus, a big arb to be had on uranium explorer 92 Energy and Nordic says Europe still wants green nickel.

By Barry FitzGerald.

Exploration 2

Bill Beament of Northern Star (and now Develop) fame calls them his 10c crowd. It is a reference to Queensland investors that rocked up to his first presentation at a Resources Rising Stars conference back in 2010.

Northern Star was 10c a share at the time and at the start of a journey to become Australia’s biggest listed gold producer with a market cap of $15 billion. Beament found that by and large, the average punter in the RRS conference crowd is a sticky investor too, if they like the story.

So many millionaires were made. The story is told because there was another RRS conference in Brisbane yesterday where a bunch of explorers were showcased before 300 investors looking to find the next Northern Star, or other former 10c RRS presenters like Liontown, Sandfire, Chalice and others.

Eighteen contenders strutted their stuff at Brisbane’s Sofitel. Against a backdrop of nickel mine closures and crashing lithium prices, the mood was as upbeat as these things get, with particular interest in lightly capitalised explorers with projects with some scale potential to them.

Having the cash to keep the doors open, or even better, getting someone else to fund the exploration  effort, went down well, with copper, gold and uranium the preferred commodities, for the time being at least.

A relative newcomer to the ASX, Legacy Minerals (LGM), trading at 12.5c for a $13 million market cap, was one to tick those boxes.

It joined the ASX a couple of years ago with a gold-copper focus in central NSW’s Lachlan Fold Belt. It has assembled projects on the cheap by pegging open ground and two them quickly attracted a potential $25 million farm-in exploration expenditure.

And the farm-ins are structured in a way that in the event of a discovery being made and a mine development planned, Legacy would not have to spend a cent to maintain a 20% stake.

Last year, Legacy pegged the Glenlogan copper-gold porphyry target some 55km south of Newmont’s  giant Cadia gold-copper mine. Rio liked the look of the target back in the 1990s but didn’t drill, believing it to be too deep.

But the modern-day assessment is that it is not as deep as Rio thought so recently, up stepped Mark Bennett’s and Mark Creasy’s S2 Resources (S2R) in a farm-in deal to earn up to a 70% interest, with Bennett of Nova-Bollinger fame saying it was a “compelling buried copper-gold porphyry target,” and a potentially high impact one to boot.

Another Legacy project picked up by pegging open ground three years ago, the potentially large scale gold-silver epithermal Bauloora project area, attracted the attention of Newmont last year in another farm-in deal.

Drilling targets are being worked up for drilling later this year.

On those two alone, Legacy’s market cap looks to be on the mean side of things. But then it has the rest of its portfolio, including the low-cost pick up of the Drake project in the New England fold belt. It has been the subject of gold/silver work for decades but Legacy reckons there is untold copper potential that has never been followed up.

92 Energy (92E):

There was no-surprise that uranium exploration executive Siobhan Lancaster was the most upbeat of the presenters at the RRS conference.

Uranium of course is on fire, more than doubling from $US48/lb at the start of CY2023 to recently hit $US106/lb before settling back at $US101/lb.

Countries around the world are lining up to facilitate an expansion of the global fleet of nuclear reactors as a sure-fire way to help meet zero emission targets by 2050.

The trouble is that there has been so little investment since the 2011 Fukushima incident that it is going to take huge investment and time to crank up the world’s nuclear power capability.

Uranium is all part of that, with the price climbing to more than $US100/lb being a first taste of the sort of incentive pricing required to bring forward new production.

On Friday this week, the world’s biggest producer Kazatomprom is expected to detail its previously flagged production shortcomings in 2024/25, with the number two producer Cameco to do the same next Friday.

They control 64% of the world’s production and there is an expectation that confirmation that their production is headed lower in the near-term could well give uranium prices fresh momentum to the upside.

It is against that backdrop that the lead uranium stocks on the ASX, Boss (BOE) and Paladin (PDN), were the first and third best performed stocks in the ASX200 in January with gains of 31.5% and 38% respectively.

But back to Lancaster. She is managing director of 92 Energy (92E), a Canadian-focussed uranium explorer with a particular focus on the high-grade uranium found in the Athabasca Basin.

A relative newcomer to the ASX , 92E has already notched up interesting discoveries and because of the spike in uranium prices due to the factors mentioned above, it was travelling along nicely at 36c a share in early December.

Then it announced its involvement in a three-way merger with Canadian uranium explorers ATHA and Latitude, with ATHA to become the new lead company.

The scrip consideration for the merger, subject to shareholder approvals, is 0.5834 of an ATHA share (trading at $C1.19) for each 92E. That currently values 92E at 78c a share which is a nice arbitrage on its ASX price of 58.5c.

That alone is enough to explain Lancaster’s excitement. But the impression was that what was really exciting her was the firepower of the enlarged ATHA where she is to become an executive director.

The enlarged ATHA will have the biggest uranium exploration ground in uranium-friendly Canada and more to the point, $C65 million in cash to hit the ground hard.

“It gives us maximum torque in the exploration for uranium,” was how Lancaster put it.

Nordic Nickel (NNL):

Given the parlous state of the ASX nickel sector, Nordic Nickel (NNL) boss Todd Ross opened up his presentation to the RRS conference with an apology.

But there was nothing sheepish about what followed, with Todd saying the company believes its flagship Pulju nickel project in north Finland’s Central Lapland greenstone belt has “mining camp potential”.

It is not a wild claim given there was an endorsement of sorts of Pulju’s potential by no less than BHP when Nordic was one of the first seven juniors to be signed up to its Xplor program.

Companies in the program received a $500,000 cash injection and access to BHP’s exploration expertise, the intent being to accelerate the process of discovering the next big thing that could be of interest to a company of BHP’s size i.e. the biggest in the business.

That Nordic, a 2022 IPO , is trading at 12c for a market cap of $15.5m says it has a long way to go in finding the next big one. Interestingly though, Ross disclosed that it remained in conversation with BHP and others about a future possible strategic alliance.

In the meantime, it is getting ready to update the existing resource at Pulju (278,000t of nickel) that was based on 10,000m of drilling by Outokumpu in the 1980s and 1990s. The update is expected in the March quarter and will incorporate results from 15,500m of Nordic’s own drilling last year.

Nordic is clearly on to a large scale low-grade resource with higher grade zones from a tiny section of its prospective ground. Future drilling will vector in on the higher grade zones at the known resource and at other targets being worked up for drilling.

And the clear message from the at-first apologetic Ross was for investors not to get put off by the current slump in nickel prices which has been caused by the massive increase in supply coming from the environmentally controversial and Chinese-controlled laterite nickel operations in Indonesia.

Regardless of the different processing routes used in Indonesia, the carbon intensity of the operations is many times that of the Class 1 nickel produced from sulphide nickel that is the focus of Nordic’s hunt in Finland.

And Finland is of course in the most sustainability-focussed market in the world, Europe.

“While we are seeing some oversupply in nickel coming through the market at the moment because of Indonesian nickel, the focus in Europe is very much on Class 1 nickel,” Ross said.

“And demand for sustainably sourced, traceable, and ESG-compliant nickel hasn’t changed. Securing supply in Europe has become a major strategic priority.

“The EU’s Critical Minerals Act (think of it as Europe’s version of the US Inflation Reduction Act incentives package) enacted last year is just the starting point for Europe to now focus very heavily on securing local supply,’’ Ross said.

Upcoming Events

17th February 2022
Investor Webinar: Gateway Mining
Gateway Mining (ASX: GML) Managing Director Mark Cossom will discuss recennt highlights from the Company's Gedgee Gold Project in Western Australia and its exploration strategy for 2022.