30-Nov-2020:  Taylor Collison: Artemis Resources Limited (ARV): On the Hunt

Analyst:  MARK GORDON, markg@taylorcollison.com.au, +612 9377 1500, www.taylorcollison.com.au

• Recommendation: Spec Buy
• Market capitalisation (undiluted): $136.4m
• Share price (November 27, 2020): $0.12
• 52 week low: $0.015
• 52 week high: $0.175
• Cash (30/9/20): $9.17m
• Subsequent receipts: $2.30m
• Cash on in-money option conversion: $8.62m
• Ordinary shares (undiluted): 1,137m
• Unlisted options: 145.7m
• In-money options: 131.7m
• Diluted for in-money options: 1,268m
• Fully diluted: 1,282m

Artemis Resources Limited (ARV)

On the Hunt

Our View

Artemis Resources Limited (ASX: ARV, ATY: FRA, ARTTF: US, “Artemis” or “the Company”) is a Pilbara region, Western Australian focussed gold-copper-cobalt developer and explorer.

The most advanced project is the Greater Carlow Castle Gold Project, which includes the 418 koz Au Carlow Castle Au-Cu-Co deposit, located just 35 km from Karratha in the West Pilbara. The Company is actively exploring and evaluating Carlow Castle and several other targets over the extensive prospective tenement holdings, with the goal to build up a Resource base of at least one million ounces of gold, and then look at development scenarios.

Results from the first hole assayed from recent drilling has returned up to 4 m @ 11.1 g/t Au, 2.0% Cu and 0.18% Co 250 m below the previous deepest intercept, thus highlighting the potential to expand the Resource base.

Depending upon the magnitude of any further discoveries and expansions of the current Resource, the Company may look at using the 100% owned 500 ktpa Radio Hill processing plant in any future operation. The plant, located 35 km from Carlow Castle is permitted and should require only relatively modest capital to complete a refurbishment.

The Company is undertaking the divestment of non-core assets in the West Pilbara – to date this has added over $8 million to the treasury, with more to come.

The Company’s second property is Paterson Central, adjacent to the Havieron discovery in the Paterson Orogeny of the East Pilbara. Havieron is shaping up to be a Tier 1 gold-copper discovery, and activities by Artemis have worked up seven priority geophysical and geochemical targets over the same geology as Havieron that are now being drilled. Although this is considered high risk exploration given the cover, there is the potential for substantial rewards as evidenced by Havieron.

With active multi-faceted work programmes under way, we expect steady newsflow over coming months. This includes results from current drilling at Carlow Castle, to be immediately followed by a further 10,000 m RC programme, as well as drilling at Paterson Central.

Key Points

• Highly prospective holdings in a world-class terrane – The Pilbara and Paterson regions of Western Australia are highly prospective for several styles of mineralisation, with recent discoveries highlighting this.
• “Hot” areas – Recent discoveries, including Hemi and Havieron amongst others have made the Pilbara region a “go to” region for explorers, with ground now at a premium.
• Positive results to date – The prospectivity of the properties has been confirmed by the results of work by Artemis to date.
• Plant, infrastructure, and services – With the East Pilbara tenements, including the Radio Hill plant, being located largely within 50 km of Karratha in a world class mining region, there is ready access to infrastructure and skilled personnel and services.
• Cashed up – Artemis, with A$9.2 million in the bank as of September 30, and subsequent receipts of A$2.3 million, is well cashed up to support the active work programmes.
• Strong outlook for gold – Global factors, including COVID-19, strategic uncertainty in the Asia-Pacific region, low interest rates and wholesale printing of money amongst other factors have resulting in a significant appreciation in the gold price. Although there has been a pull back over recent months, we cannot see any significant change in the medium term.
• Experienced board and management – Company personnel have extensive technical and corporate experience in the junior resources sector.

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[I have held ARV shares in the past, but I do not hold any currently.]