THE phone does not ring much when your market capitalisation is $7 million and you're but one of hundreds of listed mineral explorers trying to strike it lucky somewhere, sometime. That pretty much sums up how life has been for Sydney-based Global Geoscience (GSC) and its chief executive Bernard Rowe -- until GSC struck an exploration joint venture deal on its Nevada (US) gold projects with Canadian gold producer Osisko Mining Corporation.
Osisko is not exactly a household name in this part of the world, but in its home market it has a huge following, as its current market value of $C4.5 billion ($4.21bn) tells you. More to the point, it has come from nowhere in the last seven years, taking what was thought to be a clapped-out orebody and pursuing it as a low-grade bulk tonnage proposition. The end result is its new mine at the hard-bitten mining town of Malartic in Quebec.
The 10.7 million ounce "find" by Osisko produced its first gold in April last year and it is planned to produce as much as 670,000 ounces of gold this year.
Not surprisingly, a whole bunch of North American gold-types have been calling Rowe to find out just what GSC has in Nevada that has attracted the likes of Osisko. Rowe intends telling them the story on a roadshow that will take in San Francisco, Denver and on to Toronto for the mighty annual conference of the Prospectors and Developers Association of Canada (March 4-7).
Under the deal, which this market has yet to fully appreciate, Osisko can earn an initial 45 per cent interest in GSC's five Nevada gold prospects by spending $US8 million ($7.44m) over a maximum of four years. GSC gets to manage and operate the work during the earn-in phase, which has been cemented by Osisko taking up an $852,000 placement of GSC shares at 6c a share, a premium to the GSC share price on the day the deal was announced of 70 per cent.
Full details on the farm-in are on GSC's website. Suffice it to say it is as friendly as these things go for a junior like GSC. Clearly, Osisko reckons the Nevada properties have the potential to host big tonnage gold deposits. That was something Rowe has been saying for some time. Only now will people listen. GSC closed yesterday at 5.1c a share.
Golden future
FOR a company that has a $375m market value, Perth-based Indonesian gold producer Kingrose Mining (KRM) has a positively subterranean profile. That could be about to change, with expectations building that it is about due to give the market an update on its exploration effort in and around the Talang Santo deposit.
Talang Santo had a maiden resource estimate placed on it last year of 879,000 tonnes grading 5.89 grams of gold a tonne and 14.63g/tonne silver. That more or less confirmed it was well on its way to becoming Kingrose's second mine in southern Sumatra. The hope is that latest drill results will point to the size of the resource getting bigger still.
The deposit is all of 7km north of the existing Way Linggo mine, which impressed in the December quarter by generating a cash operating surplus of $US16.7m on gold equivalent production of just 13,718 ounces.
Those figures go to show that you do not need to mine half the planet to make serious money in the gold business. All you have to do is focus on high-grade dirt like that found in the narrow veins at Way Linggo/Talang Santo.
Should latest exploration results confirm extensions to Talang Santo, the market will start to think about Kingrose's southern Sumatra adventure as a 10-year-plus proposition, with annual production potential of 45,000- 60,000 ounces of highly profitable gold. Kingrose closed yesterday at $1.38 a share.
Red-letter day
THE boys at Red 5 (RED) often question their sanity in making the decision 10 years ago to seek out a brighter future in The Philippines. Needless to say, there has been many twists and turns for Red 5 in its efforts to convert some of the undoubted mineral potential in the country in to a company-making mining project.
Well, they have finally arrived, with the first gold pour at Red's $US86m Siana goldmine on the somewhat friendly northern tip of Mindanao, occurring on February 3. It was a little bit late and there were some now-sorted initial material handling issues in the treatment plant. But with the ramp-up to full production expected by the end of the June quarter, the market will now set about rerating the stock from explorer to producer. Petra Capital reckons that production by the end of the June of 10,000 ounces will rise to 80,000 ounces in the 2013 financial year, underpinning its net present valuation of the stock at $3.37 a share.
That NPV compares with Red 5's share price yesterday of $2.15 a share indicates that the market might be holding off a full-blown rerating of the stock until it has got a couple of quarters of steady-state production under its belt. And, as is usually the case with things Filipino, there could be a holding back because of a recent directive that the country's mining policy be put up for review.
There is nothing firm yet and it will be subject to industry feedback before advancing any further. It looks as if it will have minimal impact on those companies with established operations and those with a good working relationship has with the local community, as has Red 5.
On the hunt
EMMERSON Resources (ERM) created plenty of excitement last year with its exploration work in the Tennant Creek mineral field in the Northern Territory.
It excited itself too, as is reflected in its decision to follow up this year with a $10m drilling program in the hunt for a new generation of high-grade copper and gold deposits.
Now that the wet season in the Top End is coming to an end, assuming the natural order of things, Emmerson is back out in the field with an immediate follow-up of last year's Goanna discovery (36 metres at 3.8 per cent copper), then adding a drill rig to follow-up the Monitor discovery. And then it will go on to regional targets.
Much of the excitement about last year's work program was that Goanna and Monitor unlocked previously hidden potential of the old mineral field by proving that mineralisation could be detected by electrical geophysics whether or not the mineralisation was associated with iron-oxides -- the historical exploration pathfinder.
Because there is a danger of not knowing what we're talking about, it is best left to Emmerson chief executive Rob Bills to sum it up with the comment that the company now has an "unprecedented understanding" of the mineralisation at Tennant Creek.
Emmerson closed at 23c a share, which is just ahead of the 22c a share price of the December placement that pulled in $7.5m.
