Junior explorers shrug off virus woes, push ahead at speed

This COVID-19 induced economic crisis is meant to be the biggest financial setback since with the Second World War or the Great Depression of the 1930s.

But no one seems to have told the mining exploration fraternity.

This writer was covering the junior sector in the aftermath of the 1987 stock market crash when, in the early 1990s, small explorers saw their cash balances dwindle and share prices languish.

Then there was the late 1990s and the dotcom boom that drained almost all speculative money away from mining, with many juniors letting themselves become shells for telecom or internet start-ups as the only way to survive.

Just when the mining sector was getting back on its feet and a new commodity boom beginning, the global financial crisis struck.

For the third time in 20 years, exploration companies were shutting down drilling programs, laying off staff, cutting director fees — all to survive as fresh money dried up.

When this virus story gained traction in March, it was reasonable to expect a repeat of 1989, 1999 and 2008.

Not so, it seems.

And one other thing to notice: how many of the cases below are brownfield projects, either mined or explored previously, a sign that miners of the past seemed to have left plenty behind for the current generation of explorers.

The booming gold price has suddenly changed the economics of old projects where either mining was abandoned or never begun.

Money flows into exploration

On Friday, Fraser Range Metals Group (ASX: FRN) raised $2.75 million in an oversubscribed placement.

The money will largely be spent on sampling and drilling at its Mt Adrah gold project, 44km from Wagga Wagga, NSW, which in 2012 had a JORC-compliant resource estimated of 770,000 ounces of contained gold.

Fraser Range is turning to shareholders to raise a further $750,000 in a subsequent share purchase plan – boosting its cash to $3.5 million.

Another NSW explorer, Rimfire Pacific Mining (ASX: RIM) has also attracted a substantial cash commitment which will help progress its work, including at the Sorpresa gold discovery west of Parkes.

A private company will buy $240,000 worth of new Rimfire shares and invest $1.5 million per year for three years to earn a 50.1% interest.

Sorpresa was discovered in 2010 and has an initial estimated of 125,000oz in contained gold and 7.9Moz of silver.

Still in NSW, 3D Resources (ASX: DDD) closed an oversubscribed placement after banking $2.12 million, money that will settle on the purchase of the Adelong gold project, 35km from Gundagai.

It was mined between 1857 and 1916 and produced about 800,000oz gold.

3D has a JORC resource at Adelong of 127,000oz of gold.

Aggressive exploration the name of the game

Great Southern Mining (ASX: GSN) pulled off a $3.15 million placement announced on Friday.

This will allow what the company calls “aggressive” exploration on its projects, in particular its Cox’s Find project 70km north of Laverton in Western Australia.

Cox’s Find was the first gold venture mined by the late but fabled Western Mining Corp. It was operated between 1935 and 1942 – producing the yellow metal at an impressive average grade of 21.94 grams per tonne.

Near the WA town of Menzies, Dreadnought Resources (ASX: DRE) last year picked up from Newmont Goldfields the historic Metzke’s Find gold project, first discovered in 1911 but never mined on a large scale.

The company said this week that a soil survey had found multiple gold-in-soil anomalies over a 12km-long corridor.

Devex Resources (ASX: DEV) reported rock chip samples assaying up to 3.1g/t over 4km of strike at its Basin Creek project near Gundagai, NSW.

Last month the company revealed rock chip assays up to 8g/t.

Basin Creek was explored between 1973 and 1987 by several companies including Australian Anglo American and Shell Australia, but no mine was developed there. Devex says Shell’s drilling seems to have missed the main mineralised zone.

Juniors adding to land holdings

Magnetic Resources (ASX: MAU) has moved to acquire more ground after it struck thick gold intersections at its projects in the Leonora-Laverton area of WA.

These intersections included 19m at 1.1g/t gold and 25m at 1.3g/t gold.

The company has now acquired 11 additional tenements adding another 21sq km of ground.

Shareholders in Sultan Resources (ASX: SLZ) have approved the acquisition of the last remaining privately-held ground on the Northern Molong Belt in NSW, which has gold and copper potential.

An exploration budget has been approved and work will begin in coming weeks.

Not so lucky, though, for Kaili Resources (ASX: KLR).

It is eager to begin work at its WA projects, but has been delayed by restrictions on movement imposed during the COVID-19 emergency.

Even if they are eased soon, the coming wet season means that the gold-cobalt target near Halls Creek in the north-east of the state will have to wait until 2021.

But Kaili will at least be able to get to its gold target in the Yilgarn in the southern part of the state when barriers are removed.

The financing of the work has been locked in.