Latest news with #LowellResourcesFund
News.com.au
20-05-2025
- Business
- News.com.au
Why A-list gold investors think Arika has major discovery potential
Rising gold prices are driving fresh drilling and project funding for junior explorers That has worked in Arika Resources' favour with drilling about to get underway We chat to Lowell Resources Fund CIO John Forwood about why he likes the stock Market volatility has propelled gold to historic highs in both US and Australian currencies, bringing renewed interest to junior explorers. We're ~22% higher since the beginning of the year, and although the excitement hasn't been reflected in the share prices of all small-cap explorers, it has shone a light on those increasing investment in new projects via exploration and drilling programs. Arika Resources (ASX:ARI) is one example, having recently secured $5 million in funding to scale up drilling efforts from 6000m to 10,000m across its Kookynie and Yundamindra assets in the heart of WA's Goldfields, covering aircore, reverse circulation and diamond drilling. The combined program, set to begin in early June, will largely focus on Yundamindra – a promising area that has flown under the radar of major companies. Around 45,000oz was mined at Yundamindra at grades of over 19g/t up to 1970, but it remains under-explored, with 97% of the drilling in the 1980s and 1990s only targeting shallow oxide resources less than 80m from surface. The upcoming campaign will test around high-grade intercepts at multiple targets including Pennyweight Point in the project's eastern corridor. Shares in the company surged 50% after diamond drill results at Pennyweight Point were reported in April, which included 35.76m at 2.14g/t gold from 104.27m as well as 13.46m at 5.28g/t gold from 111.40m. Yundamindra is within a stone's throw of AngloGold Ashanti's Sunrise Dam and Gold Fields' Wallaby, two huge multimillion-ounce gold mines that have been in production for ~30 years, as well as major players like Genesis Minerals (ASX:GMD) and Northern Star Resources (ASX:NST). The project is also along strike to the south of the $44m Guyer JV between Iceni Gold (ASX:ICL) and Gold Road Resources (ASX:GOR), part of the 15km-long Guyer gold trend that hosts ICL's 14 Mile Well gold asset. At last month's Resources Rising Stars Gather Round conference, Arika outlined its pursuit of a multimillion-ounce discovery, a goal that caught the attention of Lowell Resources Fund (ASX:LRT). Lowell chief investment officer John Forwood, the expert behind our Ten Bagger column, told Stockhead what particularly piqued his interest in Arika Resources was the prospective geology of both projects. 'We're pretty familiar with the areas that the assets are in, we have an investment in Carnavale Resources (ASX:CAV), which is Arika's immediate neighbour at Kookynie, so we know and like the geology,' he said. 'I've also been following Wade Johnson at Iceni Gold, which is immediately north of Arika's Yundamindra asset and really, really like the geology there – in fact, it looks like the Guyer trend, which Iceni has, trends straight down into Yundamindra.' Forwood said another interesting aspect of the project was the geology in the southern part of the asset, which represents a high-priority, complex structural target that has never been effectively sampled by historical surveys. 'We're very interested in new areas, and I the think bigger picture with both Arika's assets being in the heart of the Goldfields (is) if you find something in that region there is going to be a lot of interest,' Forwood added. 'Arika have had some really good hits already from the diamond drilling at Pennyweight Point so I think they are well on their way,' he said. 'Both projects are big enough to be standalone projects and hold the potential to be toll treated.' Solid backing and well-funded Leading the Arika team is managing director Justin Barton, who brings over a decade of experience at the Big Four accounting firms across Australia and Europe, where he advised top-tier mining, energy, and financial institutions globally. 'Arika's current exploration manager, Steve Vallance, is an impressive guy and has the right approach,' Forwood noted. 'We really like to see Roger Steinepreis as the chairman there; he has done well with companies in the past including Apollo Consolidated Limited – which was the subject to a takeover by Ramelius in 2021 – and he's putting his money where his mouth is there with Arika. Forwood also likes the fact Arika's tenure sits on granted mining leases. While it doesn't mean permitting is done and dusted, it significantly shortens any production timelines should a major, or even modest, gold discovery be uncovered. 'The high gold prices, which are currently sitting around Aussie $5000 an ounce or thereabouts, provides explorers with the potential to monetise, smaller and lower grade deposits," Forwood said. 'It really incentivises explorers to go out there and have a look and they don't necessarily have to find a million ounces, they might only find 100,000oz or 10,000oz and if it's of a reasonable grade then it's something that they can make money from. 'Now that Arika are well-funded and raised five million during the last placement that we participated in, I think they've got all the elements there.'
News.com.au
07-05-2025
- Business
- News.com.au
Ten Bagger: Is your explorer serious? This could be the sign they're onto something real
Welcome to Ten-Bagger, where Lowell Resources Fund chief investment officer John Forwood gives us his take on a sector of the ASX resources market full of value. This month, John looks at the confidence boost ASX juniors are giving investors by investing in underground exploration declines. Everyone is hoping to find the real deal when it comes to an exploration stock, one that's looking to turn dollars to gold and back again, not just a well oiled PR machine that's "mining the market". But how do you know your board has serious confidence in the quality of their deposit. Lowell Resources Fund (ASX:LRT) CIO John Forwood is seeing one telltale sign that management has real conviction when it comes to an underground development. And it's a trend that's emerging more and more in recent times. "In terms of exploration there are probably not too many more significant things you can do than put in an exploration decline," he told Stockhead. An exploration decline is a big upfront capital investment for a junior explorer or miner. At an average cost of $15,000 per metre, a 700m decline down to 100m below surface on a 1:7 incline gradient could chew up $10m, Forwood roughly estimates. But it has the potential to both save costs down the line and massively increase the confidence an investor can have that a resource or reserve will hold up once mining begins. By getting closer to the source of the mineralisation, the explorer can drill more holes at shorter distances and closer spacings, and have more certainty that drill holes won't be disrupted by unknown ground conditions. With discoveries made deeper under cover these days, that could deliver major savings and spare the embarrassment of poor grade reconciliation down the line. "You don't have to avoid doing too many thousand metre drill holes to make an exploration decline, just pay for itself if you like," Forwood said. "If you get underground you can do much shorter holes like 50 metres or a couple hundred metres deep for long holes. "You're saving on drilling costs. You've got that big upfront capital, of course, but if you really believe in your deposit, you've got a reason to do that." The Spartan lesson Among the most prominent examples of the exploration decline method in action came from Spartan Resources (ASX:SPR), which was established via an $18.3m contract with underground mining experts Barminco. The decision to sink the Juniper decline was dual train. It was blasted wide enough to become a production decline in the future, short circuiting the company's path back to production at the Dalgaranga gold project in WA. It also provided access to drill on tight spacings at the emerging Never Never and Pepper discoveries, now comprising 2.3Moz at over 9g/t. But there was another advantage. Explorers who strike it big commonly follow what's called the Lassonde Curve, a chart named after well-known mining investor Pierre Lassonde that suggests the fast lift in a company's share price which follows a discovery is followed by a plateau as it moves into feasibility studies, which present risks if results disappoint. But continuing to drill, Spartan was able to continue catching the upside from growing its resource base and was eventually picked up at a premium in a $2.4bn takeover by Ramelius Resources (ASX:RMS). "The market still maintained that interest in Spartan because they were still exploring and they still had lots of blue sky," Forwood said. " Often when you put a resource around something and you move your focus from exploration to development, the blue sky disappears from your share price and then your shares go through that valley of death." Exploration declines also show investors that by going the extra yards juniors are willing to derisk their future reserve base. "We always used to think of that approach as the way that the Russians did it," Forwood said. "The Russians wouldn't classify what we call reserves until they had actually driven drives, multiple drives through an orebody and could touch and feel the actual ore." Companies taking the plunge Not every explorer has the goodwill with investors and capacity to fund an ambitious initiative like an exploration decline. But those that can stand to reap the rewards. Southern Cross Gold (ASX:SX2), which has dual listings in Australia and Canada, has pledged to spend C$27m on a 1km long decline at its highly touted Sunday Creek gold and antimony project in Victoria, where a long-anticipated maiden resource is due in 2027. C$53m will be spent on drilling to establish the inferred resource out of a C$143m ($162m) private placement led by Stifel Nicolaus Canada, Aitken Mount Capital partners and co-managed by Jett Capital Advisors. For SX2, Forwood says the exploration decline will provide a signal to the market for the company's ability to get permitted in a jurisdiction known for its regulatory complexity. "Once you can get the decline permitted, it is so much easier to then do the drilling. So you don't have to go and licence individual drill pads on surface," Forwood said. " You're ... almost unconstrained by permitting once you've done that." Also in Victoria, Catalyst Metals (ASX:CYL) has touted plans to seek approval from the State Government for an "exploration tunnel" at the Four Eagles gold project. Surface drilling has so far outlined a resource at the JV with Gina Rinehart's Hancock Prospecting of 163,000oz at 7.7g/t. That includes 70,000oz at an outrageous 26g/t at the Boyd's Dam project. Catalyst, in its deal to sell the Henty gold mine in Tasmania to Kaiser Reef (ASX:KAU), also secured a 12-year option to acquire 50% of KAU's 200,000tpa processing plant. Forwood says the access to the processing plant capacity means material stockpiled from the decline development could cover some of its costs if it contains economic but sub-resource grade gold. Meanwhile, over in Arizona in the USA, New World Resources (ASX:NWC) is considering the establishment of the single decline at its Antler deposit to expand its copper dominant resource, with some of the best grades hit in deep drilling. A DFS is due later this year with the company expecting the high grade project to be fully-permitted by early 2026. 'One of the highest grade holes ever drilled at Antler is the deepest hole drilled, but they're very expensive holes to drill from the surface,' Woolrych told Stockhead in a recent interview. ' One of the reasons we're looking to advance our decline and get that started later this year is we are looking to drill from underground. For every metre we can drill from surface we can drill four from underground.' Lowell holds a small stake in NWC, with Forwood saying the early development of the decline would assist in getting the company ahead of the curb as it waits for permitting for the full project. The views, information, or opinions expressed in the interviews in this article are solely those of the interviewee and do not represent the views of Stockhead. Stockhead does not provide, endorse or otherwise assume responsibility for any financial product advice contained in this article.
