Arete Capital Partners is spinning out acreage north of its resurrected Stawell gold mine in Victoria, Australia, into North Stawell Minerals Ltd., which plans to list Sept. 16 on the ASX in an IPO priced at 50 Australian cents per share as it seeks further multimillion-ounce deposits.
Arete manages Stawell for Stawell Gold Mines, a conglomerate of investors including private equity firm Victor Smorgon Group and a syndicate of Asian investors. The investors will own 66% of North Stawell once it lists with a market capitalization estimated at A$60 million.
North Stawell, which was independently valued at A$40 million pre-offer, plans to spend A$14.6 million of the A$20 million it is raising from the IPO to drill 75,000 meters over two years to explore 43 gold targets across 550 square kilometers of tenure.
Arete CEO Campbell Olsen put together a crew of geologists in 2019 to review two container loads of historical data for about 160 kilometers worth of drilling and geophysics from Arete's tenements north of Stawell.
Olsen told S&P Global Market Intelligence that when the team analyzed the data in light of the geological "lessons learned" at Stawell, where five large discoveries have been made since Arete bought the mine, it found 17 domes that are "lookalikes" to the Magdala basalt dome where Stawell Gold Mines is mining.
Intergenerational assets
Olsen said core from an 806-meter diamond drillhole completed 12 months ago at the Glenorchy prospect 15 kilometers north of Stawell was "almost identical" to the 6 million-ounce Magdala dome. This was done as a "sanity check before we decided to go ahead and launch an IPO," Olsen said.
In light of that confidence, North Stawell's prospects will be "intergenerational assets" if they turn out as expected, Olsen said.
In late April, explorer Navarre Minerals Ltd. referred to the Magdala deposit, which is 20 kilometers north of its own Stawell Corridor project, as hosting 4 Moz of gold. Arete owns just under 10% of Navarre Minerals.
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| North Stawell Minerals CEO Steven Source: North Stawell Minerals |
North Stawell CEO Steven Tambanis said on an Aug. 10 webinar that Stawell's geology superintendent, Brad Robinson, and his team found a further 500,000 ounces of resources at the Magdala dome on top of the 60,000 ounces present when Arete bought it.
Tambanis told Market Intelligence that this shows how important it is "not to be blindsided by conventional geological belief about the Stawell corridor" that reigned over 40 years of modern exploration.
Having "reinvented" the area's geology through exploration by making discoveries on the corridor's eastern flank, when conventional wisdom indicated all mineralization was on the western side where mining was conducted at Stawell, Robinson will lead North Stawell's efforts as chief geologist.
Olsen said most of Stawell's ore now comes from the east, and new analytical technology used at Stawell has allowed North Stawell's geologists to "work underground whenever they wish, accessing a living laboratory of what they're looking at in North Stawell, which is an advantage few other explorers have" in target generation.
Gold price driver
Though North Stawell was originally set to list in March, financial advisory Reach Markets Managing Director Patrick Nelson said the new IPO timing "made the project a lot more attractive to invest in" given how much the gold price has moved and outlined expectations for aftermarket support on that basis.
Nelson said his company "fought hard" to get the allocation of stock to provide to its investors as part of the IPO, given the popularity of deals involving gold stocks now.
Arete Chairman Hugh Morgan said record gold prices, the success of Kirkland Lake Gold Ltd.'s Fosterville mine in Victoria "noted around the world," and the state's mines department spending the past decade investigating and promoting its geology had all proved "helpful" in working toward the IPO.
Weakness in the U.S. dollar against a range of currencies has supported gold prices, with lower real rates and widespread fiscal and monetary stimulus measures boosting bullion demand, according to an Aug. 11 blog post by Jim Wiederhold, associate director of commodities and real assets with S&P Dow Jones Indices. Bullion is generally regarded as a hedge against inflation and currency debasement, Wiederhold noted.
Wiederhold said that with the S&P U.S. Dollar Futures Index falling to a two-year low at the end of July, gold is "likely replacing the U.S. dollar as the ultimate safe currency."
"Historically, there have been periods when the correlation between gold and the U.S. dollar was significantly negative. Current market conditions are ripe for the strength of negative correlation we are seeing in 2020," Wiederhold said, citing the chart below.
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