Serbia-cum-WA gold explorer says ‘rare combination is a rare opportunity’

Eastern Europe has never figured prominently as a go to destination for Aussie juniors. But attitudes are changing due in large part to the success Adriatic Metals (ASX: ADT) has enjoyed at its Vares precious and base metals project in Serbia.

A 20c float back in 2018, Adriatic is now a $1.14 billion company as it sets about reaching nameplate capacity at the project later this year under the leadership of former BHP heavyweight Laura Tyler.

Then there is the move on in Eastern Europe from the region’s wars and political dramas of the 1990s, prompting the world’s major mining groups (and Adriatic) to flock back to the region to secure the sort of world-class deposits that the region’s rocks have yielded since Roman times.

Names like BHP, Rio Tinto, Vale and China’s Zijin are all active in the region.

ASX-listed junior names are few and far between. But again, given the size of the prize to be had, the relative political stability, and the European Union-encouraged pro-mining stance of the region, more Aussie juniors will be making the trip.

A recent arrival is Strickland Metals (ASX: STK), formerly singularly known for its Yandal gold interests in Western Australia.

It was the Yandal gold position which in July this year provided the firepower for Strickland to start thinking big by settling on a cash/shares deal to acquire the advanced Rogozna gold/base metals project in Serbia from US private equity group Ibaera Capital.

Ibaera continues on as a substantial shareholder and also provided the new faces who now head up the enlarged Strickland, including Paul L’Herpiniere as managing director and the acclaimed geophysicist (Dr) Jon Hronsky as a non-executive director.

The project sits on an arm of the western end of the prolific Tethyan magmatic belt and is advanced all right, given it came with a JORC-compliant inferred mineral resource of 5.44 million ounces of gold equivalent (2.96M oz of gold, 214,000t of copper and 364,000t of zinc).

The inferred estimate is based on two (Shanac and Copper Canyon) of the four known skarn deposits, with the ground position also having the potential for epithermal and porphyry-style mineralisation.

The four known skarn deposits are different in their own way, giving what the company says is optionality around how it could eventually proceed to first production rather than having to fund a single big deposit into production at a cost of billions of dollars.

Although already big in ASX gold company terms, globally as well, it is clear from exploration results since Strickland’s acquisition that Rogozna is set to become bigger still, much bigger.

That was apparent at the time of the acquisition and in the first flush of the market’s response, Strickland was initially carried to 13.5c a share. But now it’s back at 7.3c for a market cap of about $160 million.

Recognising that the market might not be on top of the story, Strickland hosted an investor call on Thursday.

L’Herpiniere commented that the recent price weakness was traceable to the selling of smaller holdings dating back to Strickland’s earlier days of gold-only in WA. The bigger investors are sticky given the unfolding upside at Rogozna and the more-to-come from Yandal.

“Strickland is a really rare opportunity in the ASX gold market,” L’Herpiniere told the investor call.

“We've got a very rare combination. Most junior companies would be pretty happy to have one good quality asset, but we’re spoilt. We've actually got two, the Rogozna project in Serbia and obviously the Yandle project in Western Australia.

“In terms of upside, we've got a lot of that. We’ve got a serious target pipeline at both projects, and we've actually got a heap of drilled mineralisation that isn't even sitting in the resources at the moment.”

Hronsky chipped in with a geology lesson on the Tethyan belt, saying it was the biggest mineralised belt on earth, extending from Indonesia into Eastern Europe.

“It's like the Andes or the American margin, but bigger, and it hosts copper and gold deposits, and in particular the Western Tethyan belt, which is really the belt going through from Turkey into the Balkans through Serbia, is the best part of that belt.”

He said the Western Tethyan belt was on the global radar of all the all the majors.

“They understand it's got a lot harder in places like the Andes. So all of them, without exception, if you're a world class major gold and copper company, you're in the Western Tethyan.

“We’ve had conversations with all of them.”

Rogozna lies about 400km south of Belgrade in a historic and active mining region. That puts it about 300km south of Rio Tinto’s Jadar lithium/boron project on prime agricultural land which has fuelled stiff local opposition during its permitting process.

YANDAL:

It was mentioned earlier that it was Strickland’s Yandal gold interests that gave it the firepower to bring Rogozna to the Aussie market.

The firepower came with Strickland’s sale last year of its Millrose gold project to Northern Star for $61 million cash and shares. Millrose came with 6Mt at 1.8g/t for 346,000ozs contained, with the sale price being an effective $A176/oz.

Millrose lies 40km east of Northern Star’s Jundee operation on the Yandal belt and in time is to become a source of its supplementary feed.

The sale by Strickland was a handy turn as Millrose was only picked up in mid-2021 for $10m. Strickland then launched in to an aggressive drilling program costing $16m to give Millrose the sort of scale that would make it attractive to mill owners in the region.

The resultant $35m profit on the Millrose adventure is unlikely to be the last as Strickland kept a big ground position covering a big chunk of the Celia host shear zone. It starts out again building a sizeable resource from a base of about 250,000ozs.

Thanks to its $41m cash and shares kitty, Strickland has been able to earmark funds for a minimum 20,000m drilling program, primarily at the Horse Well camp on the Yandal.

Drilling at Horse Well camp is zeroing in on a number of prospects with high-grade lodes below extensive shallow oxide mineralisation at the Horse Well prospect itself, and the lightly explored deeper potential of the Warmblood prospect.

Diamond drilling in the September quarter at Warmblood returned a 14.4m hit assaying 6g/t gold from 114m, with a deeper second parallel lode returning 12.7m @ 1.7g/t Au from 144m. The mineralisation remains open at depth, along strike and down plunge.

All in all then, Strickland took the opportunity to load up its coffers with the sale of Millrose while retaining a decent exposure to more gold upside at its Yandal project area. Not enough to cover its market cap at this stage.

But certainly enough to account for a big chunk of its current market cap. And given the minimum 20,000m of planned drilling and its record of circa $10/oz finding costs at Yandal, it is gold upside worth having.

Not all Strickland shareholders were likely on board with the sale of Millrose and move in to Serbia with the Rogozna acquisition, notwithstanding the scale of the opportunity.

Still, it has got to be thought that a well-funded junior with the geological technical clout of Strickland’s board and management can do both.

That should become abundantly clear over the next 12-15 months as a flood of drilling results, resource upgrades, and a scoping study late next year at Rogozna, hit the ASX announcement platform.

It can also be said that while the likes of Northern Star will be watching to see what else Strickland can come up with in the Yandal, it will be the world’s mining majors that will be watching its progress in Serbia.