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Following an oversubscribed initial public offering and a golden debut on the Australian Securities Exchange, Perth-based exploration company Miramar Resources has a lot to look forward to in 2021. The Yield spoke to Executive Chairman ALLAN KELLY.
It may be the new kid on the block, but WA exploration company Miramar Resources (ASX:M2R) is making quite a splash.
In September 2020, the company’s heavily oversubscribed initial public offering raised $8 million in just hours at 20c per share. Then on October 22, the company went public, opening on the Australian Securities Exchange at 53c per share before settling at around 41c by day’s end.
“We've got a very simple story,” he says. “We've got highly prospective exploration projects in very well endowed gold areas, but for whatever reason, the projects are underexplored, and they're right next to existing mines and processing plants.
“Our whole strategy is about creating value for shareholders by making discoveries, picking up assets cheaply, adding value by doing good exploration and then looking at how we monetise them for shareholders. That could be developing ourselves, or it could be doing a joint venture with someone, or it could be selling. So all options are on the table.”
Miramar’s successful float can also be credited to confidence in Kelly, who has a proven track record in exploration. A geologist and geochemist with over 25 years’ experience, Kelly has worked across WA, South Australia, Alaska, Canada and Mexico, mostly in gold exploration, but also in nickel, iron-oxide and copper.
In 2009, he established Doray Minerals, a gold and copper venture he successfully listed in early 2010.
“We took Doray from discovery to production in about three years and for a little while there, it was the highest grade, lowest cost gold operation in Australia,” he explains.
In just four short years, Kelly had grown Doray to become an ASX300 gold producer that funded and built two high-grade gold operations. In 2016, he left Doray to establish Alaskan-based Riversgold. Doray, meanwhile, was sold to Silver Lake Resources in 2019 in a $421m merger.
At Miramar, Kelly and his board have significant skin in the game. Together they hold around 12 per cent of the company, meaning their interests are directly aligned with shareholders. The board’s goal is to create as much value as possible, and quickly.
The current focus is on the Goldfields-based Gidji JV project, a tenement surrounded by major gold deposits 15km north of Kalgoorlie. Things here are moving swiftly.
“We’re currently in the process of planning our first drilling program at Gidji. We've got people up there pegging and clearing and, all going well, we should be drilling at the end of this month. That's about four or five weeks from listing to first drill campaign. That's great. That's what people want to see,” says Kelly, adding that the company is looking towards a resource drill-out by mid 2021.
“If we can drill out even a couple of hundred thousand ounces, that would have a huge impact on our share price, but it would also show that we’ve got a real story – we’re not just an exploration company anymore,” Kelly says.
“We can start looking at the project in terms of development. These first couple of programs at Gidji are going to be pretty exciting.”
In addition to Gidji, Miramar’s attention is on Glandore – another exciting gold project in the eastern Goldfields. Currently in the heritage approval stage, drilling at Glandore is earmarked for the first half of 2021.
The company also has three projects in under-explored parts of the Murchison Region, near Mount Magnet and Meekatharra. Then there are the gold and nickel-copper projects, Whaleshark and Bangemall, in the Gascoyne, which Kelly believes are extremely under-explored and highly prospective.
“The tenements there are yet to be granted, but I think there's a lot of potential for that area to host a major nickel-copper project,” he explains.
“It has very similar geology to the Fraser Range, where Sirius made the Nova (nickel-copper) discovery. It also has similar geology to where Chalice discovered nickel (near Bindoon). Also, there's a massive deposit in Canada called Voisey Bay and Raglan, and the Gascoyne is very similar to those as well. So it's conceptual, but there are a lot of ingredients there that look very interesting.”
Of course, the road ahead will not be without its challenges, but Kelly feels confident Miramar is in a good position to overcome these as they arise.
“I tell you what, it's got really busy out there,” he says. “Because of the gold price, there are a lot of new IPOs that people are talking about. This means that in the last couple of weeks, the availability of drilling rigs has dropped significantly because everyone's out there trying to work."
“So the challenge is going to be securing drilling rigs and that's where having good, long-standing relationships with contractors and suppliers, like we do, is important. We've got a rig lined up for our first program and hopefully we'll just roll into our second one, but this is going to be a real challenge.”
Another challenge, says Kelly, will be human resourcing.
“A lot of the drilling companies hire backpackers, or people from the Eastern States, and that's a real challenge at the moment thanks to the borders being shut. If you do manage to secure drill rigs, there’s no one around to actually operate them. Hopefully that frees up a bit over the next six months or so.”
Kelly’s secret to prospecting success
While there is certainly no substitute for experience, Kelly believe a little luck and good timing are also key ingredients to success in the exploration game.
“Exploration is fickle,” he says. “You’ve got to have a lot of things coming together at the same time. You've got to have the right management. You've got to have the right geologists. You've got to have the right gold price. You've got to have money in the bank. You've got to have the right projects. There are a lot of things going on at the same time and if any one of those things is awry, you may have to walk away from an opportunity.
“Of course, I've got a lot of experience in gold exploration and that makes it easier for me to recognise opportunities, but you've also got to have a ticket in the lottery. You've got to actually be out there looking for stuff. For instance, I took the opportunity during lockdown to go through government websites and try to find areas that I thought were overlooked or underdone. This takes time and persistence, but of course, you also need to have the experience to be able to recognise an opportunity.”