Coffee with Samso Episode 85 with Paul Wittwer, Exploration Manager of Southern Gold Limited (ASX: SAU) is all about Epithermal Gold Deposits and chasing high-grade gold in South Korea.
When I think about Southern Gold Limited (ASX: SAU) with its Korean strategy, it reminds me of the same story as Gold Road Resources Limited (ASX: GOR). Gold Road picked up the Yamana Greenstone Belt, a suite of rocks believed to be in the wrong geochronological sequence for gold mineralization. However, after systematic exploration, millions of ounces of gold have been discovered.
Southern Gold Limited is currently the only player in South Korea. The last major explorer in the country was Ivanhoe Mines Limited, a Canadian listed company that was very active almost 20 years ago.
In this episode of Coffee with Samso, Paul Witter shares with us his thoughts on geology, exploration, and the prospects of their Korean projects. Many investors find it hard to understand the principal concept of a mineral exploration company where geology is very important in the story.
This concept of technical credibility is often lost in the market place as investors rush following commentaries of the share prices going up through herd mentality. There is no doubt that the market rush can be a factor in the share market, but, when you speak to those that have made money consistently over time in this murky industry, it has always been about the quality of the management and the technical narrative.
In this episode, I explain what Epithermal geology is about and how Southern Gold is tackling the exploration steps. As we try to understand the style of Epithermal gold deposits, we will gain a good idea of why this is such a prospective strategy for investors looking at Southern Gold Limited.
00:33 Paul Witter Introduction
02:03 South Korea as a mining jurisdiction
03:50 The Epithermal Style in South Korea
05:54 Lack of exploration in South Korea
07:35 Korea has good rock textures
09:39 Textures tell a better story
11:02 Why Korea is a great place to explore
13:02 Epithermal is more about Chemistry
14:08 Epithermal = closer to surface
16:29 What is Epithermal System 101
18:37 Epithermal geology = High Grade
20:26 What makes a good Epithermal deposit
About Paul Wittwer
BSc (Hons) Geol, MAIG, MAusIMM, MSEG
Paul Wittwer is the Competent Person for Reporting of Exploration Results.
Mr. Wittwer is a Geologist with over 15 years’ experience in exploration, mining and resource development. He has worked on Gold and Copper Projects in South Australia and Western Australia, low sulphidation epithermal systems (Eastern Australia, Thailand) and high sulphidation epithermal systems in Chile. Mr Wittwer has a broad experience of the full resources cycle, having performed both Senior Exploration Geologist and Senior Mine Geologist roles, taken exploration targets through to full production and reconciliation and was involved in the approvals process for the start-up of the Tarcoola Gold Mine.
About Southern Gold Limited
(view points from Simon Mitchell, Managing Director)
Southern Gold Limited (ASX:SAU) is a company with one unified vision: to become an internationally recognized high-grade gold-silver project generator in South Korea. Southern Gold wants to be known for its highly professional technical team which has a reputation for making valuable discoveries in a manner that shows respect for its operating environment and the local people.
Southern Gold drove this vision with a business model of monetizing small gold deposits while searching for the big ones. They are conservative with the issuance of their scrip and look to put as many dollars as possible into drilling holes to make the next big discovery.
What does Southern Gold look for when looking at opportunities in the exploration space?
We focus on gold, although we recognize that in the Korean context silver will be an important component of many of our projects. Gold is kind to small capitalisation companies due to its relatively low capital intensity to develop. We focus on high-grade gold opportunities. Grade is still king, and a high-grade deposit is a lot more forgiving than a low-grade one. It helps manage risk and provides a buffer for what is a fundamentally cyclical industry.
Southern Gold likes being near infrastructure. If they find something small, there is a greater chance of still turning it into money. If they find something large, it will be all the more valuable for being close to that which will make its development happen at more modest capital cost. South Korea has incredible infrastructure and important project development advantages due to its advanced manufacturing sector.
Southern Gold is not afraid to joint venture to those that know what they are doing. Southern Gold is a small company with a highly professional team. They do not have the large-scale execution capability in mining, while other larger or more specialist companies have teams at hand and the expertise to execute. They manage risk by getting them to do so.
Southern Gold is principally guided by geology. Their business is the business of rocks, preferably rocks with precious metals. To find the world class deposit, they are better off starting with the most fundamental characteristic: geological provinces with the right tectonic architecture to allow gold deposits to form in the first place. South Korea is the ideal place to conduct this search.
Pre 20th century, South Korea was well recognised as an historic gold producer. This profile has eased in the past several decades and so represents a “time capsule” gold industry that is poorly developed but was once substantial. Having said that, South Korea is a modern, industrialised economy, a representative democracy and has substantial infrastructure advantages.
But the reason Southern Gold is in Korea is the geology: we are wedged between China and Japan in geological time, with subduction zone ‘ring of fire’ geology. In other words, it hosts some of the best plumbing systems in the world when looking for the emplacement of precious metal deposits. Our technical team believes South Korea is ripe for modern-style gold exploration and discovery.
Southern Gold's Strategy
Southern Gold is focused on the discovery of high-grade precious metal deposits in South Korea. And they are doing so in a two-pronged approach:
A 'boots on the ground' grass roots exploration effort based on first principles geological assessment; and in parallel a focus on drill testing early to either elevate or degrade a project in the portfolio.
As they progress these two approaches the quality of their South Korean portfolio will improve with time, ultimately to the point where they can either vend a portion or all of the position and/or look to joint venture to a major gold company when they wish to take the portfolio to the next level. Of course, if one or more of the projects is well suited to a major drilling campaign and the rapid expansion of a JORC resource they will do this 'in house'.
Over the next 3 to 5 years they believe that several new gold discoveries will be possible and the potential for significant JORC resources (high quality, high grade gold ounces) will be unlocked during this period. Strategically speaking, we are looking for another 'Hishikari' - one of the longest running, highest grade gold mines in the world, situated just across the strait in Japan - a 'Tier 1' world class deposit.
Why invest in Southern Gold?
If you are looking for:
a junior company with a tight capital structure that is well funded and well supported by its major cornerstone shareholders;
a significant exploration ground position in a very safe offshore jurisdiction in South Korea, where security of tenure is extremely high;
a footprint of exploration ground that has the fundamental geological architecture for the emplacement of precious metal deposits;
a focus on getting and developing the right people with a view to building a culture of technical excellence;
a company with a modern sensitive exploration culture that respects local stakeholders and protects the environment; and
is on the cusp of confirming not one but perhaps several new high-grade gold-silver discoveries;
then Southern Gold is the company for you and your equity market investment!
VMS (Volcanogenic Massive Sulfide) Deposits Explained
In simple terms, Volcanic-associated Massive Sulphide (VMS) deposits are caused by underground metal-rich volcanoes rising and creating a cooking environment.
I suggest you download this eBook which explains the VMS and How to Add Value to your Share Portfolio
A lesson on geological models sought by mining companies that gives insight and an understanding of which portfolios are better - and potentially more lucrative – investments. Click here to download this eBook.
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