Ten-bagger Spartan says it ‘just keeps finding more gold’

All roads seemed to lead to the Spartan (ASX: SPR) booth at the Resources Rising Stars Gold Coast conference during the week.

Managing director Simon Lawson showed a remarkable ability to keep standing on his feet over the two-days to field questions from all-comers.

Maybe he was channelling the fighting spirit of the company’s namesake warriors, or maybe it was the confidence that comes from wearing a company-logoed black shirt, the only one spotted among the 700 in attendance.

The reality is though Lawson had good reason to be on the balls of his feet. When he last presented at the May 2023 RRS Gold Coast conference Spartan was a 12.5c stock with a $110 million market cap.

Roll forward to this week and Spartan is now a $1.35 billion company. So it has become the 10-bagger that hopeful investors go looking for at the conference.

The discovery of 1.92Moz of high-grade gold within a couple of hundred metres of a currently idled treatment plant – the pathway to cash-flow – will do that in a record gold price environment.

Most of the investors streaming to the Spartan booth to get an audience with the man-in-black were happy punters who liked what they heard in Lawson’s May 2003 RRS Gold Coast presentation and bought the stock.

In big licks too in some cases, with one private investor slapping Lawson on the back for making him $4 million in the stock since May 2023.

Spartan continues to add ounces to its resource base. “As we drill, we just keeping finding more,” Lawson said. Ahead of returning the Dalgaranga treatment to operation, the company expects to establish a mining reserve ‘’well north of seven figures”.

Spartan’s neighbour in the Murchison, Ramelius (ASX: RMS), is a player in the company’s future following its acquisition of an 18% stake.

“Does that make us a target? Of course it does,” Lawson said. “They are interested in what we have got – we’ve got the ounces they need.

“What is our plan? We are just going to build it and define our own future. If anyone wants to get involved, that’s Plan B. But for us, we are building this for our shareholders, and we are going to continue,” Lawson told Spartan’s happy followers at the conference.

Ramelius is a $2.36 billion company so Spartan, with a takeover premium, would be a big bite. It could have moved on Spartan earlier at much lower levels, but it didn’t.

With the growth in Spartan’s market cap, and by not bidding earlier, Ramelius now needs a reason to justify a bid at the higher levels to its own investor base.

The justification will likely come with more success by Spartan with the drill bit, with the current program now including drilling to the north of the adjacent high-grade Never Never and Pepper discoveries.

Poolside chat at conference – and that is all it was – had any bid from Ramelius pegged at around $1.85 a share, before the end of the year too. Waiting too long comes with the risk of Spartan becoming too big a bite thanks to ongoing exploration success.

COPPER:

A take-away from the conference was that the junior copper stocks are positioning themselves to take advantage from the trickledown effect of the major miners stepping up acquisition activity.

The major miners are not worried by this week’s slump in the copper price on US and China economic concerns. They are looking through the current noise to the back third of the decade when BHP among others expects a “fly-up” in prices for the red metal.

As it is, the current price of $US4.09/lb is a decent price. But prices will need to be much higher if the world has any chance of meeting the 10Mtpa of additional demand expected by the end of the decade from the green energy push.

It’s why BHP spent near on $10 billion to acquire OZ Minerals and why it tried but failed in its $75 billion tilt for Anglo American with its portfolio of Latin America copper mines and projects. It has also recently earmarked a couple of billion dollars to buy a half share in two undeveloped projects high in the Andes.

Other majors have also been active putting their foot on more copper.

Notably during the week, Goldman Sachs pulled its forecast of $US6.80/lb copper next year. Its new forecast is $US4.58/lb.

Pulling its previous call didn’t help market sentiment towards the copper stocks during the week. But there is nothing wrong with $US4.58/lb either, with the supply deficit in the back third of the decade to come.

Sunstone Metals (ASX: STM):

It is against that backdrop that junior copper stocks like Sunstone Metals (ASX: STM), Havilah Resources (ASX: HAV) and Coda Minerals (ASX: COD) are seeking to benefit.

All three attended the RRS Gold Coast conference and made it clear they are looking to deal on their copper projects, which come with the sort of scale that the major miners like to see.

Sunstone MD Patrick Duffy took the investors at the conference off to Ecuador where the company is plotting to become a 100,000-150,000oz equivalent gold-copper producer at the Limon epithermal project in the south of the country.

Limon is seen as a stepping stone to the bigger story emerging at the group’s gold-copper porphyry discoveries near Limon, and in the north of the country at its El Palmar project which has the same mix of early open-cut/porphyry opportunities.

Duffy, a former Xstrata copper man and part of the team at Red 5 that successfully developed the King of the Hills gold project in WA to make Red a $2 billion company, is a fairly recent arrival at the $30 million Sunstone.

When he joined Red 5 in 2019 it was a $60 million company. “I joined Sunstone because I see the same potential,” Duffy told the conference. Part of his strategy is to “evaluate strategic options” at El Palmar.

Take that to mean pursuing a strategic partner with deep pockets to accelerate work at the project, which has the sort of upside potential as the projects held by SolGold and others along the same fault zone do.

To that end, Duffy put the stock into a trading halt on Thursday for a $2 million capital raise at 0.5c a share. According to the circulating term sheet, the cash is to be put to work pursuing partnership opportunities, both in the southern and northern projects, as well as helping to fund ongoing drilling.

From that is can be assumed that the phone has been ringing from the big end of town looking to beef up their exposure to Ecuador’s copper-gold riches. The potential for a major to knock on Sunstone’s door with a proposal is clearly not reflected in the group’s current modest market cap.

Havilah Resources (ASX: HAV):

Havilah (ASX: HAV) thought it had a deal to sell its Kalkaroo copper-gold-cobalt project in South Australia’s Curnamona province in the north-east of the state to OZ Minerals for up to $400 million.

But the option was let lapse by OZ’s new owner BHP which has enough copper on the go in the Gawler Craton in the north-west of the state where it is looking to triple production from its existing mines and discoveries, and those taken on board with the OZ acquisition.

The good news though is that Havilah is now free to cut a deal with other groups that have come knocking on the door following BHP’s exit. Kalkaroo is a big prize too, with a resource estimate of 1.1Mt of copper, 3.1M oz of gold and 23,200 tonnes of cobalt.

It is a 20 year-plus project likely capable of producing 45,000tpa of copper and 100,000 oz of gold annually, with cobalt credits, with lots of exploration upside.

The gold component alone is creating interest from cashed-up gold producers looking for a sizeable gold production boost, with both copper and cobalt credits, depending on how they want to report these things.

Havilah’s Chris Giles showed a timeline at the conference, but it was a dashed line, indicating the timing shown of November this year for a deal is a fluid thing. Still, given Havilah’s modest cap of $55m, a longer wait could be worthwhile given the $400m imputed value of Kalkaroo in the now lapsed OZ option deal.

Havilah is also more than Kalkaroo. Its Mutooroo lode-style project near Broken Hill has attracted a 450,000tpa Japanese copper smelter and refining group JX Advanced Metals in to an alliance with a view for its future development.

Apart from its smelter and refinery, JX has investments in a number of overseas copper mines, including a 3% stake in the BHP managed Escondida in Chile, the world’s biggest.

As it is, there has already been acquisition activity in the SA copper scene with the agreed $393M takeover bid for Rex Minerals (ASX: RXM) which owns the Hillside copper-gold project on the Yorke peninsula from Indonesia’s billionaire Salim family.

The bid was at a big premium to Rex’s ruling market price indicating that industry participants are placing higher values on near-term copper development assets than is currently the case in equity markets.

Coda Minerals (ASX: COD):

That has brought a sharp focus on to Coda Minerals (ASX: COD), which is advancing its Emmie Bluff copper-cobalt project in the heart of the Gawler Craton, surrounded by BHP/OZ mines and copper discoveries.

It last traded at 9.9c for a market cap of $17 million. That compares with the $826 million NPV of the project, which is based on a resource of more than 1Mt of copper equivalent.

Coda CEO Chris Stevens told the RRS conference that achieving the NPV four years after listing on the ASX had been a big effort.

“But we have plenty more in the tank,” Stevens told investors.

The project’s cobalt is of the high-recovery type, making the development a candidate for Government critical minerals incentives.

Annual production has been estimated to average 25,700tpa of copper cathode and 1,300tpa of cobalt sulphate over an initial 14-year mine life.

Beneath the sedimentary deposits that make up the project there is a large-scale iron oxide copper gold (IOCG) target which generated excitement in 2021. Stevens has said previously it will take a partner with deep pockets to fully test the target.