Nanollose (ASX:  NC6) is an ASX listed company that is trying to make Cellulose fibres from organic waste.  Like me, you ask, what is cellulose fibres?  In a simple chinaman explanation, cellulose fibres are fibres made of esters of cellulose which can be obtained from the bark, wood or leaves of plants, or plant-based material.  These fibres are compound of hemicellulose and lignin, and different percentages of these components are responsible for different mechanical properties observed (source:  Wikipedia). The main applications of cellulose fibres are in the textile industry, a chemical filter, and fibre-reinforcement composite, due to their similar properties to engineered fibres, being another option for biocomposites and polymer composites (source:  Wikipedia). Manufactured cellulose fibres come from plants that are processed into a pulp and then extruded in the same ways that synthetic fibres like polyester or nylon are made. Rayon or viscose is one of the most common “manufactured” cellulose fibres, and it can be made from wood pulp (source:  Wikipedia). A couple of weeks ago, I heard about Nanollose from a passing conversation.  It intrigued me for a few days as this is something very different from my comfort zone so I started to look into the company. I have had a lot of interest in Hemp in the past and have done a couple of Insights on that topic so as I researched, the similarities started to appear. Hemp – A very Green Construction Product. Cannabinoids: Now I know what the fuss is all about…… The creation of natural fibre from the use of organic waste will fit into one of the “clean products” that the world is seeking.  It is probably got a few hurdles to get over before full commercialisation, but it will be a good conversation with management for those people that are keen to find out more.  I am sure you will be able to get all the contact details from www.nanollose.com. I spoke to Alfie Germano, the managing director, and he gave me a quick introduction to the industry.  For me, it is a unique concept and one that I think could prove to be very lucrative. In December 2018, the company announced that they had created their first garment from their Rayon.  The first garment was created from the conversion of organic waste.  You can see the process in Figure 2. Simple in nature, but I am sure that is not entirely the case. However, this process would help with the environment.  I know how bad the cotton industry is for the environment, so I welcome anything that can reduce that industry.  I am already all for Hemp as an alternative to cotton. While researching this company, I also learnt about Rayon and the market.  It is something that I would not have thought about even though I am wearing clothing all day. According to Wikipedia, Rayon is a manufactured fibre made from regenerated cellulose fibre. The many types and grades of rayon can imitate the feel and texture of natural fibres such as silk, wool, cotton, and linen. The types that resemble silk are often called artificial silk. Since rayon is manufactured from naturally occurring polymers, it is not considered to be synthetic[1]. Technically, the term synthetic fibre is reserved for fully synthetic fibres. In manufacturing terms, rayon is classified as “a fibre formed by regenerating natural materials into a usable form”. [2] Specific types of rayon include viscose, modal and lyocell, each of which differs in the manufacturing process and properties of the finished product. Rayon is made from purified cellulose, harvested primarily from wood pulp, which is chemically converted into a soluble compound. It is then dissolved and forced through a spinneret to produce filaments which are chemically solidified, resulting in fibres of nearly pure cellulose. Unless the chemicals are handled carefully, workers can be seriously harmed by the carbon disulfide used to manufacture most rayon. I find this topic very fascinating, and I guess Nanollose allows me to get involved in what is considered clean for our environment and has a large market.  Rayon is a high growth market valued at US$16.3B in 2019 and growing at over 10%, according to Nanollose. Figure 3 below gives a summary of the composition fo the market.  Nanollose has a facility in Indonesia where they are looking to source the waste of a coconut food product manufacturer.  So systems are in place to move their plans forward in 2019.  Corporately the share price for Nanollose has not been performing well but I think there is room for improvement.  The investing market is always looking for something different I think with time and the right marketing, this could be a worthy product. I could go on for a while on this, but I think it is best to have a look for yourself and check it out. I can see several barriers for the company to reach its target.  Acceptance, by the market, the endurance of the fibres for the garment industry, proving that the material has no adverse health considerations and the ability to sustain the competitive barrage from traditional fibres. All these thoughts may be overcome with time and endurance to stay in the game. I am thrilled to have found this topic, and it is worthwhile to do more research. Disclaimer The information or opinions provided herein do not constitute investment advice, an offer or solicitation to subscribe for, purchase or sell the investment product(s) mentioned herein. It does not take into consideration, nor have any regard to your specific investment objectives, financial situation, risk profile, tax position and particular, or unique needs and constraints. Read full Disclaimer. www.samso.com.au If you find this article informative and useful, please help me share the information.  I try and write about topics that are interesting and have the potential to be of investment value.  It is not easy to find stories that fit those parameters. If you or your organisation see the benefit of what Samso is trying to achieve and have a need to share your journey, please contact me on noel.ong@samso.com.au. About Samso

Sulphate of Potash (SOP) is indeed an agricultural phenomenon within the mining industry and probably should not be treated as a commodity. I don’t think the retail investing community fully appreciate the sector or is probably too impatient.  Like all things in life, we pigeon hole our thoughts. I feel that SOP should be treated as an agricultural product.  A product that should not have any connection to the typical mineral commodity community. The whole SOP industry is now pretty mature with several companies already way down the road on feasibility and mining studies. Technology is now pretty off the shelf, and new players will need to be innovative in how they approach the market. My optimism for the Sector I think we are seeing signs that we may be fast approaching a period where we cannot seem to grow enough food to feed the increasing population on this planet. The only way we can sustain our needs is to increase yield without knocking down more acreage. It is this thinking that I got interested in this topic of the whole potash fertiliser thing and how it will improve the quality of food being grown and also increase yield. In terms of an investment opportunity, I have read many stories on how deserts are being transformed into an oasis. Now that is a great concept, but I know they must be putting something in that soil other than water to make that happen. Hence unless we get the big evil Thanos (for those that don’t know, Watch The Avengers: Endgame) to come and click his fingers and wipe out half of the human population, we better find a better way to feed ourselves without poisoning each other. On the way, it would be nice to be able to latch on a sector that has no limits, like aged care and childcare. Is there room for New Players? SOP is a premium potassium fertiliser required for healthy plant growth, plant metabolism, optimisation of crop yields and quality of produce. It is a necessary fertiliser for high value, chloride sensitive crops such as avocados, cocoa, coffee beans, grapes, berries and tree nuts, as well as arid and acidic soils. Potassium is also of vital importance for human health where it is required for normal cell function, maintenance of cardiovascular health and prevention of stroke and coronary heart disease. Companies that are new to the market have one great advantage, and that is the ability to pick a strategy that works and one that will give them a competitive edge. Assuming that they have got an acreage with SOP and the tenements can be granted. SOP projects will need 100s of square kilometres of salt lake playa and interpreted paleochannels (ancient underground rivers). It would be ideal to have early exploration that has established a JORC Compliant Exploration resource/target as a minimum. You would also want to be close to infrastructure. In the above Figure 1 and Figure 2, an example of a live SOP IPO project, (Trigg Mining Limited),  it appears that their projects are well-connected to transport and energy infrastructure.  Many roads and tracks access the projects and two gas pipelines passing directly through the area.  Nearby airstrips are located at the nearby working mines, as well as the commercial airport at a nearby town.  These kinds of infrastructure are almost mandatory for bulk commodity projects to reach the market. So What is Sulfate of Potash (SOP) and Muriate of Potash (MOP) (Source: Agrimin, Investingnews, Salt Lake Potash) According to my google search, Sulfate of Potash contains 50% potash and 17% sulfur to crops. This potassium sulfate fertiliser is chloride-free and has a low salt index, less than half that of muriate of potash. Crops that are sensitive to chloride require SOP. SOP demand is driven by high-value crops, where the cost of fertiliser has less of an impact on crop profitability. The negative part of SOP is the high cost of production. The Mannheim Process is costly, and it also produces an unwanted hydrochloric acid by-product. MOP is the primary input in the process and represents approximately 75% of the production cost. Some other SOP Facts SOP currently sells for approximately AUD$900+/t (2019) The global market for SOP is ~7Mtpa, and ~70,000tpa is consumed in Australia annually (100% is imported) Market grade specifications for SOP are deemed to be >50% potassium oxide (K2O), > 17.5% sulphur (S) and <1.5% chloride (Cl) 50% of the SOP used globally is manufactured via the Mannheim Process, and the balance is extracted from ancient salt lakes What is The Mannheim Process (source: Wikipedia) The Mannheim process is an industrial process for the production of hydrogen chloride and sodium sulfate from sulfuric acid and sodium chloride. The Mannheim furnace is also used to produce potassium sulfate from potassium chloride. The Mannheim process is a stage in the Leblanc process for the production of sodium carbonate. MOP or Muriate of Potash or Potassium Chloride is the most common of potash fertiliser. The form of fertiliser is only for crops that love chloride and for soils that are chloride deficient. The negatives are the chloride can be toxic to the crops and the soil. The needs have primarily driven the demand for MOP for food. The decreasing yield is ignored as the demand has exceeded that ratio. I think some of this demand is also coming from an Increase in wheat farming. I read in one research that there is a rise in carbohydrate form of food as the “third world” is getting self-sufficient in that form of food. It is a cost-effective way of allowing them to get into a self-sustaining cycle. As for what I call those in the “first-world” problems, they are acknowledging that there is a need to “clean-up”, I do feel that if companies can produce SOPs and make money, they will prevail. This is like what the iron-ore industry is witnessing with the high-grade ores being favoured as China comes to grips with cleaning up the pollution that is generated with lower grade ore being used in steel mills. What a typical SOP Project has to deal with? The SOP is dissolved in brine contained in sediments below and around the salt lakes, which is affected by: • The capacity of the sediments to retain brine. • Variability of the brine chemistry throughout the aquifer system. • The ability of the sediments to release brine during abstraction. • Viability of abstracting the brine at the required rates • Effect of brine abstraction on the regional hydrogeology and environment. The new thinking in SOP manufacturing is a non-Mannheim process such as that described in the diagram below.  Several companies are now entertaining this process.  Effectively you could say that this process is similar if not identical to that used in Dampier to process their salt. Are there any other players in the SOP sector. The whole potash industry has been around for many years. As I mentioned, it started with the phosphate flavour, and I remember this was off the back of the uranium rush back in 2006 or even earlier. It kind of went for a six month hard run on uranium and then it was phosphate. The Potash rush came later, and of late it has been quiet, for me anyway. Researching this article, I noticed that some of these companies have been established and are travelling pretty good. I did see some news in this sector about 12 months ago, but as I mentioned, I never ventured into any research. I have listed some of the better-known companies to me below from my research. However, there are probably more advanced or better-known companies not listed here. – Agrimin (ASX: AMN) – Danakali (ASX: DNK) – Reward Minerals (ASX: RWD) – Salt Lake Potash (ASX: SO4). What is the positive aspect of New Entrants? One advantage for a late player coming into this sector is that they will be able to get the best practice that is being developed without needing to go through the hard yards of trial and error. For example, to negate the high manufacturing cost, many current companies are talking about doing what I call the “Dampier Way”. Evaporating the brine and then shipping what is left as “concentrates”. I believe that it is a more straightforward process, and it has worked a charm for the salt sector. A couple of years ago, I stumbled onto a group wanting to mine salt in Somaliland. The concept was pretty easy.  In Somaliland, the evaporation rates are apparently the best. The proposal was to evaporate the seawater and capture the moisture to be stored for agriculture. I showed this project some of my contacts in Asia, and there was some interest. The timing was not the best for the participants, and they stopped the negotiations due to internal issues back in China. However, the business proposition was perfect.  Mine the salt, use the evaporated moisture for agriculture and create a sparse land of no agricultural use into an oasis of farms. What are the negatives for New Entrants? Here are some of the challenges that I see, and they are common issues such as, – Define a resource – Feasibility Studies – Funding for ongoing work. Funding is always an issue. However, if you can make the money want you, it is all smooth sailing from that moment. How do you do that? In the normal metal space, and I guess in oil and gas too, you need to show that your project is robust and have all the development ROI sorted.  SOP has one other factor. As a product, SOP is described as having an inelastic demand. This means that the demand for the product is not subject to price movements, or instead not at the mercy of price movement.  Hence, they have the market on their side. Require A Resource Of course, it is a given that resources will need to be established and then it needs to show the economics. But at least if they get to define a useful resource,  funding will be easier to target with a good marketable product. Defining the resource will have its challenges in that the product is in solution, and they can move, literally. My experience with the salt lake hosted uranium projects have taught me that defining a resource could be tricky. As the commodity is in solution, an influx of groundwater and groundwater movement will affect the potential resource for the better or the worse. This will lead to issues in your feasibility studies. Probably not a big problem but I think that it will probably cost more? The upside to this is that new entrants to this market will get all the upside from work related to brine hosted lithium and potash deposits in the last five years. In discussion with associates, we spoke about how the “Americans and the Russians” love brine hosted lithium and think hard rock lithium is a waste of time. Hence, in my opinion, drawing on that expertise to understand brine hosted deposits will be important if not critical. The good news is that the skills are there and not in the development phase. You could almost measure it as an item that you could buy off the shelf. In Conclusion I like things that are simple.  Sometimes when you are too early into the market, you don’t get any love and similarly when you are too late.  How many people invest at the right time?  Well, that is the million dollar question.  There were many winners in the early part of the Potash run, but I think it is not too late to look at this market now.  As for new players, again, this could be the second wave. Investment in the resource market, in general, is not short term. There have been very few companies that have started and was in production within five years. I see any new entrants, either as an RTO or an IPO, as a way of getting into a sector at a reasonably lower valuation compared to what is already out there. Companies will take advantage of best practice in developing the projects as all the hard work have already been done. In some way, the dust has settled and it is now clear to see what works and what does not.  Sometimes a rebuild is cheaper and faster than a renovation. —Clean China Policy— As for the pricing, management needs to take care of market perception. I have this view because the demand for this commodity is going to surface and surface quickly soon. China is now in a clean-up phase, and the environment is the number one priority. You only have to look at the iron ore market where higher grade ores are getting premium as they are allowing the steel mill to meet environmental requirements. This thinking is consistent with my thoughts on uranium coming into the picture as it is by far without out any competitor the cleanest fuel in the market. It has less carbon footprint than any other so-called renewable energy source. It will be the cheapest clean energy alternative. This cleaner way of doing business is a factor that is mostly missed by out investing circles. Food source and the simple fact of high yield and low environmental damage will be in the front of China policy, not saying that it is not already. For an investor, I feel this sector is going to be like the base-metal sector, you cannot live without it, but you can live without lithium and cobalt. It is absolutely a risk, but what is not? Disclaimer The information or opinions provided herein do not constitute investment advice, an offer or solicitation to subscribe for, purchase or sell the investment product(s) mentioned herein. It does not take into consideration, nor have any regard to your specific investment objectives, financial situation, risk profile, tax position and particular, or unique needs and constraints. Read full Disclaimer. www.samso.com.au If you find this article informative and useful, please help me share the information.  I try and write about topics that are interesting and have the potential to be of investment value.  It is not easy to find stories that fit those parameters. If you or your organisation see the benefit of what Samso is trying to achieve and have a need to share your journey, please contact me on noel.ong@samso.com.au. About Samso

The Davyhurst Project is located approximately 120 km north west of Kalgoorlie within the North Eastern Goldfields of Western Australia. This large scale project comprises 112 mineral tenements totalling approximately 1,336 square kilometres.  This coverage provides approximately 200 strike kilometres of greenstone sequences prospective for gold as well as sulphide nickel and base metal mineralisation. The Company is focused on unlocking significant value from the company’s strategic and prospective landholding. To achieve this, the Company will target resource development activities at five advanced projects, namely Riverina, Waihi, Siberia, Callion and Golden Eagle. This work aims to deliver a robust Definitive Feasibility Study to underpin the future development of Davyhurst. The project has a 1.2 Mtpa conventional CIP processing facility with associated infrastructure, including an extensive road network, 160 man camp, administration & workshops buildings and a large bore field. The tenement package is accessed from Kalgoorlie by a series of well-formed, unsealed shire roads and haulage roads. Airstrips are located at Davyhurst (Callion) and Mt Ida (Bottle Creek). ” — Eastern Goldfields Monarch Gold Mining Company Limited (No longer trading) consolidated the project around 2008. Since the consolidation, there has not been any work done in the area due to the corporate activities and the insolvency of entities involved. In 2008,  I was working for a private company doing some iron ore work, and I learnt that Monarch was going to end up in tears as there were issues with the project. It was not a matter of not having the gold.  It was more a fact that the extraction was not simple, and it may have something to do with the chemistry or the structure of the ore bodies.  I cannot recall if it was specific to the gold being refractory or some issues with copper, or some structural complexity within the orebody,  like Blackham Resources Limited (ASX:  BLK) in Wiluna.  Anyway, the conclusion was that the projects would struggle. Don’t get me wrong. I am not saying this is a lemon project. I am a firm believer that lemons if used appropriately, can be used to make lemonade.  And we all love lemonade.  You have to remember that around that time, gold was still around the sub $1000 mark and we were almost on parity with the USD.  Mining services cost were at an all-time high.  Iron ore was all the buzz, and nothing outside that sector was exciting.  I remembered in 2008, Silverlake was putting out great news, and there was no traction.  Gold was not a flavour of the month.  The once vibrant town of Kalgoorlie was almost a ghost town. Diggers and Dealers were just acceptable. In fact, at that time, attendance numbers were not very attractive. So funding and market interest for gold projects were not high on the agenda. The Resource There is no doubt about the potential of the project.  As you can see in the table below that was printed in the Eastern Goldfields website,  there is ample gold in the ground. The grade is also decent compared to what is out there in the market.  These days, anything above 2g/t is excellent.  It will be interesting what the new guys will do with the project. What don’t I like? As an eternal optimist, there is nothing currently that I don’t like.  I am assuming that the new management has seen what has not worked and had put contingencies in place so as to not make the same mistakes.  The bad news around Eastern Goldfield’s demise is a sad state affair for the investors, but a repeat of the same ways of operation would be the single worst factor for the new entity. Geologically, there are apparent issues, but with technology and the market changing so fast in the last decade, I don’t think there are any deal breakers.  There will be some projects that don’t stack up but the key for me here is adequate funding. I am assuming that the money raised had a fantastic plan — a new idea that has taken into account price movements and technical hurdles.  As I mentioned previously, there is a big difference in the market sentiment now as compared to 2008.  Like the diagram below, as in the movie, The Raiders of the Lost Ark, let’s make sure there are no surprises. What is of concern would be the significant tenement commitment to the Mines Department.  I would think that cost would be running into the millions of dollars.  Raising AUD23M does not seem to be a lot of money if you take all this cost of administration into consideration.  OPEX may appear to be on the light side.   The high wages that seem to be synonymous within this industry to the top management is one that I have always found hard to comprehend.  Company management teams are customarily incentivised with lots of performance share and options, but yet they are paid high wages. What do I like? I like the fact that there is a significant strike length and you have mineralisation throughout the project.  When there is smoke, there is fire.  This phrase is my favourite when looking for a deposit in the mineral resource industry. For nearly 20 years, this substantial tenement holding that has not had any exploration or mining activities. You would view that as a good thing.  It is as close to virgin exploration land as you can get today.  In terms of exploration, one always look at what may be left undiscovered or unexplored. Look at Bellevue Gold Mines (ASX:  BGL), Northern Star Resources Limited (ASX:  NST) at Kundana, Acacia with Higginsville and the list goes on. They went and found significant deposits that were not looked at, or not given the funding to look at in the past. I have learned over time that miners don’t venture too far out of their operations as they need to concentrate on what they have.  There is limited exploration, and in the 19980s and 1990s when many small producers were in the sector, there was just not enough capital to be distributed to ensure proper near mine exploration. This lead to future opportunities for new players in the market.  I am not sure of the real factors that lead to the downfall of Eastern Goldfields, but many would suspect management.  While this may be true, in many cases, a lack of funding can lead to poor management decisions not due to ignorance but due to a need for e=relocation of funds. Hence, now that the dust has settled and all the bloodletting has stopped with, one would hope that the future ahead could be positive for the new entity. Disclaimer The information or opinions provided herein do not constitute investment advice, an offer or solicitation to subscribe for, purchase or sell the investment product(s) mentioned herein. It does not take into consideration, nor have any regard to your specific investment objectives, financial situation, risk profile, tax position and particular, or unique needs and constraints. Read full Disclaimer. www.samso.com.au If you find this article informative and useful, please help me share the information.  I try and write about topics that are interesting and have the potential to be of investment value.  It is not easy to find stories that fit those parameters. If you or your organisation see the benefit of what Samso is trying to achieve and have a need to share your journey, please contact me on noel.ong@samso.com.au. About Samso

Mincor Resources Limited (ASX: MNR) acquiring the Long nickel operations is a good indicator of the changing nickel market.  This changing dynamic is a good thing. I remember the consolidation of nickel projects in the early 2000s, which was the start of nickel prices running to the stratosphere. It probably is a bit premature to call the beginning of good times, but I think consolidation, divestments are a good thing.  Independence Group (ASX:  IGO) have their hands full with Nova and rightly have sold to get the upside with the Mincor.  This sale is IGO is saying, here is the project, Mincor, you do it and make us lots of money, and in return, you give me some of your shares.  The sale is a significant vote of confidence for value.  A cash deal would not have made sense, and I think the market prefers this deal. The all script deal (unless I have read it wrong) is very favourable. IGO has also put up money for the placement which got to be a massive vote of confidence on the acquisition.  If you digest this sale, it is becoming less of a deal and more of a partnership. The Long Nickel sulphide mine is located 45km south of Kalgoorlie at Kambalda East in Western Australia. While current reserves are estimated at only three years of productions,  the company is confident that it will be able to extend the reserve base given that the two primary deposits, McLeay and Moran, are open at depth.  The mine currently extends 600m below the surface (or 1km below sea level). Table 1 below outlines the resources that are in the Long acquisition.  My thoughts are that Mincor will find more resources and the operation will allow a more dedicated exploration program to define and upgrade the current resource. Time will tell if there are more resources in the ground, but I think a mineralised system like this has to have more legs than what is shown now (spoken by a non-shareholder 🙂 ). As readers would know that I am a Nickel bull, I do think this is going to work well for Mincor.  The whole EV market wants more nickel sulphides, and as the inventory of nickel sulphide projects is very low, projects such as this will increase in value.  How all this pans out, in reality, will be very interesting but I think there is sufficient evidence in the market to indicate a positive outcome.  There are now even talks that the use of cobalt will decrease and the use of nickel sulphates will increase. How Mincor goes about the business of reshaping the Kambalda nickel status will be solely based on how best the leverage the Long operations.  It sounds like the infrastructure at Long will help them develop their own nearby Durkin resource.  If that was the case, then the resource at McLeay and Moran will be a bonus.  Future exploration results will make this a desirable proposition. This brings me back to my first remark.  Mincor making this move to buy and IGO allowing this to happen with very favourable commercial terms will create the possibility of a nickel catalyst.  This nickel catalyst could ignite the market and kick start the mineral resource sector.  This kick start has been a long-awaited event, like the “conglomerate gold rush” that set the industry buzzing in 2018.  I am convinced that when this happens, the mineral exploring companies will be buying drinks at the bar again. Disclaimer The information or opinions provided herein do not constitute investment advice, an offer or solicitation to subscribe for, purchase or sell the investment product(s) mentioned herein. It does not take into consideration, nor have any regard to your specific investment objectives, financial situation, risk profile, tax position and particular, or unique needs and constraints. Read full Disclaimer. www.samso.com.au If you find this article informative and useful, please help me share the information.  I try and write about topics that are interesting and have the potential to be of investment value.  It is not easy to find stories that fit those parameters. If you or your organisation see the benefit of what Samso is trying to achieve and have a need to share your journey, please contact me on noel.ong@samso.com.au. About Samso

Liontown Resources Limited (ASX:  LTR) had a spectacular result from its latest drilling.  On the 20th May 2019, the company released the headline numbers (See image below).  I am always a sucker for significant intercepts.  As I have always said, there is nothing better than a great long length of intercept.  You can see the market expectation with the stock rising from 2c territory to nearly 10c. Corporate Information Market Capitalisation:  31M Outstanding Shares:  1.1B Top Twenty Shareholding: Approx. 50%  (Tim Goyder: 18%) From the share price chart below, you can see the market liked the results.  I agree that it is still too early to say if this price rise is going to be supported.  I think in this market, it is hard to say.  Buyers are scattered, and the majority of the buyers are punters who are not the “sticky” money.  The fear in the market is also not encouraging punters to stick around.  The uncertainty in the lithium market is another factor. A recent chat with industry people highlighted that there is just no retail trade.  The T+2 system in the market is not allowing “real punters” to do their thing, and that is to “gamble” on these kinds of situations. What is the Fuss? The fuss is all about this nice diagram you see below which is part of the Kathleen Valley Lithium project.  The announcement of a 90m of intercept with grades of 1.3% Li2O has excited the market.  The project has a current “resource estimate”. The results were in line with the ongoing story, and I think this shows that the Kathleen Valley project has some good legs.  Whether it turns out to be a profitable mine is another story.  The cross sections show where the intercepts were and how they appear with the other pegmatites. The drill plan location plan (Figure 1)  does give an impressive look at the potential of the area.  The ongoing issue for mineral resource deposits such as this is that the real possibility is not observable yet. Many punters assume the best, but for those trying to prove economic viability, there is still a long way to go. You can see in Figure 2 the orientation of the pegmatites.  As promising as the story is being told, I am cautious as to how this story will end.  From an exploration point of view, there is a good reason for excitement.  The grades are looking consistent and without knowing other aspects of the mineralogy, it is hard to have any firm conclusion on the outlook.  Notwithstanding all the doubts, this is indeed an exciting time for the company and the story. Currently, there is an excellent strike length of 600m, which I would assume that the company will want to extend. The intercept is deep, but it does give a level of optimism that there is endowedment of the system in the region.  Some of these pegmatites can be very wide and be reasonably consistent.  I am not sure if the grade is sufficient to make everything work.  I remember that the figure needs to be higher.  As I have always mentioned in my previous articles, it is more about the end size than a spectacular grade. All the deposits, irrespective of the commodity is about the mining grade and the mining tonnage, which then will be determined by the AISC (All-In Sustaining Costs).  As you can see in Figure 2, the pegmatite layers are pretty deep down.  I remember my Galaxy days when I was freezing in the paddocks logging the drill chips.  They were very shallow, and at that time, it was considered deep. If I am not mistaken, they were no more than 20m+ below but were stacked with waste in between. I am not saying that this is not going to happen as a mining proposition, but I think it is worth a thought.  Liontown also has the Buldania project, and that looks interesting too. Beautiful thick intercepts that are carrying some grade.  However, I think, for now, Kathleen Valley is giving some needed profile to this lithium sector. Always good to see people have exploration success and making our small-cap exploration sector buoyant and full of hope.  That is what drives this industry, and job creation is always a welcome result. Disclaimer The information or opinions provided herein do not constitute investment advice, an offer or solicitation to subscribe for, purchase or sell the investment product(s) mentioned herein. It does not take into consideration, nor have any regard to your specific investment objectives, financial situation, risk profile, tax position and particular, or unique needs and constraints. Read full Disclaimer. www.samso.com.au If you find this article informative and useful, please help me share the information.  I try and write about topics that are interesting and have the potential to be of investment value.  It is not easy to find stories that fit those parameters. If you or your organisation see the benefit of what Samso is trying to achieve and have a need to share your journey, please contact me on noel.ong@samso.com.au. About Samso

Recently, I have been following the news flow from De Grey Mining (ASX: DEG) and it occurred to me that they may turn out to be the only real gold project to come out of the Pilbara for a long time.  I know there is some gold history out of the Pilbara region but that was a while ago.  The Pilbara region is a harsh place for the unprepared. Even the great Mark Creasy had given up on the Pilbara and made his fortunes in the southern goldfields of Yandal, Albany Fraser and the Kalgoorlie region. There is no argument that there is gold in the Pilbara region, it’s just that nobody has yet found a sizeable source. Like the Patterson Range where there has been limited “exploration” due to its remoteness, the Pilbara suffers from a lack of success. I have seen chunks of manganese on the surface and very colourful pegmatites during my limited time in the Pilbara but ultimately, this is Iron Ore country. Those that have spent many more moons in this region tell me that they get close but as yet, come up with nothing. I found this Mines Department Annual Report from 1914 and you can see that there is a suite of minerals identified as of interest. I can guarantee many ASX company would love to go chasing them in today’s market. The issue is that even today, none of that has been even noticed. Some may have been investigated and listed as non-economical. However, I would have a guess that most would be overlooked from a market sentiment point of view. However, what could be interesting are the ones that were overlooked due to a lack of funding or technical misunderstanding. What’s the Issue? Looking at the diagram below, you can see that the Pilbara is predominantly an Iron Ore country. The BIFs (Banded Iron Formation) that strike from one side of the basin (Newman) to the coast carry a minimum of 30% Fe. Since the rise of the Iron Ore boom in the 1970s, the Pilbara has really been a single commodity region. Some players have gone in there to look at Nickel and Gold but it has not made an impression.  There is also the Wittenoom asbestos mine which was a world-class deposit being shipped out of Point Samson (not sure if they were shipped out of the other ports). The conglomerate gold rush in late 2017 was what made this place stand out in terms of a commodity other than iron ore. The rush was international and money from big names came flooding into the region. I think that is a rush that could have opened the place up for real exploration. The rush for lithium did not make the same impact. I guess that is why there is the term Gold Fever. Obviously, when the Conglomerate Goldrush came, that fuelled the speculation that this is why there has never been any primary source. The theory was that the gold was deposited rather than your traditional “primary” source. Kind of like sedimentary deposition…etc. This was the main aspect of the story that got everyone excited and the association with the South African Witwatersrand conglomerates and their resources in billions of ounces.  The traditionalist felt that the story was just that, a good story.  A lack of success on that theory would end that rush. Corporate Information (Source:  Commsec) Market Capitalisation: 62M Outstanding Shares: 334.47M (2018/06) Top 20 shareholding: 51.40% (2019) What is the REAL value of De Grey Mining? De Grey is not your ordinary explorer.  When one looks at this company, in my opinion, you need to understand that you are investing in a company that is the whos who of gold mining.  I am talking about the following shareholders, Kirkland Lake Gold Ltd (ASX: KLA) with 9% DGO Gold Limited (ASX: DGO) with 7% Kirkland is an 18.4% shareholder of Novo Resources Corp (TSX-V:  NVO) who has a JV (Farno JV) with De Grey.  In turn, the shareholders of Novo are also highly notable gold bulls, such as Mark Creasy, Sprott Asset Management and Newmont Mining Corp.  Hence as you can see, they are well connected. I think they must be the most well-connected company that does not operate a mine, yet.  DGO Gold is chaired by Ed Eshuys who was the right-hand man of Great Central Mines discovering major nickel and gold mines in the 1980s and 1990s. Novo Corporation has the “famous” Quinton Hennigh, who “discovered” the big resources for Kirkland Lake Gold’s project at Fosterville Gold Mine in Victoria, Australia. My point is that when you look to invest in this company, you are with some good company.  I am not saying that this is a given that they will discover things and make the company great.  I am just highlighting that you are in the company of some good names.  When one looks at the management of a company, as I mentioned in my article (5 Points you Need to know before Investing in a small-cap resource company on the ASX?), there is a focus on who they are and what they have done before in the past and what they will potentially do in the future..  When you have so much experience close at hand, it would allow technical issues to be sorted out easily. This would be a great tick of approval in regards to the correct management. From the project asset register, one will see that they have got some decent resources and if the economics hang together, there will no issue raising the funds. This has got to be one of the easiest fundraising campaigns when the time comes to doing that job. The Projects (Source: De Grey Mining Limited) The projects are located 60km south of Port Hedland in the Pilbara Region of Western Australia (see Figure 4).  The company has mentioned that there is a mineralised strike of approximately 150km.  The total tenement packages are approximately 1500 square kilometres.  Currently, their gold inventory is a total of 1.4Moz (see diagram below).  They are shared by several deposits over the 150km strike. Like most of the goldfields a couple of decades ago, the amount of drilling in this region is primarily to bedrock, which literally means drill to when it gets hard.  Hence, most of the drilling is less than 100m.  I do suspect that the maximum depts would have been in the 150m department.  The Pilbara is a place where there is not much cover.  Unlike the goldfields, you pretty much cannot dig too deep.   Hence, it is pretty interesting that in places where you find decent mineralisation, there is a deep “soft” geology, for obvious reasons :-).  In places like Carlow Castle, you can get RC drilling doing 400m in a day.  That is not going to happen if you start drilling the BIFs, especially the fresh kinds of stuff. This is a region that has had previous mining and exploration success so there are good reasons for optimism in making this work.  Items such as infrastructure will not be an issue and the cost of mobilisation for construction will be reasonable.  All these factors are aligned with the fortunes of the company. Geological Factors of the Projects The geology of the projects is pretty straight forward.  Most of the projects are now at the stage of just needing more drilling.  The aim is to accumulate information to construct some sort of a resource leading to mining.  It is no longer an issue of discovery, the drilling data just need to be consolidated.  The latest announcement on the Toweranna with the release of 136m @2g/t got my attention.  LIke the Ausmex story, where there was the intercept of 59m @1.25g/t Au, and 0.43% of Cu. The 136m to me was some sort of validation that they could have some depth to the story.  These days, I tend to look for the length of intercept and not just grade of intercept.  Repetition over sections is also a good thing. On the 15th April 2019, the company announced the latest drilling result from the Toweranna project.  Figure 6 above shows the drill plan and the drilling can be seen over three sections which are described over Figure 7, 8 and 9.  The cross-sections showed clearly the information which caught my attention.  The drilling did show that the mineralisation at depth could be substantial and of a decent grade. The grade is not going to set any records but if mineralisation does get extended from 200m to 400m, that will be something that you want to really shout to the markets. In Figure 7, the proposed drilling will hopefully put that theory to bed.  One must think that this will happen unless there is a great big fault in between and displace the continuity.  I have not seen any geophysical information but I am assuming that management would have noticed this possibility.  A mineralisation length of 280m would be really good for the share price 🙂 I noticed that in that same announcement, the company made the comment that this style of mineralisation is not common in the Pilbara and has analogies to Wallaby (Goldfields) and the Jupiter (Dacian Gold Limited) The Toweranna deposit shows a style of gold mineralisation not previously known in the Pilbara, but similar to other granitoid hosted gold deposits around the world, many of which host large gold resources (>1.0Moz). Two Western Australian analogues are both located in the Laverton region of the Eastern Goldfields and include: • the Wallaby deposit (Goldfields Limited) – >8Moz resource and producing over 250,000oz per year; and • the nearby Jupiter Deposit2 (Dacian Gold Limited) – 1.6Moz resource. Additionally, the Lamaque and Sigma gold deposits in Quebec, Canada, have both produced over 4.5Moz each for total production in excess of 9.0Moz3. Mineralisation and mining extend at Sigma to over 1800m depth.  Importantly, these large multi-million-ounce gold deposits also tend to occur in clusters, providing longer-term upside to discover additional Toweranna style targets within De Grey tenement portfolio. De Grey is assessing a number of early-stage exploration targets including to the south west of Mt Berghaus. —De Grey Mining Personally, the fact that you have these clusters of mineralisation with decent resource numbers is already different from what is around in the Pilbara.  The closest to something like this could be the Carlow Castle project that is owned by Artemis Resources Limited (ASX: ARV).  I covered this project in an article in late 2018. It was titled, Best undiscovered project: Carlow Castle an unconventional Gold-Cobalt-Copper mineral Project. If there was a negative aspect of this good story, it is that the resources are far apart.  Toweranna is approximately 100km from Winginia and this is going to be an issue in the short term.  I think many projects claim that they can economically mine several satellite pits and make money,  In many cases if not all, I think this is more of a hope than a fact.  This is more of a fact if you are a Northern Star Resources (ASX: NST), a Newcrest Mining Limited (ASX: NCM) or a Rio Tinto Limited (ASX: RIO).  To be fair, if DeGrey can establish bigger numbers to all their projects, then this will not be an issue. It is very early at this point to make an encouraging or non-encouraging call, but the one concern I have is when you look at Figure 9, the mineralisation is not very lengthy.  Sure the plunge may come into play but I would have thought that anything significant will hold true for at least 80m (two sections).  I would have liked to see longer intercepts that will create meat for the resources. Conclusions De Grey Mining Limited has gone through a large transformation process. I remember the first time I came across the company, around 2015 (I think), they were trying to sell off one of their assets. I forget which one now. They were struggling in the market and looking for directions.  Fast forward to 2017 and they became a front runner on the Conglomerate Goldrush.  Couple with a large holding in the Pilbara area and influential investors such as Kirkland and DGO, the company became noticed.  The share price was moving and in some ways, the company was being noticed more than the ARV-Novo partnership. Large sums of money were being raised even though their landholding in the Conglomerate Goldrush was not the most prospective. However, after the dust settled, it is safe to say that DEG may have come off better.  The shareholder list will most likely help with future fundraising assuming that the story unfolds well geologically.  Looking at the data presented by the management, I do see some good signs that the current resource would increase. My one unknown factor is I don’t have much information on the metallurgical aspects and that may or may not turn out to be a deal breaker.  This may have been mentioned but I am sure the standard company issue is that all is well. Time will tell if that is the case. I have no doubt that if management drill more and get a decent number for the tonnage, the matrix will get better and the success will provide a good ending to the story.  The take away from this story is that without the strong shareholding on the register, I would think that with the amount of work required to make this work, most companies will struggle to get it done.  There is going to be a lot of money needed to be spent in the coming years. The downside to such a strong shareholding will be if that translates to a stranglehold on sudden share price run.  In the past, many of these top-heavy companies seem to struggle with this part of the equation.  Time will tell. Disclaimer The information or opinions provided herein do not constitute investment advice, an offer or solicitation to subscribe for, purchase or sell the investment product(s) mentioned herein. It does not take into consideration, nor have any regard to your specific investment objectives, financial situation, risk profile, tax position and particular, or unique needs and constraints. Read full Disclaimer. www.samso.com.au If you find this article informative and useful, please help me share the information.  I try and write about topics that are interesting and have the potential to be of investment value.  It is not easy to find stories that fit those parameters. If you or your organisation see the benefit of what Samso is trying to achieve and have a need to share your journey, please contact me on noel.ong@samso.com.au. About Samso

Ausmex Mining Group or Ausmex (ASX: AMG) has had a lot of attention lately with announcements that they are possibly sitting on top of an IOCG (Iron Ore Copper Gold) source. Recent drilling results have been very encouraging, and they are in elephant country in terms of talking about IOCGs.  When I think of IOCG, I think of Olympic Dam, and if what Ausmex have is anything like that, this is going to be a fantastic story for shareholders.  I am a shareholder of the company and have been for almost two years. A long-suffering shareholder until the recent rise in share price. History I became a shareholder of Ausmex nearly two years ago when they listed on the ASX (Australian Stock Exchange) in May 2017.  It was a rebadging of a company called Eumeralla Resources Limited at a price of AUD$0.08.  It has been a long ride, and the share price has gone as far down as AUD$0.032. The original concept was to explore and add value to the Mt Freda group of tenements.  They have some stockpile of ore that they were going to commercialise, but I was intrigued by the package of projects and the historical drilling results. One of the things I have learned about the Cloncurry area is that it is a very mineralised corridor, but it is not very big in terms of strike length (length of the region).  There have been some big mines and the potential of developing a project to get some of the cream will be good. Corporate Information Market Capitalisation: 63.8M (04/2019) Outstanding Shares:  Approx. 470.7 (04/2019) -including 58.3M placed on 2 April 2019 (Not including 89.25M unlisted options) Top 20 Shareholding:  Approx. 70.4% (2019) – Before placement What is an IOCG? (Source: Geoscience Australia) Iron oxide copper-gold (IOCG) deposits are a diverse family of mineral deposits characterised by the following features: (1) Cu with or without Au, as economic metals, (2) hydrothermal ore styles and strong structural controls, (3) abundant magnetite and/or hematite, (4) Fe oxides with Fe/Ti greater than those in most igneous rocks, and (5) no clear spatial associations with igneous intrusions as, for example, displayed by porphyry and skarn ore deposits. Uranium-rich IOCG deposits in which U is an economic metal are an important yet uncommon subset of the IOCG family. Currently, the Olympic Dam deposit is the only IOCG deposit in which U is extracted as a significant economic commodity. This deposit is the world’s largest single resource of U (BHP Billiton, 2010 Annual Report, www.bhpb.com). In a global context, most of the other IOCG deposits containing higher grades of U are found in the Gawler Craton and Curnamona Province of southern Australia. Based on current knowledge of IOCG deposits globally, it would appear that the IOCG deposits with the highest grades of REE are also confined to southern Australia. Distinctive features (Source: Geoscience Australia) High to extreme paleogeothermal gradients is the critical driver.  What that means to the average person is that it was damn hot at the time of mineralisation.  To achieve this extreme gradient, it has to be of a crustal-scale hydrothermal system to accomplish the massive scale of alteration systems and the masses of hydrothermal precipitates (mineralisation) in individual IOCG deposits.  When we geologists talk about crustal scale, what we mean is that it is a big system.  It’s like comparing the Grand Canyon to the trench you would dig in your backyard for your garden reticulation pipes. There is the presence of two distinct fluids during deposit formation: (1) a highly oxidised fluid (e.g., meteoric/ground waters), and (2) deep-sourced high-temperature brines (magmatic-hydrothermal fluids and/or fluids reacted with metamorphic rocks). In many IOCG systems there is also evidence of volatile-rich fluids during ore formation (e.g., CO2-bearing; see review by Williams et al., 2005, and references therein). To collect so much “mineralisation”, you need to have a topographic depression such as calderas, grabens, maar complexes…etc).  They are conducive to mixing of shallow-crustal and deep-sourced fluids. IOCG deposits are characteristically diverse in their minor element compositions and contain elevated concentrations of many critical commodities. Recently published data for the Olympic Dam deposit have revealed the presence of an extensive range of minerals and corresponding geochemical variation. More than 90 minerals have been identified, and in addition to Cu, U, Au and light REEs the deposit is enriched to strongly enriched in As, Ba, Bi, C, Cd, Co, Cr, F, Fe, In, Mo, Nb, Ni, P, Pb, S, Sb, Se, Sn, Sr, Te, V, W, Y, and Zn (Ehrig et al., 2013). It is interesting to note that almost all of these elements are included in the current study of critical commodities. Australian IOCG Provinces There are two major IOCG provinces in Australia of global significance: the Olympic IOCG Province along the eastern margin of the Gawler Craton in South Australia, and the Cloncurry district in the eastern Mount Isa Inlier of northwest Queensland. In addition, there are several other metallogenic provinces that contain or may contain medium-sized or small IOCG deposits, including the Tennant Creek district (Northern Territory), Curnamona Province (South Australia and New South Wales), and the Aileron province, Northern Territory (Schofield, 2012). Mt Freda Story (Source: Ausmex Mining Group) The project area is approximately 38km from the township of Cloncurry. The famous Ernest Henry Mine which is an iron oxide copper-gold deposit lies in the same area (35km NE of Cloncurry). As of 2017, the mine had the following resources, Measured, Indicated and Inferred Resources for the Ernest Henry Mine (source: Evolution Mining) 95.30Mt @ 0.63g/t Au for 1.92Moz 28.59Mt @ 1.17% copper for 334kt Ore Reserves for the Ernest Henry Mine 51.40Mt @ 0.55 g/t gold for 902koz 15.42Mt @ 1.07% copper for 165k The main component of the whole story is that you have this massive IOCG target that is being worked by Newcrest Mining Limited  (ASX: NCM) within a stone’s throw from the tenement boundary.  I have been a fan of the whole Olympic Dam story, and hence I am excited to be associated with a story such as this in Ausmex. SAM could make all the Difference. Why do I keep bring up Olympic Dam?  When you read about the extent they went about chasing the concept, you realise that it could have been a non-event.  Looking at the image below, the SAM (Sub Audio Magnetic) conductor could be more than impressive. Remember my article about Carlow Castle, the only geophysical method that picked up the mineralisation was SAMS.  In the world of exploration, no one way works 100% of the time, and it is this kind of logical optimism that drives discovery.  If SAM is picking up something real, then this could be the game changer that will work in this instance. The great thing about an IOCG target is that it is big and as mother nature intended, completely random where it put or shares its mother lode.  Looking at the location of that blue speck for the next phase of drilling, one has got to be quietly excited.  As in Olympic Dam, it was not the area of the high that drove the discovery.  It was the periphery of the high, and even the participants admitted that it was a stroke of random genius that decided on that area. The conductive structure that has been defined is an easy target, and if the drilling comes up with good results, this will be a sitting target to drill out.  Imagine what Newcrest would think if a minnow like Ausmex makes such a discovery.  Imagine what the Ausmex share price would do with discovery. Why Do I believe? I do get some of my “confidence” from the fact that you are not dealing with hundreds of meters of cover and being in the middle of the desert.  The intercept at Little Duke when they got 59m @1.25g/t Au, and 0.43% of Cu is very significant in my books.  The first two significant drill holes at  Olympic Dam was, RD1 which came back with 38m @1.05% Cu and RD5 with 92m @ 1.01% copper.  Although the copper values are more significant, one has to be encouraged with the length of 59m from a depth of 73m.  In my book (and it’s not a very detailed book), I think if management can zero in on the source, I am going to be holding onto my shares. There is a diagram (see below) that was released in an announcement that gives a cross-section view of the whole concept.  I am a big believer of a schematic diagram as it simplifies the technical into a cartoon view.  This view was something that sold me on the story, and the funny part is that I think the story got better over time.  As I have said, it has taken a long time, and I hope this comes good. You can interpret the diagram below in any level of technical confidence, but we all know that a missed drill hole could mean a lot, but a persistent team will most likely make up for that missed hole.  Just like the story of Sirus Resources Limited using the last remaining budget to drill holes which led to the discovery of the Nova-Bollinger nickel sulphide mine. The flip side of a schematic diagram is that it is a cartoon and one has to become aware that it does not become a real cartoon.  Schematic diagrams are made to simplify a complicated view 🙂 What does this all mean? The big prize is the potential of tapping an IOCG source, and the reward can be astronomical.  The issue with chasing IOCG style mineralisation and chasing this big pie in the sky is that you will (not potentially) be spending a lot of money.  Western Mining Corporation which is now part of BHP started searching for a copper deposit in 1953 and only found Olympic Dam in 1976.  They spent in today’s terms around AUD$45m to discover that copper mine.  Fortunately for WMC, they not only found a copper mine, but they also found the mother of all mines in copper and uranium and to a lesser amount, gold.  I think they commercialise a few other commodities. It is good to see that Ausmex raised the AUD$7M as they will need that to keep the momentum going.  There is no doubt that there is a lot of noise around and management will have to be very scientific on where to drill. I don’t think there are too many people out in the geoscientific world today that will doubt the way WMC went about exploring.  When you read the book “The Olympic Dam Story” by David Upton, you will see the long and meticulous way the people went about looking for “Olympic Dam”. It took them years of postulating and finally ten holes to get the discovery.  Only 3 of those holes were not barren.  It was almost a 3-year journey, and it took another 13 years to get to production (mostly due to the anti-uranium program).  RD1 was a start, and RD5 was a teaser and RD10 was the discovery.  The time from RD1 and RD10 was over 12 months. Hence, the point is that it is going to take even more patience and even more efficiency on the part of Ausmex management to create even more value for shareholders (ME…  🙂 ) Conclusion To close on this article, the storyline that the management of Ausmex is telling people is the potential of a significant find. As a shareholder, I hope they are correct, and they spend the AUD$7M wisely and manage their salaries like how a chinaman would (if they want advice on how to do that, they know where to contact me) do if they were running the company. I don’t doubt the storyline, but as many “investors” will attest, there have been many great stories that have become lemons.  In my experience, I always say that the proof of concept is the numerous smoke that is in the area and that Newcrest is spending money on the same idea.  It is not a lone ranger concept, and that gives me some confidence. The conductive structure is the other piece of confidence.  Technology such as SAM was not around in the 1970s, so the comparison I have made with the discovery of Olympic Dam may not be so pertinent.  However, as a shareholder, I bloody hope it is the holy grail….. At the end of the day, Olympic Dam is a big deposit. It had 10B tonnes of ore.  Something close to that would be punching above Ausmex weight and all shareholders will be happy. NOTE:  I am a shareholder of Ausmex, and I do want to highlight that this Insight is not meant to give advice and not to influence anyone to buy or sell the shares of the company.  This is my research and my thoughts on the activities of the company.  I have not been paid by the company to write this Insight. Disclaimer The information or opinions provided herein do not constitute investment advice, an offer or solicitation to subscribe for, purchase or sell the investment product(s) mentioned herein. It does not take into consideration, nor have any regard to your specific investment objectives, financial situation, risk profile, tax position and particular, or unique needs and constraints. Read full Disclaimer. www.samso.com.au If you find this article informative and useful, please help me share the information.  I try and write about topics that are interesting and have the potential to be of investment value.  It is not easy to find stories that fit those parameters. If you or your organisation see the benefit of what Samso is trying to achieve and have a need to share your journey, please contact me on noel.ong@samso.com.au. About Samso

Coffee with Samso Episode 13 with Ed Mead, Artemis Resources Limited (ASX:ARV) This episode of Coffee with Samso is all about the “Paterson Goldfields”. A wealth of potential gold and copper deposits could be found in what I feel is a very underexplored province. This mineral belt is about to open up. Ed Mead gives us an update on the latest Share Purchase Plan (SPP) and speaks about the potential of the other projects they have in their portfolio. We discussed the new seismic information made available by Geoscience Australia and the Geological Department of Western Australia. We speak about the positive change in investor sentiment flowing into the exploration industry. PODCAST Disclaimer The information or opinions provided herein do not constitute investment advice, an offer or solicitation to subscribe for, purchase or sell the investment product(s) mentioned herein. It does not take into consideration, nor have any regard to your specific investment objectives, financial situation, risk profile, tax position and particular, or unique needs and constraints. Read full Disclaimer. www.samso.com.au If you find this article informative and useful, please help me share the information.  I try and write about topics that are interesting and have the potential to be of investment value.  It is not easy to find stories that fit those parameters. If you or your organisation see the benefit of what Samso is trying to achieve and have a need to share your journey, please contact me on noel.ong@samso.com.au. About Samso

In the pursuit of Happiness in the mineral resource industry, the mecca of strategies is to secure yourself a “Province or Belt”. I like the word Province as it feels like you have got more :-).  For Echo Resources Limited (ASX: EAR), it was the realisation that the Yandal Belt is a province of great wealth that till now has not been fully realised. The Yandal province has brought much wealth to the gold industry and has been a known gold producing region. The famous prospector Mark Creasy cut his teeth here and made his first fortune (a 150M fortune) kicking rocks here. Starting Point Echo Resource listed on the ASX (Australian Stock Exchange) in 2006. It was a robust listing with AUD$6M which in those days was a right amount of money. They had one project in Western Australia and several in Queensland. A simple strategy of wanting to chase a gold, copper and nickel project. They are pretty high standards, • Gold: > 3M ounces @ >3 g/t Au • Copper-Gold: > 440M pound copper @ >1.5% Cu equivalent • Nickel: > 90M pound nickel @ >5% Ni This story is not a greenstone discovery story but one that is impressive not for their expectations but in the fact that at that time, they were able to secure such a sizeable acreage in such a prospective province. According to their information, they had Indicated resource in the ground, • 196,000 ounces of gold (75% Indicated) • 97,000,000 pounds of copper (75% Indicated) • 924,000 ounces of silver (95% Indicated) History Life for the directors of Echo Resources has been volatile. Starting with the combination of Queensland “base-metal” projects and a West Australian gold project was always going to be challenging to juggle. I have always looked at such portfolios as one that is for the BHPs of the world. Small minnows should stick to projects that make sense logistically. There is nothing wrong with being multi-commodity, but the projects should be geographically close to each other. I think when I see portfolios like that, I know that 3/4 are a space filler. If you show me that you have a cash balance of 20M, then I will change my views. As expected, in December 2014, Echo Resources announced that they would be divesting their Queensland projects. When I look at those projects, the first that came to my mind was that is just too difficult. A swag of environmental issues will probably be arising or some land access issues. I will say that I did not investigate as that is no longer an asset of the company. What is exciting and humorous is that in 2015, the company received a 249D requesting Board make changes. That indicates to me that life on the Board was “interesting” The Board would have been affected with significant shareholders meddling, and in most cases, they would have hampered real work. Shadow director things are the worst for people who want to get things to happen. In September 2016, the company announced the friendly merger /takeover of Metaliko Resources Limited. In December 2016, the merger created the present package of tenements. A 1600 square kilometre coverage of the Yandal Province. Corporate Information Market Capitalisation: 127M (03/2019) Outstanding Shares: 551M (03/2019) Top Twenty Shareholding: 60% (03/2019) Why is the Yandal Province Attractive? I am familiar with the Yandal province due to my time working at Bronzewing and working with a group with some holdings in this area. It is a great place to explore, and there are more questions than answers. I worked in the area in the 1990s. Firstly as a field assistant and then being “promoted” to a graduate geologist in 1992. It was my first job out of University with Great Central Mines (No longer exist) on the Bronzewing project. When I arrived,  it coincided with the time when they got the discovery result from the first pass RAB drilling that brought a mass of activities that led to the discovery of the Bronzewing gold mine. As usual, unbeknown to me, that period of my employment turned out to be one of two discovery teams I was to get involved with in my geological career. The other was the Merlin Diamond Field. Again unbeknown to me, I had drilled through the pipe and did not understand it. What I did realise was that it was different from the other holes I had supervised at that time. Every time I went on break, there would be one more drill rig, and more people were coming into the camp. When I arrived in August 1992, there was one RC rig at Mt Joel and one RAB drilling at Bronzewing. When I left in January 1993, there was four diamond rigs, four RC rigs and one RAB (mine). The rest is history. So What’s the Fuss? The reason I mentioned my working experience is to point out the fact that the last real exploration activity for the Yandal Province.  There has not been little exploration since that mid-1990s period. Therefore, the chances of finding something similar to Jundee, Mt McClure, Bronzewing sitting there with millions of ounces of resources, are pretty good. In my opinion, what Echo Resources may have is something like what Gold Road has with their Yamana Province. The last time I saw something like this was when Mt. Holland Gold Field ( Now better known as the Early Grey Lithium Deposit) was up for grabs. That Forrestania Gold Field was well drilled and mined in the 1980s and 1990s. A nice tenement package like this has never been present. The Package When I came across Echo Resources, I was taken aback with the package of tenements. The whole package is 1600 square metres and in the Yandal Belt? That is impressive. Hence I started to have a look at how this came about for Echo Resources. To top it all off, I see that Northern Star is a significant shareholder as well. The merged package as shown below looks impressive.  Whatever Echo discover here is going to have a big brother waiting to do all of the above.  Name the option, and they will want it. Why would they not want it? Jundee is just up the road.  Remember that Jundee is an outstanding deposit. It was one of the best discoveries at that time and probably still is in today’s standards. The Resource The resources look robust, and I am assuming that all the financing talk and the introduction of mining personnel into the Board and senior management tells me that they are gearing up for mining.  In saying that, I will assume that the numbers are stacking up.  In my time looking at these projects (not claiming I am an expert, just saying that I am :-), like every punter),  I do think about the grade and the resource.  The grade of 2.1g at Julius with 96K ounces kind of reminds me of the lower grade that Gascoyne Resources had on their deposit.  They mined that, and I think things are not going well. I am not saying that this is a similar deposit, but I find that there are a lot of smaller companies trying to be producers with not enough resource.  When things are not going well, their margins get squeezed, and the house of cards begins to fall. Silverlake Resources Limited (ASX:  SLR) did it well with limited resources, so I am aware that it is not always about the size of your resources.  Their early downfall was mainly due to their mill and not the mine.  When they got that to happen, it was all smooth sailing.  The inside factor on that was Les Davis, and Chris Banisik were playing with the same style of deposits during their time at Western Mining in Kambalda.  So they knew what they were doing.  What happened, in the end, is another story but the company did well when they were mining Daisy Milano. The upside for the resource is that you have the higher grade stuff coming from Orelia.  The higher grade at the bottom of the pit looks great but renovating a house sometimes is not the best idea.  They are saying that they will mine the bottom of the pit and they don’t have to spend a lot of money to cut back.  I have seen many a great idea like that come undone spectacularly. Conclusion When I first looked at Echo Resources, my impression was this is an exciting story.  It seems to have the ducks in line and their future appear bright.  I say bright because I like the potential of the area.  There are some potential ugly duckings in the package but which package does not.  I love the fact that Northern Star Resources (ASX: NST) is a significant shareholder (?) and they have put their money into the business. There is no need for me to comment on the geology nor the deposit potential.  The fact that these guys have put money in and the management content tells me that a decent amount of due diligence has happened.  The result of that process of due diligence would have been positive. I do remember when I was doing some mapping with a senior guy, we saw a heap of quartz veins, and they sampled well. But when we sent a rig to test them, we came up with nothing.  The system there is very mineralised.  Maybe some of the recent discoveries were the result of those previous works. Having a significant shareholder with a mill close by is a substantial part of this puzzle.  Northern Star will also be the big brother watching the play, and if they need more ounces for their inventory, it is a done deal.  Good or bad, it can be hard to say sometimes, but I think in this case, it is probably closer to the right than sorry here.  Well, it’s too late to have that debate 🙂 Disclaimer The information or opinions provided herein do not constitute investment advice, an offer or solicitation to subscribe for, purchase or sell the investment product(s) mentioned herein. It does not take into consideration, nor have any regard to your specific investment objectives, financial situation, risk profile, tax position and particular, or unique needs and constraints. Read full Disclaimer. www.samso.com.au If you find this article informative and useful, please help me share the information.  I try and write about topics that are interesting and have the potential to be of investment value.  It is not easy to find stories that fit those parameters. If you or your organisation see the benefit of what Samso is trying to achieve and have a need to share your journey, please contact me on noel.ong@samso.com.au. About Samso

Originally posted on Smart Money Gains Bullish price action in spot gold and high-grade copper has resulted in an increased appetite for junior exploration issuers from both institutional and retail investors alike. Improving underlying market conditions, coupled with the seasonal nature of junior exploration stocks presents a lucrative entry point for those in search of exposure to alpha returns. Over the last century, gold has materially outperformed the general market by a ratio of five-to-one. Gold is up 350% over the past 72 quarters, while the S&P 500 realized gains of only 70% in the same timeframe… The Smart Money Gains commodity desk has initiated coverage on well-financed precious metals explorer; strategically located in British Columbia’s prolific Golden Triangle region. This company is equipped with a seasoned management team, armed with a track record of success. This Explorer seems poised to capitalize on the looming bull market in precious metals while it expands upon last year’s considerable discoveries… The End Of The Equity Bull Market Is Nearing… Various recession indictors are suggesting a major market correction appears imminent. During this critical time it’s crucial for investors to diversify and de-risk their portfolios by positioning at least 10% of their assets in precious metals. Nearly ten years into one of the longest bull markets in history, with the majority of asset classes appearing dangerously overvalued it is imperative that as many investors begin increasing their precious metals exposure as a hedge against future market risk. The New York Federal Reserve recession probability indicator spiked to 10-year highs on February 7, 2019. Gold has outperformed the S&P in the 12 months post warning 6 out of 8 times this has happened historically. There are a variety of ways to invest in gold including bullion, miners and ETF’s but the method that offers the greatest possible returns is investing in gold exploration companies that show great potential for major discoveries. The World’s Premier Exploration District The Golden Triangle has long been one of the most prominent mineral exploration districts in the world. Spurred by improving market conditions and material discoveries, exploration activity in the area has been sharply increasing in recent years. Over the past few years, the Golden Triangle has experienced numerous world-class discoveries. Every indication is that this trend will continue through the 2019 field season, as companies continue to deploy exploration capital into the ground. March Is When Gold Exploration Stocks Catch A Bid The share prices of explorers situated in the Golden Triangle are inherently cyclical due to the extreme weather conditions during the winter months in the region. Typically, stocks perk up a few months before drilling commences and perform very strongly during the drill season. Usually the middle of March, shortly after the conclusion of the Prospector Developers Association of Canada (PDAC) Conference is when these stocks start to heat up. PDAC is the largest mining convention and exhibition show in the world and should create a buzz, and with these catalysts in place the right exploration picks have proven to be extremely profitable for investors. This Golden Triangle Explorer Is Poised For Big Gains In 2019… One company who will be looking to leverage their success from last year is Golden Ridge Resources. With continued bullish price action in underlying commodity prices, Golden Ridge is again mobilizing on their 100% owned Hank Project. Golden Ridge Resources TSXV: GLDN FWB: 44G Market Cap: $9,107,000 Shares outstanding: 79,191,834 Treasury: ~C$1,700,000 Chaired by prolific mine finder Larry Nagy, co-credited with the nearby discoveries of the Snip and Eskay Creek mines, and led by young up-and-comer Michael Blady, Golden Ridge has built a team with a history of success in the Golden Triangle and abroad. Golden Ridge deployed over C$4,000,000 exploring their Hank property since 2015, completing nearly 11,000m of diamond drilling in the process. Golden Ridge also completed several comprehensive geophysical and geochemical surveys on the accompanying ground. In 2018, Golden Ridge was credited with one of the years major discoveries in the Golden Triangle on their 100% owned Hank project. The Hank Project 2018 Discovery The Company discovered the makings of a sizable Cu-Au-Ag porphyry headlined by a discovery hole of 327-meters grading 0.31% copper, 0.35 g/t gold and 1.94 g/t silver in drill hole HNK-18-001. Golden Ridge followed it up with an even more impressive 319-meters of 0.34% copper, 0.42 g/t gold and 2.20g/t silver in hole HNK-18-013. This discovery was particularly exciting as it was an original discovery by the company dating back to a geochemical survey completed over the zone during the 2015 field season. 2019 Exploration Campaign All the assay results and geological data from the 2018 drill program will be paramount as the company looks to expand on their 2018 Williams and Boiling Zone (HNK-18-010: 20.00m of 11.63g/t Au and 13.8g/t Ag) discoveries. With geological similarities to Imperial Metal’s Red Chris deposit and GT Gold’s Saddle North discovery Golden Ridge is looking to advance the project to the next stage. The Companies geologists believe the broad intervals of intense potassic alteration with strong bornite and chalcopyrite mineralization indicate the presence of a large alkalic Cu-Au-Ag porphyry at depth. IP chargeability data collected in 2018 indicate that only the fringes of the porphyry have been drilled with the system wide open to the North and East. 4 Reasons this stock is primed for growth Experienced management team with a documented history of success in the Golden Triangle; Two major discoveries made in 2018; positive drill results this summer will again cause a material surge in GLDN’s share price; Catalysts in place for continued price appreciation of gold in 2019; and, The cyclical nature of the Golden Triangle stocks offers a great opportunity for investors that acquire a position early in the cycle. Bottom Line Last year GLDN went from a $0.10 to $0.55 on over 200M shares traded during the exploration season. The stock has retreated in recent months following typical seasonal cyclicity trends of Golden Triangle explorers trading at $0.12. This price range offers an excellent entry point into the stock to take advantage of another exciting summer season of exploration in the Golden Triangle. Disclaimer The information or opinions provided herein do not constitute investment advice, an offer or solicitation to subscribe for, purchase or sell the investment product(s) mentioned herein. It does not take into consideration, nor have any regard to your specific investment objectives, financial situation, risk profile, tax position and particular, or unique needs and constraints. Read full Disclaimer. www.samso.com.au If you find this article informative and useful, please help me share the information.  I try and write about topics that are interesting and have the potential to be of investment value.  It is not easy to find stories that fit those parameters. If you or your organisation see the benefit of what Samso is trying to achieve and have a need to share your journey, please contact me on noel.ong@samso.com.au. About Samso

Champion Iron Limited (ASX: CIA, TSX: CIA) is an iron ore exploration and development company with significant projects in the southern Labrador Trough, Canada’s largest iron ore-producing region. Champion Iron, through its wholly-owned subsidiary Champion Iron Mines Limited, is developing eight iron-rich projects in a 707 km2 area. The projects are all strategically located close to the electrical grid, all-season roads and railway lines. This infrastructure connects the projects to a terminal located in water that does not freeze, on the north shore of the Gulf of St. Lawrence. The fascinating story with Champion iron is their vast resource.  As you can see in the diagram below, it has several billion tonnes but with what Australians would consider low grade.  However, they appear to be able to beneficiate the grades to over the 60% mark and are producing very impressive tonnages for sale.  I have very little knowledge of the iron ore industry in this part of the world, but I am impressed.  If they can beneficiate all these tonnes, this could be a significant play for investors. An associate had suggested I write about Champion Iron and on first look, I will admit that I was not so keen.  Upon more detail reading, I was curious about the size of their resource and the share price journey.  The share price has had a great ride and as you will agree after reading this article, technically,  I have a feeling, this journey may have only started. Projects As I mentioned the resources shown in the diagram above is super impressive.  With the recent iron ore pricing taking a run this has got to be a company to look out for in any portfolio.  The Australian magnetite projects differ significantly from the metasomatic varieties in the tropical areas where magnetite “pods” can grade up to 60% plus.  However, these Canadian varieties are lower in grade, but I believe they occur as weathered varieties which I assume will help in the economic department during the beneficiating process.  I think the structure of the magnetite must allow a more natural beneficiation process. Capital Structure (Data as of November 7, 2018) Market Capitalisation: 682M Top 20 Shareholders: 51.9% as of 2018 Share Outstanding * | 419 319 747 Company stock options | 11 050 000 Compensation options | 21 000 000 Champion is on the ASX and the TSX.  It has been an exciting share price journey.  The company was a merger of Champion Iron (TSX) and Mamba Minerals Limited (ASX).  The merger was initiated in the last quarter of 2012 and completed in the first quarter of 2013. Merger Details • Announced in December Quarter 2012 • The merger of Mamba Minerals Limited and Champion Iron Mines (TSX: CIA) • Champion shareholders to receive 11 Mamba shares for every 15 shares of Champion shares. • Raised AUD$10 million with the merger. The recent upsurge in pricing appears to have taken hold after the acquisition of the Bloom Lake project in 2016.  The addition included related rail assets and a capital raising of C$30 million at C$0.16.  The transaction brought in two private equity firms invested in the placement, • WC Strategic Opportunity( a Wynnchurch Capital LLC portfolio company) • Resource Capital Fund These two funds are big players, and this would have been a great sign of support from the “smart money” and the “big money sector”.  It would be a boast of confidence to the general market.  The old saying” safety in numbers” or rather ” Don’t get me angry, my big brother behind me will fight you” :-). Labrador Trough – What is the deal? (source: Canada Natural Resource) The Labrador Trough is something like the Pilbara Region of Western Australia. A mass of super-rich mineralisation with a lot of iron ore.  It has been mined since 1954 and currently, production is at a rate of over 30 Mt per year. The region has several billion tonnes of ore outlined in fine-grained, cherty magnetite iron formation. The iron deposits occur within an extensive Proterozoic geosyncline.  Several facies of iron formation within the Sokoman Formation reflect variations in chemical composition and depositional conditions. This band extends for about 1100 km southeast of Ungava Bay through both Quebec and Labrador. Further south, it turns southwest past the Wabush and Mont-Wright areas to within 300 km of the St. Lawrence River. The iron formation is essentially folded and faulted along most of its length. The degree of metamorphism is variable, ranging from intense in the northern and southern portions to greenschist facies in the central part. Sokoman Formation (source: Newfoundland and Labrador Natural Resources) The Sokoman Formation consists of a 30–170-m-thick sequence of cherty iron-rich sediments and is continuous for 250 km from Labrador City to Schefferville.  It also continues into Québec in both directions and is one of the most extensive iron formations known on Earth. The lower part of the Sokoman Formation consists mainly of oxide-rich beds which are the most important economically, with iron-rich layers and lenses commonly containing more than 50% hematite and magnetite. Iron Ore Types (source: Newfoundland and Labrador Natural Resources) Generally,  the majority of iron ore production, including that of the Labrador Trough, comes from iron-rich cherty sedimentary rocks and their metamorphic or supergene derivates. All iron-ore deposits in the Labrador Trough formed as these sediments and are eventually altered and metamorphosed in some form and affect grade, mineralogy and grain size, which impacts the economic viability of iron-ore deposits. In addition, faulting and folding led to a repetition of sequences in many areas, which significantly increases the surface extent and mineable thicknesses of the iron-ore deposits. What the above paragraph means is that all the geological “cooking” creates a variety of ore types with differing grades. Three main types of iron-ore deposits are as follows: Taconites are found throughout the Labrador Trough. These are weakly metamorphosed sedimentary iron formations (15 to 30% Fe), with magnetite as the dominant iron-ore mineral. None are presently mined in the Labrador Trough. Metataconites are present in the southern part of the Labrador Trough, especially in the Labrador City– Wabush area. They have been moderate to strongly metamorphosed, and the grade of these iron- ore deposits is generally higher than unmetamorphosed taconites (up to 41% Fe). They are easily beneficiated into iron concentrates (approximately 65% Fe), which are ideal for pellet production. Direct Shipping Ores (DSO) are secondary iron ores containing >50% Fe that formed from the enrichment of primary taconites. Such ores require minimal beneficiation and have very low mining costs. Two main types of DSO deposits occur in the Labrador Trough. Soft, friable, fine-grained, variably porous deposits occur mostly in the Schefferville District and may be related to deep groundwater circulation and supergene enrichment associated with Mesozoic (Cretaceous) tropical climates. Specifically, silica and carbonate were leached from the ores, leaving a high residual iron content. Hard DSO deposits occur in several locations, including Sawyer Lake and Astray Lake, southeast of Schefferville. These are dominated by blue hematite and martite, and, typically, are denser than the soft, friable ores, with no evidence of an increase in porosity. The origin of these deposits is unknown, but they may be related to early hydrothermal processes. In addition, some DSO deposits have characteristics of both the soft and hard DSO deposits (e.g., the Houston deposits close to Schefferville). What could this mean for The Future? According to my research and the information from Champion Iron,  the iron in the UIF, MIF and LIF is for the most part in its oxide form, mainly as specular hematite and specularite in its coarse-grained form and to a lesser extent, like magnetite, with some of the iron in iron silicates. Recent research on iron formations in Australia and Brazil has emphasised the importance of structurally controlled hypogene alteration and upgrading of iron formations before supergene alteration. Such models imply that not all high-grade iron ores are linked to surface weathering and leaching processes, which in turn suggests that some ore bodies of this type may lack surface expression. In Australia, there are notable examples of high-grade zones that sit beneath unaltered low-grade primary iron formations. (source: Newfoundland and Labrador Natural Resources) The Koolyanobbing iron ore mine (Southern Cross, Western Australia) has a distinctive ore.  It is not your typical BIF types.  When you consider that, understanding the ores at the Labrador Trough could be the way to unravel deposits that have been ignored.  The mineral exploration industry has a bad habit of following historical methods, and the lack of funding means new techniques and new thoughts are expensive and dangerous. Conclusion Recently, I learned that several Chinese companies are searching for lower grade ore for beneficiation.  Chinese steel mills prefer magnetite to hematite, and they can bring grades over 10%.  Now that is very impressive. In steel mill language, magnetite is the preferred mineral.  One report mentioned that up to 15 billion dollars were spent in the Labrador Trough as investments.  This kind of investments is long term looking people and the Chinese are very good with this kind of thinking. Helping these miners in the Labrador Trough is the Quebec government.  The Quebec government had set aside the C$20 million from its Northern Plan Fund to contribute to a study to determine the optimum rail option for iron ore miners in the Labrador Trough region to reach ports to service international markets competitively. What the Quebec government have done is very smart with the allocation of funding to help build infrastructure and encourage studies to improve the delivery of products from the Labrador Trough. In the 1960s the Western Australian government did the same for the Pilbara region.  This government spending allowed all this wealth created the iron-ore industry as we know it. Otherwise, it will still be in the ground.  The booming iron ore industry in Western Australia is all in part due to the foresight of previous government spending and policies. Like all commodities, ports are an essential part of the equation.  Currently, as I am lead to believe the ports handle Cape-Size and Chinamax vessels.  These port all the mineral wealth to be realised by allowing labrador miners a great passage to markets. Disclaimer The information or opinions provided herein do not constitute investment advice, an offer or solicitation to subscribe for, purchase or sell the investment product(s) mentioned herein. It does not take into consideration, nor have any regard to your specific investment objectives, financial situation, risk profile, tax position and particular, or unique needs and constraints. Read full Disclaimer. www.samso.com.au If you find this article informative and useful, please help me share the information.  I try and write about topics that are interesting and have the potential to be of investment value.  It is not easy to find stories that fit those parameters. If you or your organisation see the benefit of what Samso is trying to achieve and have a need to share your journey, please contact me on noel.ong@samso.com.au. About Samso

5 Points you need to know before investing in a small-cap resource company on the ASX?  Many would ask, are you trying to sell a How to Blog? My answer is simple.  I have been in this industry for nearly 30 years, and I feel that the structural parameters of risk and reward ratio that “entice” investors have not changed after all these years. You would be surprised how often investors ignore these simple basic questions.  In the last ten years of “corporate” work, I have heard so many people say that promoters misled them and were all liars.  What I know is that in many instances, the fault is in not asking these simple questions.  It is not negligence, its that fact that this is a unique and dangerous sector but filled with the excitement of more substantial capital gains. How many times have you been approached to look at a company that is raising money, doing an RTO, an IPO or merely being asked to buy on the market? We all know that investing in a small-cap resource company on the ASX can be very challenging. When you look at this industry, many commentators have compared the process much like going to the casino. In many aspects, I agree, but every gambler has a system that uses science to explain the process. It is this science if applied properly that increase your chances of getting a good result from investing in a small-cap resource company on the ASX. So What Should We Be Looking For? Investing in a small-cap resource company on the ASX is something of a unique beast as it deals with the blue sky but yet requires a lot of the first principle of investing, DYOR (Do Your Own Research). The issue with the average punter and those that are new to the industry is that many of the research may sound like a foreign language or don’t see the full spectrum of activities behind the scene and don’t realise that what they read and see is not necessarily a result in reality. In my opinion, there are many factors to put on a checklist. However, let’s discuss those that are probably more relevant, more important or more critical. These points are not a saviour of a decision but give an excellent guide to what you would want to know, before investing in a small-cap resource company on the ASX. So How Does it Normally Work? For your average Joe investor, opportunities arise where an “introducer” proposes to you to invest your hard-earned money into a company through one of these five scenarios, • RTO (Reverse Takeover – probably less likely in time to come as the ASX is slowly making it less attractive to do this method.) • IPO (Initial Public Offering) • Placement • Rights Issue. • Buy on Market RTO Lately, the RTO or Reverse Takeover was a flurry of activities, but I see this as less likely. The ASX is now making it hard for an easy RTO and instead of making participants go down the route of re-compliance and do a new IPO. All pathways to the “easy money” no longer exist. IPO The traditional IPO is probably the least favoured as there is a perception that it is harder for 20 cents to get to $1 than for a stock to go from 2c to go to 10c. This kind of thinking is purely an act of market psychology and I feel that strongly through my trading activities. The market is all about psychology and very little on fundamentals. One can argue that but what makes a stock price plummet many percentage points overnight, technical or psychological? Placement Placements are the most commonly used instrument, and they occur very often. When you are dealing with a business that does not make an income and the investors make money from the capital appreciation of the share price (and this is why activities are essential for the company), you would expect cash burn rates to be higher than usual. The downside of placements is that they usually are not placed to the public and all the good ones are for the “boys” club. And when you get a look, you would wonder why am I getting this? Rights Issue Rights issues are an interesting phenomenon as it is like a double edge sword. Rights Issues are taken to raise more money from existing shareholders and sometimes, it’s a good thing, and sometimes it’s a bad thing. It is also used in many cases to change ownership of the management and the shareholding. Don’t get me wrong, this happens in all the other forms of capital raising, but this is just the most commonly used instrument. It is also the most “legal” way of doing things :-). Buy On The Market Buying on the market is the most easily understood. Buying on the market is least used to influence a sinister plot. In saying that, I am assuming that you are not going to buy a controlling stake from a recommendation. The professionals do take controlling stakes from the open market. I have seen this happen more than once, but they are people who have a mandate/agenda to achieve a future yet determined purpose. So what are the points to look out for? With over 30 years of experience, it usually only takes a quick 5 minute of reading and investor deck, an Information memorandum or Presentation for me to decide if I need to spend any more of my time. You will be surprised at the numerous name changes that projects can go through with a new concept or a new super idea over and over again.  The predominant motive for investors in this sector is to make money and make good capital gains. Otherwise, you would buy BHP (ASX: BHP), Rio Tinto (ASX: RIO), National Australia Bank (ASX: NAB) or Westpac Bank (ASX: WBC).  Investors in this sector tend to turn a blind to the “sharks” in return for the share price heading north. Let’s try and make this simple and discuss some of the critical points that I think one must check before throwing our hard earned money into the hands of these “sharks”.  In my normal checklist are these items to be considered, Technical Merits Corporate News People involved Brokers Market Perception of the Commodity 1 – Technical Merits All projects have a specific component that will make it happen or not.  A good friend of mine once told me that all diamond mines have something unique that will make it viable.  If not for that component, the mine will never happen. He said, look at Argyle Diamond mine, it’s the Pink diamonds that make it viable. You could also add the marketing of its browns as Cognac and Champagne diamonds was anything but a spectacular stroke of genius.  Take Ellendale diamond mine, the yellow diamonds kept the company going, and as soon as that marketing game finished, the company was in administration. On the other side is the Letseng Diamond mine in Lesotho. Letseng is characterised by extremely low-grade ore (less than 2 carats (400 mg)/hundred tons) and is known for producing huge diamonds, having the highest percentage of large diamonds (greater than 10 carats (2.0 g)), giving it the highest dollar value per carat of any diamond mine. The world average is roughly US$81 per carat, while Letseng averaged over US$1,894 per carat for the first six months of 2007. My point is that the technical merits of a project are not the headline numbers. It is about possible production numbers.  It is about the intrinsic value that it has which makes it a viable project.  Also, depending on your investment strategy, are you looking for capital gain while the story is in high momentum or when it comes to production.  Again, these are essential factors to consider. In many gold projects, investors get excited with big numbers, but they need to realise that an interception of say 5m at 125g/t is markedly different from 150m at 2.5g/t.  The example I have given there is almost on two extremes of the spectrum, meaning that the first may not work and the second is practically a discovery. 2 – Corporate News Corporate activities are the most contentious point for investors and vendors of projects.  In reality, most plays are in a public company scenario and where everyone is going to make lots of money from the share price going up.  For companies that are in the ASX, it is common for vendors of projects to be paid in part or in full with company shares.  The share price going up is what vendors are all hoping that they will have their payday soon.  Under present ASX listing rules, in most cases, vendors of projects have their shares escrowed for up to 12 months or at least 12 months (the shares are held and not allowed to sell till a particular time in the future). This is where the problem starts for everyone.  Everyone benefits with a rising share price, and if your drill hole does not come right, that is not going to be good for all shareholders.  As companies “make money” through placements, the company wants as high a price as possible before they start issuing shares for new money.  As you can see, the ingredients for mining the market begins, and with all schemes, it just gets worse as time goes. The Old Boys Club, kool to some people. (source:Tailgatecorneroffice) The term “mining the market” is very well used and the losers are the shareholders, and the smaller you are, the more insignificant your thoughts and feelings are to the company.  Sweet deals are very commonly placed to “the boys club” to average their cost down while the smaller shareholders are ignored. 3 – People The management team/directors need to be compatible with the activities of the company.  As the company is a non-income generating spending machine, those paid an income need to be doing it’s best to reduce the expenditure.  A mineral resource company with AUD5m in the bank is not going to have a lot of money left if they are paying themselves a high wage and employing everyone under the sun. I would go further in saying that the directors who are geologist should be the ones sitting on drill rigs.  Mark Bennett is one that is a real example of saving money and doing it all and the result was the discovery of the Nova-Bollinger nickel-copper mine with Sirus Resources Limited.  Sirus is now absorbed into IGO (ASX: IGO).  There are too many examples of directors who are on a high wage and not making any real effort to reduce the spending.  For a small company, controlling cash is a significant issue as the cost of operating a public company and making sure you get the stories and maintaining market expectations is very difficult. 4 – Brokers The broking industry is not doing well at this time as there is a downturn in the small-cap sector.  My 30 years in this industry have taught me that the broking industry is one that is very robust.  It is incredible how they can survive for this long.  My relationship with brokers is in a ubiquitous phrase; the broking industry gives you the umbrella when it has stopped raining.  It is very frustrating, but I do understand why that is the case.  The brokers are only interested in no lose stories, and they negate bad stories by being lined with options and shares that are or will be “in the money”. This is a commercial world, and that is a simple truth.  Hence, when these guys start coming to you, be very aware that all the walls are lined, and you are the fuel that the vehicle needs to get going.  They are given the incentive to approach you and compensation has been given to them in case they lose you as a client.  Brokers play an essential role in helping companies to promote however I am open to thinking that in today’s social media world, companies can do a lot of promotion internally with the right personnel. Don’t get me wrong.  I am not saying that the brokers are all shonky hub stealing people in suits.  What I am saying is that they are in this business to make money.  The everyday investor is also in this business to make money.  All I am alerting to is that investors should understand the motive of the introduction.  There is always going to be a level of conflict of interest as they make money for companies in getting you to invest, but that is just the nature of the game.  The other way to look at this is that you would not get the opportunity to make money without them. 5 – Market Perception of the Commodity Market perception of the commodity is obvious, and as I explained in my previous blogs with zinc  (Zinc Market- What happened to the price surge?; 7 Interesting Zinc Companies on the ASX), market perception may not necessarily be the market reality.  In the first part of 2018,  I started telling people that I believe that the simple commodity like nickel and copper will flourish.  At that time, cobalt was still the darling with many commentators always saying, get cobalt and all your worries will be over. At that time, I think Cobalt pricing was near USD 92,000.  As I write today, the price of cobalt is around USD 32,000. Nickel and Copper are showing good signs of recovery, and simple commodities such as iron ore are now back in favour.  As I tell my associates, I don’t need to have lithium as I don’t need an electric car, but I need the essential metals to have that car.  The next EV story could be hydrogen or tungsten or vanadium, but I need the nickel, copper and the iron in any of those scenarios. Gold is a good example. After the crash in 1999, it was USD 240/ounce, and today it is over USD 1300/ounce. Market perception, in my opinion, takes into consideration, timing, price upside and demand upside.  When all three points are aligned, then, in my opinion, that is a good thought. Conclusion It is never easy to decide what is a good investment or the right timing and I am not professing that I am an expert.  The more I write, the more there is to share, and suddenly I realise that there is an endless amount of mines field that I have seen and heard over my 30 years.  For example, it was only recently that I realise that no more than five personalities control the whole mineral resource small-cap sector in Australia.  Everyone else feeds from them and deals are done in a myriad of ways in companies that are related to or friendly to these identities.  I don’t mean that in some illegal manner, what I mean is that they have positioned themselves well over time in projects that are in their portfolio. To get a good look into whether the investment is a good move, one needs to understand how the market works in this industry.  It is easier for the likes of myself to understand if there are any big holes in the presentation, but it is also impossible to say that a bad reputation means a bad investment. In some cases, you can make a lot of money with a functional promoter with a lousy project.  Sometimes, it is the opposite. When I started this blog, I thought I could cover everything that I wanted to say.  However, it appears that I have already written too much and there is still so much to share.  I guess that this means that I will have to do the rest in another blog.  These 5 points are just a rough guide to what I think I know, so there is no need to crucify my thoughts.  I have been wrong, and luckily for me, I have been correct most times 🙂 Disclaimer The information or opinions provided herein do not constitute investment advice, an offer or solicitation to subscribe for, purchase or sell the investment product(s) mentioned herein. It does not take into consideration, nor have any regard to your specific investment objectives, financial situation, risk profile, tax position and particular, or unique needs and constraints. Read full Disclaimer. www.samso.com.au If you find this article informative and useful, please help me share the information.  I try and write about topics that are interesting and have the potential to be of investment value.  It is not easy to find stories that fit those parameters. If you or your organisation see the benefit of what Samso is trying to achieve and have a need to share your journey, please contact me on noel.ong@samso.com.au. About Samso