Rejuvenated Ausgold shows parallels with $1.7b Capricorn of four years ago

Is Ausgold (ASX:AUC) having its Capricorn moment?

The question is a throwback to when ex-Regis messiah Mark Clark and team arrived at the then seemingly sleepy Capricorn Metals (ASX:CMM) in July 2019.

Capricorn owned the Karlawinda gold project but it was low-grade stuff out the back of Newman in the Pilbara and was considered by some difficult to finance into development. Capricorn was an $84m company at the time.

Clark and crew got busy doing a “Regis” at Karlawinda, getting it all dressed up and ready to go with first production in 2021. By November that year, Capricorn had become a $1.05 billion company (it’s bigger still after adding the Mt Gibson project).

A similar story is going down at Ausgold and its Katanning gold project in wheatbelt country to the south of Perth.

Ausgold acquired the project way back in 2010 when the resource was 400,000 ounces. The resource has since grown to more than 3 million ounces and we are in the middle of a gold price boom. But there has been a distinct lack of momentum towards development.

All that has changed with the recent arrival of John Dorward as Ausgold’s executive chairman. Dorward is the former president and CEO of Roxgold, a West African gold group acquired by fellow Canadian Fortuna Silver Mines in an all-scrip deal worth $US884 million in 2021.

Two weeks in the job and Dorward has given Ausgold’s development ambitions for Katanning some real momentum by securing $38 million in a two-tranche placement at 3c a share, with Dorward putting his hand up for $1m worth PA.

Sleepy local institutional investors weren’t relied on as a collection of international types that have supported the company in the past like Jupiter and Dundee cornerstoned the raising.

No surprise Dundee is continuing with its support. Back on May 14, it supported a small bridging loan and its CEO Jonathan Goodman had the following to say:

“Ausgold today is where Capricorn was with its Karlawinda gold project circa 2020 except Ausgold’s Katanning Project is bigger, higher grade with double the tenure and better infrastructure. We see excellent potential for the future development at Katanning.”

The raising means Ausgold is now fully funded to a final investment decision on a development at Katanning. Previous study work pointed to average annual production of 136,000oz at an AISC of $A1,549/oz after capex of $297m.

Let it be noted that after Dorward’s arrival and post completion of the $38m raising, Ausgold will have a market cap of about $125m.

Meteoric (MEI):

There is little doubt that this market under appreciates the disruptive capacity of the emerging Brazilian clay-hosted rare earths industry.

The low capex and low opex potential of the projects being brought forward are the best shot the world has in breaking China’s grip on the rare earths supply chain.

Still, it has been the high capex and high opex hard-rock alternatives that continue to attract taxpayers’ money willy-nilly here and overseas, lulling investors in the hard rock space into a false sense of security.

Times are about to change though thanks to the Brazilian projects moving down the development timeline towards first production.

There is already one up and away in Brazil but it’s owned by private equity so the capability of the Brazilian projects remains something of a black box.

But that will change late next month with Meteoric (ASX:MEI) set to release its scoping study into its Caldeira project in Minas Gerais.

Caldeira has a world-class resource of 545Mt at what is the highest grade of the clay-hosted Brazilian projects, with the scoping study to be based on its first indicated resource of 86Mt at a higher-still grade of 2,730ppm.

The scoping study will be the first transparent look at what is expected to be quite spectacular capex/opex figures.

The key test will be if the scoping study can demonstrate robust earnings at the current depressed price levels. The expectation is that it will do so comfortably, and then some.

Best to what for the scoping study (a pre-feasibility study is to follow by the end of the year and a bankable one in the third quarter of next year, with first production in the second half of 2027 possible).

But notably Meteoric has been trading sideways for months. It’s as if the market has forgotten the scoping study is imminent, with Caldeira’s disruptive power to be on fully display. The stock last traded at 18c for a $368m market cap.

Mitre Mining (MMC):

Last week’s mention of how ASX-listed silver stocks were doing nicely in response to silver’s run to more than $US30/oz from last calendar year’s $US23/oz was a bit off in its timing.

Silver promptly fell below $US30/oz and took the silver names down with it. But here we are and silver has punched back through the seemingly important psychological threshold and the silver stocks are in recovery mode.

Some more than others. Mitre Mining (ASX:MMC) was one the stocks mentioned last week when it was trading at 71c, which was roughly double its level of two months ago. Silver’s brief fall to below US30/oz took Mitre down to 64c.

But in Thursday’s market it powered back up to 70.5c for a daily gain of 10.1%. The outperformance was due to a particularly bullish assessment of the company and its Cerro Bayo silver-gold project in Chile.

Canaccord – it was joint lead manager to a $10m placement by Mitre in early May at 45c a share – didn’t hold back with its assessment the stock was a speculative buy with a $2.30 price target.

“With rapid resource growth expected in 2024, major sunk capex, exploration upside potential, favourable macro tailwinds with silver poised to continue its catch-up trade to gold, an impressive new management team capable of unlocking the full potential of the asset, and strong balance sheet, we think MMC presents a compelling investment proposition,” Canaccord said in its Thursday note.

Hi Ho! Mitre, you might say.