Pinned straw:
14-Dec-2023: From today's GMD Announcement that they are buying two gold projects off Kin Mining (KIN): GMD-to-acquire-the-Bruno-Lewis-and-Raeside-gold-projects.PDF (also: Kin-Receives-$535m-from-Sale-of-Gold-Deposits-to-Genesis.PDF - note that is $53.5m, not $535m):
Saturn Metals (STN) own Apollo Hill, shown there in GMD's map as being around 40km south east of GMD's Leonora Mill.
I have no idea if Raleigh Finlayson at Genesis will try to buy Apollo Hill from Saturn Metals, or try to acquire the whole company (STN) which is currently valued by the market at less than $40m, but I think it remains a real possibility considering Apollo Hill's location in relation to Leonora, and Genesis' stated “Open for business” strategy - "Building a premium gold business with sustainable, high quality, +300koz pa production 100% from the Leonora District in Western Australia" (from today's GMD announcement - see also Open-for-Business---Corporate-Presentation.PDF [April 2022] ).
The following screenshots are from Saturn Metals website today (https://saturnmetals.com.au/projects/apollo-hill/) and clearly need to be updated as they still show Gwalia as owned by St Barbara and Mt Morgans owned by Dacian - and both are now owned by Genesis Minerals.
So this one could be both a nearology play and an M&A target at some point, but they remain high risk, and they could certainly go broke if they don't find significantly more gold and transition to a producer, or else get acquired by another company (like Genesis). In the meantime, as all small explorers do, they will continue to raise fresh capital to fund their cash burn (i.e. expenditure on further exploration drilling and overheads). Some of these companies can go for decades without ever producing a single ounce of gold from production. Peel Mining (PEX) sold Apollo Hill to Saturn Metals (STN) in mid 2017, opting to instead keep looking for something even better.
PEX has been trading since 2007, and it's been a rollercoaster ride for their shareholders. OK for traders who got their timing right I suppose, but not a good buy and hold company, typical actually for precious metals and base metals explorers. Most of them go broke, but not before mining their shareholders' wallets for all they're worth. Some of them do OK, but it's a small minority. I tend to stay away from that speculative end of the market these days - i.e. I have NO current explorers in any of my portfolios; All of my miners (including my gold miners) are producers and most are also developing additional projects as well or expanding existing ones to become larger producers in the future. But I have dabbled in the past, and STN is now on one of my watchlists.
High risk, but Apollo Hill is certainly located close enough to Leonora to make them a prospective M&A target at some point.
That's the bull case. The bear case is they don't make money, they are burning through cash, they could go broke, there are no guarantees anyone will make a bid for either Saturn Metals or their Apollo Hill gold project, and they are going to keep raising cash until they either (a) find something really good and transition to being producers (which takes years), (b) get taken over (acquired), or (c) go broke. So they're a punt, not an investment, and the odds aren't good with explorers and early stage developers, but this one has got my attention today; not enough to buy any shares, but enough to go on a watchlist.
Monday 20th May 2024: I highlighted here back in December the high risk/high reward nature of Saturn Metals (STN) with their Apollo Hill Gold Project being the only major gold discovery between Leonora and Laverton that Genesis Minerals (GMD) haven't already acquired - see map below...
Red 5's (RED's) King of the Hills (KOTH) gold mine and mill to the north west of Leonora is the only other major gold project within that 50km radius of Leonora and RED are merging with Silver Lake Resources (SLR) so I'm really hoping Raleigh Finlayson (@ Genesis) doesn't try to outbid SLR for RED now that RED are so expensive - and I'm saying that as a Genesis [GMD] shareholder with no direct interests in STN, RED or SLR at this point. I did try to pick up a small position in STN here on SM a few weeks back when they looked particularly cheap - but they got away from me - and look at them today:
Chart Data sourced from Commsec.
That's a fairly steady rise since February - and it's not all to do with the gold price:
Source: https://goldprice.org/
That's US$ gold price movements on the left and A$ gold price movements on the right. As you can see, there was a gold price drop in the second half of April which is NOT reflected in STN's chart. Pleasingly, the US$ gold price has already made up all of that lost ground from April - and then some, making fresh all time highs yet again, so we're seeing some really positive movement across the Aussie Gold Sector today:
Most of the larger gold producers are up by between 3% and 6% today so far, with the physical gold bullion ETFs/ETPs (Exchange Traded Funds/Products) up by less than 2% (+1.8% to +1.9%) so that indicates positive sentiment is back.
The worst performing Aussie gold sector stock today on that list is M2M (Mt Malcolm Mines) who are probably going to go broke if they don't get acquired (for peanuts) first. Their market cap is now under $3 million and they have just announced an SPP priced @ 2 cps when their SP was trading on-market at 2 cps. The SPP is supposed to raise just $1m, which would be more than one third of their market cap, but it won't raise $1m because they've been trading BELOW the offer price on every day since they announced it - mostly at 1.8 cps, today down to 1.7 cps. Their MO is to announce positive drill results and then immediately do a placement to take advantage of the minor pop in the SP, but the pops are getting smaller and smaller as people get wiser. They are always struggling to keep the lights on, so the chances of further positive drill results are pretty slim considering they don't have the money to pay for the drilling. M2M's projects are also within that same area - even closer to Leonora than Apollo Hill (STN's project) is, but they haven't proven up a decent deposit yet, just some individual good hits, so they are at a WAY earlier stage in their project development than Saturn is with Apollo Hill. The reason M2M's projects do not show up on that map at the top of this post is that they haven't got a decent gold deposit worth including yet, and they don't have the money to drill the ground that they have got to prove that the gold there is substantial. They have reported some great hits, but they could just be one-offs. They are chronically underfunded and they don't have enough interest from anybody to enable them to raise enough money to do some serious drilling there. The only way I can see them progressing those tenements/projects is really only if they get acquired by a larger company with better management and deeper pockets.
Apollo Hill has 1.8 million ounces of gold there, which is a decent deposit for sure, and while it is mostly relatively low grade, there's a lot of gold and it's all close to surface (so open pit mining) and relatively cheap to extract the gold. You can read about their progress here: Saturn-Metals-March-Quarterly-Activities-and-Cashflow-Report.PDF
They also released an Investor-Presentation.PDF on May 7th. They have GR Engineering (GNG; I hold GNG shares both here and IRL) helping them with the testwork and the design of the plant, so they are certainly moving forwards with Apollo Hill, and (unlike M2M) STN have the money to fund that progress, and the ability to raise more capital as required. That is now being reflected in their rising share price. They weren't even the sector's best performer so far today - that would be Ausgold (AUC) whose SP is up by over +30% today so far.
But +14% today by STN is not to be sneezed at. Especially when they've been making similar moves for about 2 months now.
Too early stage for me - not taking a punt on STN. I was prepared to add them to my SM portfolio a few weeks back as a trade (and what a trade it would have been!) but not with real money.
On today's Aussie gold sector watchlist, my top performer in my real money portfolios is in 5th position, BGL (Bellevue Gold) with a nice +7% to +8% move (they're currently +7.98% @ $2.03 - or up +15 cps). NST & GMD are both between +2.7% and +3%, or thereabouts. Good to see the rally is back on.