Here’s one for lazy investors looking for leveraged exposure to near-record Australian gold prices – DGO Gold (DGO).
Led by Ed Eshuys of Plutonic, Bronzewing and Jundee gold deposits discovery fame, and Bruce Parncutt of analyst/investment banker fame with McIntosh Securities and Merrill Lynch, DGO has a somewhat unique strategy for a junior.
The strategy combines strategic equity investments in WA brownfield gold discoveries along with exploration in its own right, with the latter having an emphasis on largely-ignored sediment-hosted gold opportunities capable of forcing a re-think on where to find big WA gold.
The call that DGO could be one for lazy investors in the junior space goes to how DGO, drawing on the decades of geological and market-smartz Eshuys and Parncutt (they are both geologists) bring to the table, went about finding its initial brownfields equity investments.
Recognising that much of the best land for gold exploration in WA was locked up inside the ASX- listed juniors, DGO screened more than 90 projects held by juniors against three criteria.
They were projects where the finding cost is assessed to below the brownfield average of $25/oz, they have a resource potential of more than three million ounces and they come with upside.
About 10 juniors made it on to a shortlist, with DGO able to act on two of them to date – Pilbara gold explorer De Grey Mining (DGO), where it has a 10.7% stake, and Leonora gold explorer NTM Gold (NTM), where it has a 12.1% stake.
DGO now has board representation at both and has been supportive of their capital raisings to allow them to get cracking on the upside it believes are inherent in both. Significantly, both have sizeable gold resources under their belt, with the potential for much more, on DGO’s assessment.
That gives the strategy its brownfields foundation. Industry data suggests it is a smart strategy given the cost of finding an ounce of gold in the resource category is about $25 an ounce. Juniors with a resource generally get valued at about $50 an ounce and can expect $250-$400 an ounce when they have a mine development on their hands.
Plus, cashed-up Kairos set to start the rig turning again at its 640,000oz Pilbara project. Read more +
