Pinned straw:
What I like
Management:
One name that stood out on this slide was Peter Langworthy. Peter Langworthy was behind the discovery and scoping studies of the Karlawinda and Bibra Discovery at Capricorn Metals before Mark Clark took over. He is only however serving as a Technical Consultant so not sure of his contribution to the recent work and progress.
I am not sure about the track record of the other names on the list with some from Silver Mines Ltd. I don't rate Silver Mines (SVL) very highly. But it does appear that there is a highly capable team running the show which culminated in the development of Millrose and sale to NST
Finances
The sale of Millrose to NST for 41m in cash and 1.5m shares gives Strickland a comfortable financial buffer to pursue exploration. The 1.5m shares also means the company will receive dividends of 750K pa. Current cash burn is about $1.6m from the recent quarter. So roughly there is about 5 years of cash runway. Seems like also a good proxy for holding NST shares too.
Exploration
The latest exploration update at Horse Well in Marwari shows some clue of upside potential with a 700m target. Most of those dots are aircore drilling which only touched the surface. They are now going to drill deeper into Horse Well with a RC rig.
And below is a map of prospect locations for Horse Well. Arguably some of the best ground near a Tier 1 operator.
What I don't like
Share structure
Number of shares is about 1.6b so past history of draining shareholder wealth. So there will be obvious holders looking for a way out which appeared to happen in the last few days.
Valuation
Currently sitting at an EV (enterprise value) of 100m. So this is still overvalued given there is only a resource base of 260K at Horse Well and Dusk to Dawn.
Other Prospects
Iroquious Base metals, Earaheedy Basin, Western Australia. There was plans for a spin out but has been shelved since the sale with NST. Probably a wise move given the cash and they can put the money to good use to add value to the project.
Bryah Basin copper gold, Meekatharra, Western Australia, WA
Summary
Lots of newsflow but it is still early days and still some risk of disappointment given the past history in addition to being overvalued.
I've recently taken a holding. It's either buy NST again but I prefer to take the chance for hopefully higher expected return. Or expected loss!
Very risky and not for everyone and not a recommendation, but I believe I've done enough research so happy with this.
[held]
Regarding STK @edgescape - don't know if you caught the MoM podcast coverage of STK on Monday (6th Nov 2023) - so in case you missed it - here's a link: https://youtu.be/7Kxp2P_Mhyo?t=1859
They do talk about some of the positives, including:
- That NST recently bought their Millrose Gold Project off them, so there's that; investors know that NST could do it again; and
- That STK are cashed up because of that, so there's much less chance of a CR based on a share price spike, so people are less likely to hold off on buying them because they're expecting a CR, so there's no real reason not to buy on continued positive drilling results - unless you let rationality play a part and assume there's too much upside already priced in...
And that's where I'm at with Strickland - NOT onboard - They're like DEG on a much, much, smaller scale - if Strickland have what they think they have underground at Marwari they could have plenty of upside from here, but if not, well...
I am somehow more comfortable with a share price going up at a 45 degree angle, or thereabouts, than one that's gone vertical. It smacks of over-exuberance to me.
I mean, these guys have 1,607,246,103 shares on issue, so they've gone from a market cap of $64.3 million in August (@ 4 cps) to now $281.3 million (at 17.5 cps) on 9th November; that's a +337.5% increase in around 10 weeks.
It's a very BIG SP and M/cap rise for a small gold explorer.
BTW, the Money of Mine (MoM) boys also highlighted STK back on August 24th - link below:
This ASX-Junior has $56m to Spend | Daily Mining Show - YouTube
Plain Text: https://www.youtube.com/watch?v=OP0m3UwNL6I
If you want to skip directly to the discussion on STK that day: https://www.youtube.com/watch?v=OP0m3UwNL6I&t=1326s
STK closed unchanged at 3.9 cps that day so their market cap was less than their cash balance at the time, and JD suggested that one of the reasons for that was probably that punters were sceptical that Strickland could replicate what they had achieved with Millrose, i.e. spend that cash wisely, so there wasn't a huge amount of confidence in Strickland's management and their ability to find another really decent deposit. The idea being that they would probably spend most if not all of that cash and end up with little or nothing to show for it. The inference is probably that Millrose was perhaps more the result of good luck than skill. However, Strickland DID go on to find more gold, and good grades too, so perhaps the time to be buying these companies is at times like those - when the company is trading at 3.9 cents per share, less than the value of their cash held at the time, and they have just sold a gold project for $61 million** to one of Australia's largest gold producers. Just saying...
** The Millrose GP (gold project) sale price was $61 million comprising $41m in cash plus 1.5 million fully paid ordinary Northern Star (NST) shares (which are subject to 12 months’ escrow) so the cash component was $41m but STK also received those 1.5m NST shares as well. That is outlined in these two announcements by Strickland:
Sale-of-Millrose-Project-for-$61M-to-Northern-Star-Resources.PDF [26-June-2023] and
Completion-of-Sale-of-Millrose-Project-to-Northern-Star.PDF [25-July-2023], however Northern Star (NST) said the sale price was $67m in their announcement:
NST-adds-ounces-and-commits-to-renewable-energy-at-Jundee.PDF [26-June-2023]
I can't really explain the $6m difference. It was certainly not the value of the NST shares because for 1.5m NST shares to be worth $26m, they would have to be trading at $17.33 each, and they were not anywhere near that high at the time. The VWAP (volume-weighted average price) for the previous week (prior to the 26-June-2023 announcements) would have been around $13.33 to $13.34 per NST share, which gives a $20m valuation for 1.5m NST shares, and that checks out against Strickland's announcements, but not NST's. Perhaps a typo on NST's part. What's $6m between friends?!
Disclosure: I did NOT buy STK at 3.9 cps in August. I wish I had. I do not own any STK shares (but I do hold NST shares).
Further Reading: Yandal East Project / Projects / Strickland Metals Limited