Coffee with Samso Episode 201 is all about looking at a mineral explorer to ride the current market excitement for mineral resource discoveries.
There is a visible and coherent bullish shift with investors within the mineral exploration sector of the Australian Stock Exchange (ASX). The E79 Gold Mines Limited (ASX:E79) story is being reviewed as it is primed for potential discovery, and now cashed up.
I have known about E79 and was reminded when they were the beneficiary of a nearology play with Kalgoorlie Gold Mining Limited announcing results from their Lighthorse project. E79 was the beneficiary as they share tenement boundaries (Figure 1).
Figure 1: The area that has recently made both E79 Gold Mines and Kalgoorlie Gold Mining Limited prominent on the ASX. (source: E79 Gold Mines Limited)
One of the most important aspects of trying to understand this industry is to know that as retail investors, we are never going to know the real ins and outs of the company. On most occasions, we are the last and the "insiders," or what I term the "Purple Circle", are always looking at the retail market as the driver of rising pricing and the bag to hold when they leave. Hence, to negate some of the heartache, I prescribe the need to know the two critical points: one is management and the viability of the projects being promoted, and the other is the potential economic discovery within the project.
Let me try and break this down without writing a book about it.
Management
I cannot stress enough the need to know the style and content of management in place. For the majority of retail investors, who are not from the industry, it is hard to know who is who. What many people rely on is being told who they are, and not knowing the main players with some degree of intimacy.
The problem with second-hand knowledge is that you don't know how far that knowledge came from by the time it got to your ears. I have compiled a small list of things to ask or to DYOR for readers to chew on:
Ability to raise money: Are they connected and have the records to show this? This is a very important ability.
Are they the type of management that wants to make an economic discovery? I stress the term economic, which indicates a real effort in terms of spending money and having the right team.
Are management looking for an economic discovery, or are they looking for a discovery to create share price stimulation? This is not a bad thing, but knowing this will help you from rushing in and taking a wait-and-see approach.
The person who is known for the "Midas Touch," now this is a no brainer and in some ways, this kind of management is the easiest. Put your money in and then go do your day job. The only drawback is that these guys can take a long time, and I mean multiple years as they normally work on their schedule and not yours :-)
Similarly, they may have a stronger holding power than you and hence, if you are forced to hold longer than you can, you may miss out.
I am sure there are many other characteristics to be aware of, but those are normally the ones I look for before jumping into any stocks.
The Project
It is sufficient to say that the promoters of these companies have the same motivation as all investors, and that is making money. Retail investors like me are all about making sure we are not taken in by the promotion, that we forget there is a need to sell, and making sure we have the holding power to stay in the game.
In my opinion, when we look at the projects being promoted, we need to simply think of two parts. If the main story is about making an economic discovery, is the project, technically, able to give it a good go, or do I think that the chances are low and the risk great? This normally requires a higher level of research and at most times, it's difficult to have an absolute answer. Fortunately for me, with 3 decades of experience, it's a lot easier to break all those points down. For those not in the industry, I have to admit, it's not easy.
If the project appears to be lacking in substance, then you would have to assume that management is looking for something else and this is a holding pattern. It's kind of what we call, "Let's Join The Club First.".
Coffee with Samso
Today, it's all about E79 Gold Mines Limited and Ned Summerhayes. As I have mentioned, I know the management relatively well, and I do believe that they are looking for an economic discovery, and I am pretty sure they are also looking for a better project to come along. They will take their time while they slowly work on their projects.
Chapters:
00:00 Start
03:29 Who is Ned Summerhayes?
04:20 What it's like working with the board members?
05:50 The Neurology Factor?
08:19 Has the market changed to being a Bull?
10:46 E79 projects set up by Ramelius consolidation.
12:37 What is the strategy for E79 at the Lighthorse region?
17:27 The Mountain Home Project
26:02 How should corporate manage shareholder expectations?
29:01 Is the market still tight for funding?
34:10 Last comments
34:47 Conclusion
PODCAST
About Ned Summerhayes
Edward (Ned) Summerhayes has completed a Master's of Economic Geology from the University of Tasmania. Ned has more than 15 years’ experience in Mineral Exploration, primarily in Western Australia.
Ned’s most recent role was with Black Cat Syndicate as Exploration Manager, having both corporate responsibilities and directing technical programmes. Ned was responsible for all site personnel, stakeholder management, reporting and compliance, as well as reviewing and recommending strategic acquisitions.
About E79 Gold Mines Limited
E79 Gold Mines Limited is an Australian gold and copper exploration company which has approximately 1,838km2 of highly prospective ground in two proven gold producing greenstone belts in the Western Australian Goldfields and a project within the McArthur Basin of the Northern Territory.
Mission
To discover gold and develop sustainable operations whilst acting responsibly towards the environment and all stakeholders
Statement of Values
E79’s vision is to create significant value for Shareholders through good science and applied exploration with a strong culture of operating ethically and responsibly.
To respect the cultures, customs, and values of all Stakeholders, including employees, contractors, suppliers, Traditional Owners, pastoralists, and the community.
At all times conduct ourselves with integrity, honesty, and transparency.
Encourage an enjoyable and safe workplace based on technical excellence, teamwork, collaboration, and diversity.
Seek to protect the environment and enrich the communities in which we work.
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.
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