THE BOURSE WHISPERER: Every now and then The Roadhouse obtains research notes from different research establishments. Here’s a couple that hit our inbox this week.
Sovereign Gold (ASX: SOC)
Sovereign Gold (ASX: SOC) is focused on exploration of the Rocky River-Uralla Goldfield, located in north eastern New South Wales near Armidale.
Historical workings in the area produced approx. 167,000 ounces of gold from high grade deep workings between 1856 and 1967.
Limited modern exploration has since been carried out to determine the source of the alluvial gold.
In 2003, the NSW Geological Survey conducted an airborne geophysical survey that revealed the gold workings in the Rocky River-Uralla Goldfield may potentially be derived from magmatic fluid and as such could represent a much larger Intrusion-Related Gold System (IRGS).
Martins Shaft, located within EL 6483, is the most advanced prospect but is just one of the numerous targets identified.
An initial drilling campaign carried out in 2011 intercepted broad widths of shallow gold mineralisation including 22 metres at 3.2 grams per tonne gold and 18 metres at 3.5 grams per tonne gold, highlighting the potential of the region.
In November 2012, Sovereign entered into a JV agreement with a Chinese state owned company Jiangsu Geology and Engineering Co. Ltd (SUGEC).
Under the terms agreed, SUGEC will contribute A$21 million of funding to earn a 30 per cent interest in 10 exploration licences surrounding (but excluding) EL 6483 whilst also providing significant technical capabilities.
In November 2012, SUGEC and Sovereign agreed to broaden the scope of the JV agreement to include a further 8 tenements (now totalling 10) and increase funding to a total of A$21 million to be spread across tenements owned by Sovereign Gold and Precious Metal Resources (ASX: PMR).
At the completion of the agreed expenditure, SUGEC will be entitled to a 30 per cent interest in each of the respective tenements.
Securing funds earmarked for ‘riskier’ exploration projects in the current economic climate can be challenging.
Breakaway is encouraged by the recently announced JV as it not only brings significant capital to fast track exploration; it also brings a technical team of up to 14 geologists, geochemists and geophysicists to work with the company.
The JV also removes the need for Sovereign to contribute any funds to exploration on the 10 designated EL’s over the next two years, thus defraying risk while retaining a majority interest in all the tenements.
Breakaway is further encouraged by SUGEC’s involvement (a geology and engineering company) as it validates the IRGS model in the region.
Numerous other high priority targets exist within the exploration portfolio. To get a better understanding of the geophysical features at play, Sovereign Gold has already completed a 5,008km Geophysical Survey covering a large part of the tenure.
This magnetic and radiometric data has provided a detailed structural image for identifying potential conduits for gold bearing fluids.
In particular, the company will be looking for signatures similar to those associated with Martins Shaft.
Sovereign Gold represents an opportunity for investors to partake in a fully funded gold exploration company with exposure to quality exploration targets which have the potential to host significant deposits (million ounce potential) with shallow, ‘ore grade’, intercepts already identified.
All of the tenements within the portfolio are well serviced by existing infrastructure, with sealed roads, rail, water, power, airport and labour all nearby.
The most advanced and attractive project is hosted within EL 6483 which is excluded from the JV, further enhancing the potential upside for Sovereign Gold shareholders.
Recommendation: Speculative BUY
Venturex Resources (ASX: VXR)
Venturex Resources (ASX: VXR) is aiming to commence producing copper and zinc, in concentrates, at its flagship Pilbara copper-zinc project (100 per cent VXR), located close to Port Hedland in Western Australia during the 2H of 2014.
VXR has established a substantial JORC‐compliant Resource base containing in excess of 550,000 tonnes of copper‐equivalent within a number of high‐grade Volcanogenic Massive Sulphide‐type (VMS) copper-zinc deposits.
Preliminary results from VXR’s Feasibility Study suggest a low (C1) cash cost of A$1.15 per pound copper‐equivalent.
While VXR already has a substantial Resource base, there is exploration potential within and external to the identified deposits, in particular at the 35 kilometres of prospective, near‐surface mineralisation at the Whim Creek, Salt Creek and Liberty Indee Joint Venture (JV) areas.
VXR is currently developing a drilling program to test down‐plunge extensions of the Evelyn deposit at Liberty Indee, the Salt Creek deposit and the Balla Balla prospect.
VXR is also planning to drill test more regional targets within the broader Mons Cupri area.
The company recently finalised a strategic 15 per cent share placement with an ASX 300 gold producer that is operating in the Ashburton‐Pilbara region of WA, Northern Star Resources (ASX: NST).
Northern Star invested $6.5 million and underwrote VXR’s recent $4.5 million capital raising.
The companies have also entered into a Memorandum of Understanding (MoU) to explore potential options for the joint‐development of the Pilbara project, which could result in significant costs savings for VXR.
In addition to the Pilbara project, the company is exploring for large gold deposits in Brazil through its wholly‐owned subsidiary CMG Mineracao Ltda (CMGM).
Out of the recent capital raisings, VXR has allocated A$1 million to explore its Brazilian assets.
The most‐advanced project in Brazil is Serre Verde (100 per cent VXR), which is currently awaiting the grant of exploration licences.
Serre Verde hosts VXR’s highest priority exploration targets.
Recommendation: Strong Buy
Disclaimer: The above
is intended as a guide only. The Roadhouse accepts no responsibility for
investments made from this advice.