RIU Resources Investor Roadshow in Sydney and Melbourne this week has drawn up to 600 investors eager to pick up clues from 21 presenting junior resources companies amidst a mood of increasing optimism in the industry.
Echoing this optimism was State One Stockbroking executive chairman Alan Hill who said: “If you are looking at the resources sector, I think it is not a bad time now to get yourself involved in what is happening in the junior end.”
In opening the Melbourne event today Hill outlined some of the issues that had been holding the sector back and a number of the positive developments that were set to pave the way forward.
‘Life under Donald’
He explained that ‘Life under Donald’ (US President Donald Trump) was generally proving positive for resources at a global level.
“It was all doom and gloom previously but since Trump took office “US equity indexes have gone through the roof and likewise in Australia, but not to the same extent. This is a reminder of how things can change,” he said.
“Existing investors worried about the volatility of markets should sit tight and wait for better days rather than sell-off as these days will come.
“Sharpen your pencils”
“Those looking to invest for the first time or increase their investments should be sharpening up their pencils and having a really good look at things as now is the time.”
Hill said, “US debt has skyrocketed to US$21.5 trillion and keeps rising and urgent action is needed to reign this in, with Mr Trump needing to build revenue and confidence in the US Dollar.”
State One Stockbroking executive chairman Alan Hill.
He pointed out that since 1981 US debt had increased 31 times while tax revenue had only risen six times in the same period. “The US debt clock needs to start slowing down and this can happen.”
In regard to US-China trade, he said in almost every sector, the US was in deficit to China and this needed to be rectified.
With action needed in these areas, Hill said Trump was the right person “to do something about it” as he “knows what to do”.
“He has a plan while everyone else previously ran away from the problems.”
Optimistic on gold
In terms of resources the State One chairman said although gold prices had been vacillating for a couple of years and there had been volatility of late, it would not be too long before another run-up in bullion.
“The gold index feels like it has been going down of late but it hasn’t really moved much and many smaller companies are getting a little impatient with what’s going on.
“My advice there would be to sit tight and wait for better days because they will come and we believe that there are a number of gold stocks in the sector that represent good value.
“Energy is the same thing, there is definitely potential there.”
The State One chairman said iron ore was a good indicator of what should be seen in the market. “There has been a sell-off lately but it has started to recover and reclaim lost ground.
Base metals “good place to be looking”
“In my view base metals is a good place to be looking as they haven’t gone a long way. All of them are pretty much towards the lower range and with strengthening economies around the world, the future is bright.”
Hill said it was a similar story for the battery metals such as cobalt, lithium and graphite. “There is a lot of interest in this area and I believe this is for good reason.”
He concluded by saying, “Prices of commodities will start to move higher, profitable resource companies are there and starting to make money, and there is good value to be found among the juniors.”
Altech Chemicals managing director Iggy Tan meets investors.
The 21 presenting companies had good stories to tell investors and among those creating strong interest among investors at the Melbourne event were Altech Chemicals Ltd (ASX:ATC), Blackham Resources Ltd (ASX:BLK), Corazon Mining Ltd (ASX:CZN) and Alto Metals Ltd (ASX:AME).
Altech’s managing director Iggy Tan outlined the company’s high purity alumina (HPA) strategy centred on its kaolin project in Western Australia and its HPA plant in Malaysia, at which construction is underway.
Tan spoke of the company securing a US$120 million mezzanine debt facility term sheet and a US$60 stream finance facility term sheet for the project.
The mezzanine debt term sheet counterparty is a global investment bank with more than $400 billion in assets under management and the finance term sheet counterparty is a global alternative investment management firm with $4.5 billion under management.
Altech aims to become one of the world's leading suppliers of 99.99% HPA.
READ: Blackham Resources secures $23 million from Lind to reduce short-term debt and expand gold production
Gold producer Blackham has been in the news this week after executing an agreement with an entity managed by The Lind Partners for an investment of up to $23 million in total capital.
Managing director Bryan Dixon said that Lind’s initial $7.5 million investment would be provided as a secured convertible note with a 24-month term.
The proceeds will be used, along with Blackham’s current cash, to fully repay $13 million of short-term secured debt owed to Orion Fund JV Limited.
Dixon said that with the Orion debt repaid, Blackham would be able to re‐direct operational cash flows to expand its reserves and finalise a definitive feasibility study for the Wiluna expansion project at its Matilda-Wiluna operations in Western Australia.
Corazon managing director Brett Smith outlined the company’s battery metals strategy focused on the Lynn Lake Nickel-Copper-Cobalt Sulphide Project in Canada and the Mt Gilmore Cobalt-Copper-Gold Project in New South Wales.
Metallurgical test work has started on a 500-kilogram sample of mineralised material from Lynn Lake while strong drilling results have been returned from Mt Gilmore.
The company has intersected significant cobalt mineralisation with the Cobalt Ridge target having returned 5 metres at 2.14% cobalt within a broader 27 metres at 0.47% cobalt from a down-hole depth of 49 metres.
This week Alto Metals revealed a maiden inferred resource of 124,000 ounces of gold for its Indomitable and Vanguard Camp deposits at the Sandstone Gold Project in Western Australia.
Managing director Dermot Ryan told investors today that there is potential to double the current resource base to +500,000 gold ounces over the next 12 months.
Sandstone is in the middle of the prolific East Murchison Mineral Field which hosts a number of major deposits.