Re-rating on the Cards for NML? Stavely IPO Today on the ASX with $ 16M Market Cap
It’s the day NML investors have been waiting for… Today, May 7th, Stavely Minerals will list on the ASX after 80 million shares have been issued at 20 cents – Stavely will have a market cap of $16 million. Stavely’s $16 million market cap is all well and good – but we know of another company with a bigger list of targets, a longer strike length of prospective volcanic rocks, more confirmed mineral bodies and more land:
Navarre Minerals (ASX:NML)
Navarre Minerals (ASX:NML) is still capped at just $4 million and hunting similar giant porphyries in the Victorian countryside next door to Stavely – who are valued at $16 million. If you don’t believe it, check out the ticker SVY. Today on listing, Stavely is valued 4 times more than NML! Once the market wakes up to this, there is a good chance NML could re-rate upwards. NML is still up 60% since we first featured the article Tiny ASX Company in Race to Discover the ‘Australian Andes’ :
The past performance of this product is not and should not be taken as an indication of future performance. Caution should be exercised in assessing past performance. This product, like all other financial products, is subject to market forces and unpredictable events that may adversely affect future performance. However, this may just be the beginning. Following listing, Stavely will be cashed up and moving quickly with their drilling program. In the coming weeks, we understand Stavely are planning 3,800m of diamond drilling near NML’s targets. Any good news Stavely generates will impact positively on NML’s nearby project where four prospects are being explored with one close to confirmation. Stavely claims one modest inferred shallow copper resource in the Miga Arc but is yet to discover a deeper porphyry source to this mineralisation. NML has found a similar shallow copper blanket and is also searching for the deeper porphyry source. Stavely has a medium sized footprint compared to NML’s four prospects and monster sized land holdings. That’s a $16M market cap for Stavely with one inferred resource on the Miga Arc plus one modest inferred resource at its Ararat VMS project. NML is currently valued at a paltry $4M even though it’s got a superior position in the Miga Arc compared to Stavely. Could a re-rate for NML be on the cards? Stavely’s IPO could spark an upward market correction for NML as punters wake up to NML’s undervalued bigger and better potential. But no matter what the markets think the dash to strike copper riches in the Miga Arc is shifting up to Usain Bolt speeds! In addition to our plucky explorers, the Federal and Victorian governments have just started drilling even more holes into the Miga Arc to unlock its copper and gold secrets to turn the whole area into one big prize for mining companies to fight over. It’s all in the interests of boosting economic activity and jobs for western Victoria – NML investors aren’t complaining. The exact drill locations have not yet been disclosed, but since NML has so much prospective land in the region, there is a very good chance the government’s drilling might be on a couple of NML’s properties. But wait – there’s more! The government has just announced in its new budget – to be handed down today (May 7th, 2014) – the so-called TARGET Strategy – grants will be made available for co-funded drilling and geoscience surveys to rejuvenate the state’s gold and copper industries. NML and Stavely will be in the box seat under this new initiative expected to focus on the Miga Arc. NML’s own drilling programme has stepped up a gear on the back of a stream of positive gold and copper finds at its Eclipse project. Part and parcel of being such a tiny company, The Next Small Cap expects NML will need to raise some cash in order to fund their next drilling campaign. Strap yourselves in; Stavely may be getting all the attention with its $16M market cap but we’re still cheering for NML to win this race.
Our Track Record
Regular readers of our sites will be familiar with our long-standing interest in reporting on high potential stocks. To note just a few:
- Since the Next Small Cap article on ASX:SEG, its share price has risen 100% following the report Sirius went from 5c to $5… New Upstart Explorer Has More Land, More Drilling Targets.
- After the Next Oil Rush article on ASX:SWE The last junior oil explorer operating in this exciting region with this same JV partner went up 800% in a matter of months – the share price has been up to 150% since we called it.
- Following the Next Mining Boom’s coverage on ASX:TRF – This junior stock will rebound hard in a broad commodity rally – TRF has risen as high as 110%.
- And who could forget the Next Oil Rush tip of the decade, TSX:AOI, which has since a rise as high as 600% (!) since we called it in the report East African Oil – Hot Tip of the Decade!
The past performance of these products are not and should not be taken as an indication of future performance. Caution should be exercised in assessing past performance. These products, like all other financial products, are subject to market forces and unpredictable events that may adversely affect future performance.
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NML’s red metal race in ‘The Australian Andes’
NML is based in the little town of Stawell in central Victoria where Australia’s oldest and richest running race is held, ‘The Stawell Gift.’ The 2014 running of this historic 120m race was just run on Easter Monday and the winner took the tape in a photo finish, collected $40,000 in prize money and retired on the spot! That’s the winner in black on the left falling over the line:
NML is running its own version of The Stawell Gift in the nearby Miga Arc mining region; but the prize is a lot bigger than $40,000 and they’re not planning on retiring any time soon! The prize NML is hunting is called a porphyry – a huge lump of predicted copper or gold mineralisation (or even both!) that geological surveys show dot the landscape of the Miga Arc like nuts in a chocolate bar. NML have a bulging red IP electrical chargeability target staring them in the face:
You can see in the 1990s someone came close to piercing this target – but just fell short. What exactly is emitting such strong chargeability? The shallow holes indicate it is caused by copper minerals and gold metal! NML investors are most definitely hoping for a big pile or copper and gold! NML are targeting this deeper target below the shallow copper and gold drill intercepts – the massive red bulge in the section above. However, to do so they will need to raise some cash and then get stuck into some deeper drilling. Porphyries are common in the Andes – that’s why South America is home to the largest deposits of copper on the planet. The Miga Arc is said to be geologically similar to the Andes – just millions of years older and a little deeper – but no less prospective. This prospectivity has earned it the nickname of the ‘Australian Andes.’ NML saw the Miga Arc’s potential early and snapped up 100% ownership of 1,278 km² of this highly prospective region – and have four copper porphyry prospects in the bag so far. Stavely, the IPO mob, are yet to find a porphyry deposit and have just ONE modest inferred copper resource for a shallow chalcocite blanket on the Miga Arc – earning it a $16M market cap. Both companies are looking to drill in the upcoming months before the winter rains – any discoveries for either company should float each other’s boat. The region will become even more prospective – but NML has a lot of catching up to do from such a low market cap – thus the re-rate potential!
Why Stavely’s $16M IPO is good news for NML
At The Next Small Cap we look for undervalued companies overlooked by the herd that have the potential to grow from near zero to total hero. That’s why we invested with NML instead of the more highly publicised Stavely. Both companies are heavily involved in the untapped Miga Arc region but from what we can see, NML has a superior position with four porphyry prospects compared to Stavely’s modest mineral resource. NML has more land, more drilling prospects and larger strike lengths. The market seems to be temporarily unaware of this. Stavely’s fully subscribed IPO and $16M market cap is proof of that. Although the Stavely IPO looks good, we think NML is better. We’re biding our time as the market slowly wakes up and become aware of NML’s gross undervaluation. The last few months have been an exciting time for Stavely. The buzz around its IPO has been impressive and has drawn a lot of attention to the prospectivity of the Miga Arc. Stavely were recently featured in the Australian Financial Review:
… and the Australian:
Stavely’s 30 million offered shares were taken up at 20 cents each leading to a $16 M market cap on listing. We expect Stavely will use its new capital position to accelerate its drilling programme at its Stavely prospect where it claims an inferred resource of 28Mt at 0.4% copper for 110kt of contained Cu. If Stavely can find a deeper porphyry source to that shallow resource and demonstrate to the market it’s got a big copper porphyry in the bag then a lot of investors will be rubbing their hands in glee. But so will NML! Remember, NML has got four prospects to drill in the Miga Arc with one, Eclipse, showing very encouraging signs of a porphyry. Porphyries occur in clusters and there are three porphyry targets alone at Eclipse and only one of them has been superficially drill tested to date:
Source: Navarre Minerals
Proving that the Miga Arc actually contains porphyries is half the battle. Being the more cashed up of the two, Stavely have already announced drilling to commence in a few weeks. NML will need to raise some cash to start drilling to the same extent that Stavely will…. or cash-in on the state governments co-drilling grants (more on this below). But if Stavely can prove up something big in their drilling campaign, then NML’s four prospects are going to look a whole lot better to the markets. Keep drilling Stavely and good luck – your success will fuel NML’s too!
NML closing in on a big copper porphyry deposit
Right now, at the Western Victoria Copper Project, NML is concentrating on proving up its most advanced porphyry prospect at a site called Eclipse. A drilling programme is planned for June to follow-up lots of encouraging gold and copper drill intercepts from its recent shallow drilling:
The results from the reverse circulation drill holes show significant gold and copper in a mineralised blanket above a deeper porphyry target. NML will look to raise some cash soon to start drilling even deeper at Eclipse and hopefully hit a red metal behemoth! This should happen sooner rather than later – it’s pretty unforgiving ground in western Victoria come winter, so NML wants to get the job done before the winter rains hit with full force.
NML to receive free drilling?
You read correctly.
Right now government geologists have commenced a program of 16-18 diamond drill holes into the Miga Arc to generate new geological information and boost mineral investment into this region. The exact locations of the drill holes are yet to be disclosed. So why is the government spending all this cash on the Australian Andes? To stimulate growth in the region. If they manage to drill on NML’s land and find something big, they will be stimulating NML investors wallets also! Back in January an announcement was made confirming that the Federal and Victorian governments would fund a multi-million dollar exploration program in the Miga Arc to generate new data on its copper and gold prospectivity:
The Deep Exploration Technologies Cooperative Research Centre (DET CRC) is managing the project on behalf of GeoScience Australia and the Geological Survey of Victoria. Drilling is now underway!
It’s safe to say the government work is hugely important for the region and NML. Through the programme, the government geological agencies will be able to throw the full gamut of tests on the drill samples with the goal of providing mining and exploration companies (like NML) with a detailed picture of the underground geology. This is fantastic news for NML, which holds an enormous land position within the Miga Arc of 1,278 km². So NML’s attempts to hit a big copper-porphyry could be bolstered by free government drilling! Sounds like a much cheaper way to go about things! Using state of the art technology, DET CRC will deploy conventional diamond drilling as well as new real-time sensing technologies both down-hole and top-of-hole. Samples will then be sent to laboratories for analysis with data uploaded to the internet for real-time, remote access – a boon for NML’s field work!
Check out this video of what the process will be like:
In addition to the government’s current drilling program, the Victoria government will today (May 7th 2014) unveil in their budget the TARGET initiative – allocating $15 million for co-funded drilling and surveying in the State of Victoria:
Things are really heating up in the Miga Arc and could get even hotter if the government exploration data turns up some prospective porphyries.
NML has by far the biggest slice of land and is in a dominant position to take full advantage.
Combine the government data with its four porphyry prospects, 1,278 km² of land, plus their appealing undervaluation, and NML seems to be the Miga Arc explorer with more room to grow.
New partner brings tighter focus on the Miga Arc
NML’s main focus is on its Western Victoria Copper Project in the Miga Arc and a recent development has sharpened that focus even tighter.
NML also have an interest in the north Bendigo Goldfield through its Tandarra Gold Project and through its Sebastian and Raydarra farm-ins, with an aim of developing a huge goldfield 40km north of the historic 22 million ounce Bendigo Goldfield in central Victoria.
Victoria’s Geological Survey estimates there’s at least 32 million ounces of gold yet to be found under-cover north of Bendigo.
But with so much potential in the Miga Arc, NML have elected to bring in a new partner, Catalyst Metals to help explore the north Bendigo area thereby removing a big investment burden (time, money & resources) for NML.
Under the deal Catalyst will need to spend $3 million in exploration over four years (at least $800k in the first two years), pay $51,000 cash and give up 500,000 of its shares to NML. In return, Catalyst gets a 51% stake in the Tandarra Gold Project and will take over the management of the entire 60 kilometre strike length of the North Bendigo Goldfield.
NML will still retain exposure to exploration upside to the Raydarra and Sebastian projects by way of a 1% net smelter royalty on Catalysts portion of future gold production plus a decent lick of Catalyst shares allowing exposure to Catalyst’s Four Eagles Gold Project.
With Catalyst taking care of the costs to explore the North Bendigo Gold Project, NML is free to dedicate its resources exclusively to the Miga Arc copper project – a great deal for all involved!
The Next Steps for NML
With Stavely now listed on the ASX and about to drill like mad in the Miga Arc, we expect the coming months to be very busy for NML.
NML’s recent drilling programme at its Eclipse copper-gold porphyry prospect delivered strong drill results showing expansive shallow mineral potential. A recent geophysics survey indicates this shallow mineralisation may be just the ‘tip of the iceberg’ with strong evidence for a larger zone of mineralisation just below the current level of shallow drilling.
From here, the only way for NML is down (we mean in the drilling sense!), then hopefully… up!
NML is planning to sink its drills even deeper into the earth and hopefully confirm a monster porphyry deposit at Eclipse.
After that, there are three more prospects to target and loads of unexplored land to have a crack at.
Stavely is expected to hit the ground running and in a few weeks should drill below its inferred mineral resource in the hope of finding a deeper porphyry source in the Miga Arc. Any good news there will spur NML on and hopefully impact the market valuation of its projects.
For too long NML has been making good progress in the Miga Arc with scant recognition.
The market’s $16 million market cap valuation of Stavely is a sign of positive sentiment to this new Victorian mining region and we expect to see NML’s fortunes rise especially as both companies release drill results in the coming months.
We have added NML to our portfolio as a LONG TERM hold and the current undervaluation continues to remain appealing.
Have you heard about the Next Investors VIP Club?
Joining this Club will give you free access to opportunities not normally available to general retail investors – however you must qualify as a sophisticated investor under Section 708 of the Corporations Act.
These opportunities are as diverse as stock placements, seed capital raisings, IPOs, options underwritings. Plus a whole host of other high risk, high reward investment opportunities not available to the general public (careful – this stuff is high risk!).
Just fill in the form and you will be alerted to the next opportunity.