Gold rush in the Pilbara sends share prices rocketing for small cap explorers

Pilbara gold rush share price small cap explorers mining resources

Western Australia’s fabulously rich Pilbara area is now in the midst of a gold rush which has seen the share prices of a swag of junior resources companies skyrocket and caused a rush on pegging and acquiring potential gold leases.

Of course the Pilbara for many decades has been known as the source of Australia’s fabulously rich iron ore mines which power Australia’s export performance and the fortunes of mining heavyweights BHP, Rio Tinto and Fortescue plus a host of juniors.

This time it is the rolling hills near Karratha that are the focus of an exploration effort that is as novel as it is exciting.

It has sent the prices of a series of junior explorers rocketing to multiples of four and more, which is a serious boom in this sort of market.

Novo and Artemis set the pace

At the core of the rush is Canadian-listed company Novo Resources and its ASX-listed joint venture partner Artemis Resources (ASX: ARV) which together have been busily pegging ground near Karratha and forming other joint ventures to expand their exploration footprint.

Novo’s theory is that the conglomerate-style gold mineralisation at its Purdy’s Well project is very similar to that found in the rich Witwatersrand gold reef in South Africa.

With Witwatersrand’s past production of 1.5 billion ounces and massive gold reserves still to come, that is the sort of deposit you really want to attach your name to, although it must be said that there can be a world of difference between the style of a gold deposit and its size, grade or distribution.

However, the watermelon pip style of nuggetty gold mineralisation being found at Purdy’s Well combined with the marketing buzz of managing director, Quinton Hennigh are something to behold.

During the recent influential Denver Gold Forum in Colorado, Mr Hennigh successfully live streamed gold nugget discoveries, which managed to set a fire under the stock.

Nearology sends share prices flying

One of the strongest forces on the mining exploration side of the share market is “nearology’’ and there has been plenty of action among other companies with potential gold projects in the Pilbara.

Junior explorer Impact Minerals (ASX: IPT) got in on the act, applying for nine new Pilbara exploration licences over 1,300 sq km of ground which is close to Novo’s ground and prospective for conglomerate-hosted gold.

Impact will begin a review of previous exploration and on-ground activities in early November and is looking at funding options for exploration.

De Grey Mining (ASX:DEG) has also been surging after finding 91 gold nuggets at a new gold target called Loudens Patch located at the base of the Mt Roe Basalt at its Pilbara project.

Loudens Patch gold nuggets De Grey Mining
De Grey Mining’s gold nuggets found at Loudens Patch.

That has had a nearology effect of its own, with share in Venturex Resources (ASX:VXR) climbing because its Whim Creek tenement package in the Pilbara lies adjacent to De Grey’s Loudens Patch discovery.

Speeding ticket for Kairos

Minnow Kairos Minerals (ASX: KAI) has been raising cash for exploration and was last week hit with a speeding ticket by the ASX asking for an explanation for its rapid share price rise.

It was happy to report that there was no reason for its stock heading upwards except for the attention drawn to conglomerate hosted gold by the activities of Novo, Artemis and De Grey.

Calidus Resources (ASX: CAI) is also rattling the tin for some cash to fund its exploration joint venture with Novo and the updraft has also hit stocks such as polling king Gary Morgan’s Haoma Mining (ASX: HAO), which has extensive Pilbara leases.

Creasy to the rescue

It wouldn’t be a real gold rush if it didn’t involve West Australia’s most renowned private prospector and sure enough, Mark Creasy’s Creasy Group has signed a joint venture with Novo covering 1,800 square kilometres near some earlier joint venture ground with Millennium Minerals (ASX: MOY) at Beatons Creek and Marble Bar.

Creasy’s most notable recent success was the 2012 discovery of an exciting new type of nickel-copper deposit in the Fraser Range area of the WA goldfields, which resulted in a takeover of former minnow Sirius Resources by Independence Group for $1.8 billion.

It is yet to be fully established but if exploration by Novo and Artemis manage to prove up their conglomerate/ Witwatersrand style gold deposits at the right grades and scale, this latest Pilbara gold rush could turn out to be every bit as exciting as the Sirius discovery.

Then again, history buffs would probably point out that the Pilbara region has had gold booms in the past – in the late 1800’s there were several reefs exploited around the Nullagine area and other areas including Marble Bar.

Northern Star already mining gold

The operating underground Paulsens gold mine 180 kilometres west of Paraburdoo was the original cornerstone investment of the highly successful Northern Star Resources group (ASX: NST), and is still producing today even after Northern Star has grown significantly.

There most certainly is gold in them thar hills – the question remains how much and at what grades and at what cost for mining and recovery.

This latest flurry of exploration should answer many of those questions but until then, we small cap traders will need to hang on and ride every stock exchange announcement to rags or riches.

John is a highly experienced business journalist and formerly chief business writer for the Herald Sun. He has covered Federal politics in Canberra, was Los Angeles Bureau chief for News Limited and was also chief of staff for the Herald Sun. He has covered a wide range of small and large cap ASX stocks and has a special interest in mining and technology.