Gold is finally in the limelight with the new generation of metals stepping out with the reducing market sentiment. For many years, the gold loyalists have been up in arms that the gold sector was largely ignored.
The gold price is now at an all time high (Figure 1), and it was only in the last couple of years that the general market (ASX Punters in the small-cap sector) attention was focusing on gold equities.
If you’ve been following the gold market and social media commentaries, discussions about the benefits of investing in gold have been a recurring theme over the past decade. The most significant signals emerged after 2020, driven by increasing political uncertainties, rising interest rates, and escalating geopolitical tensions between the West and China.
Figure 1: Gold price chart since 1972. (source: Kitco)
The escalating anti-eastern sentiment—primarily characterized by tensions between the West and China—and the perceived threat of China's expanding influence should, in theory, push more investors toward the safety of gold. If this is the view of the investing community, then entering the gold sector would be a no-brainer.
As illustrated in Figure 2, the last significant gold price movement was in mid-2022, climbing from under USD 1,800 and gaining more than USD 1,000 since then. and surprisingly, small-cap investors didn’t capitalise on this trend earlier. However, this may be partly attributed to the relatively small pool of emerging or small-cap miners listed on the ASX.
Figure 2: Gold price chart over the last 5 years. (source: Kitco).
Rick Rule Thoughts
In my Coffee with Samso episode with Rick Rule in May 2020, titled "Coffee with Samso - Episode 037: Markets and Commodities - Views from Rick Rule," Rick did emphasised that investors should be loading up on gold (Click here to listen). Rick mentioned that investors outside of Australia (at that time) had been entering gold equities, while the Australian investors were still missing. My discussion with Rick took place in May 2020 and it feels as if the Australian investors got distracted with the Lithium bull run and are now late in entering the gold production story.
It’s no surprise that Rick Rule made those comments, as he mentioned that he had witnessed nine recoveries in the gold market throughout his career. His perspective undoubtedly comes from a wealth of experience and a deep understanding of market cycles.
A Good Technical Project Flourishing with the Perfect Timing.
The ASX (Australian Stock Exchange) mineral exploration industry is an exciting sector, and it is never boring. It is consistently dynamic in its activities for eager investors. Whether that is a good cocktail for investors is up for debate, but it is a sector of the ASX that has been a major part of my "investing" playground.
Timing is everything, and investors in mineral exploration are constantly on the lookout for the next great "thing" or what I call the next great "story." As I have mentioned in my previous writings, having triggers that can help you limit your risks is always a good thing. It is the creation of a scientific reason for making the investment decision.
The main trigger for me is the technical viability of the project. We all know that there are numerous "issues" that will make or break a project, and nobody can counter a "Black Swan" event, so one has to discover some form of a tangible decision-making process.
The Tolu Minerals Connection
In the context of our discussion, the emergence of a "Gold Story," I think Tolu Minerals Limited (ASX: TOK) may be a prime example of a good technical project that appears to have added significant value. With a climate of "Good Timing," the concept may grow further in time.
I came across the story of Tolu Minerals Limited (ASX: TOK) in August 2022 in an episode of Rooster Talk entitled Tempest Minerals Limited (ASX: TEM) Acquires Producing Asset - Tolukuma and Mt Penck Projects. Tempest Minerals Limited was acquiring the Tolukuma gold mine from the current management. This was a very complicated transaction that ultimately ended up with the IPO (Initial Public Offer) of Tolu Minerals in Mar 2024.
Samso Insights published a review of that event entitled: "Tolu Minerals Accelerates Gold Exploration in the Pacific “Ring of Fire”. I have a history with Papua New Guinea (PNG) and I think this helps me a good understanding of the ins and outs of working in a very challenging political and social-economic environment.
Figure 3: The share price chart for Tolu Minerals Limited as of 31st January 2025. (source: Commsec)
The share price chart for Tolu Minerals (Figure 3) is why I think this is worth reviewing for Samso Insights.
Let's review the details and understand the whole Tolu Minerals Limited business. For those who want to skip to the parts of the review, please use the list below.
1.00 Who is Tolu Minerals Limited?
Tolu Minerals Limited (ASX: TOK) is an Australian exploration and development company that focuses on gold, silver, and copper projects, primarily in Papua New Guinea (PNG). The company is developing the Tolukuma Gold Mine and several other projects in PNG's highly prospective mineral belts.
1.10 Tolukuma Gold Mine:
This is the company's flagship project. Located in the Central Province of PNG, approximately 100 km north of Port Moresby, the Tolukuma Gold Mine is a high-grade gold and silver mine (Figure 4).
Figure 4: Tolu Minerals tenement locations. ( source: Tolu Minerals Limited)
Tolu Minerals acquired the mine in 2022 and is focused on revitalising it, including restoring infrastructure, conducting exploration, and increasing production.
1.20 Exploration Focus:
Tolu Minerals is also exploring additional regional opportunities, including the Tolukuma Structure (adjacent to the existing mine) and the Mt. Penck Project in West New Britain. These projects are part of the company's broader strategy to expand its asset base in PNG's rich mineral terrain.
1.30 Management:
The company is led by a team with significant experience in exploration, mining, and project development, particularly in PNG, which is known for its complex and challenging geological environments.
1.40 Listing:
Tolu Minerals is listed on the Australian Securities Exchange (ASX) under the ticker TOK. The company aims to leverage its assets and expertise to create value for shareholders, particularly with the growing interest in resource markets.
Tolu Minerals is positioning itself to benefit from the recovery and growth of the resource sector in PNG, with a particular focus on gold and precious metals.
2.0 The Tolukuma Gold Mine [1]
The Tolukuma Gold Mine is in the Goilala District of Central Province, Papua New Guinea, approximately 100 kilometers north of Port Moresby (Figure 5 and Figure 6). Discovered in 1986 by Newmont, the mine commenced operations in 1995 and focuses on high-grade epithermal gold and silver deposits.
Over two decades, it produced around 1 million ounces of gold at an average recovered grade of 14 grams per tonne, peaking at 21.3 grams per tonne, along with approximately 50 grams per tonne of silver in the form of gold/silver doré.
In 2015, operations ceased due to escalating costs, primarily stemming from incomplete infrastructure projects such as a 70-kilometer access road and maintenance issues with the 3 MW hydroelectric power facility. The mine entered liquidation in 2018. Tolu Minerals acquired the mine in September 2022, obtaining all existing operating and environmental permits.
As of August 2022, the Tolukuma project reported a JORC (2012) Mineral Resource Estimate of 1,610,000T at 10 grams per tonne gold and 38 grams per tonne silver, totaling 503,000 ounces of gold and 1,950,000 ounces of silver.
Figure 5: Tolukuma existing mine site. (source: Tolu Minerals Limited)
Tolu Minerals has outlined plans to complete the remaining 23 kilometers of the access road to connect the mine to the Hiritano Highway, dewater the mine to access existing resources, conduct an environmental baseline assessment, refurbish the hydroelectric power plant, and upgrade key site infrastructure to support resource development and exploration.
3.0 Geology of the Tolukuma Gold Mine
(A summary taken from PorterGeo - www.portergeo.com.au)
The Tolukuma gold deposit is classified as a low-sulphidation adularia-sericite epithermal system and is located in Papua New Guinea’s Central Province, approximately 100 kilometers north of Port Moresby.
Figure 6: Location of Tolu Minerals Limited two gold projects in Papua New Guinea. (source: Tolu Minerals Limited)
The oldest geological formations in the Tolukuma region are the Kagi Metamorphics, part of the metasedimentary sequence within the Cretaceous to Eocene Owen Stanley Metamorphics. These rocks underwent deformation during the middle Miocene. Locally referred to as the Auga Beds, the Kagi Metamorphics consist of slate, siltstone, sub-greywacke, feldspathic sandstone, limestone, and pebble conglomerate, with some zones containing highly carbonaceous material.
Overlying these rocks unconformably are the late Miocene to Pliocene volcanics and interbedded sediments, intruded by subvolcanic equivalents of the Mt Davidson Volcanics. These basic-to-intermediate volcanic rocks were deposited within a 10 to 20 km-wide north-south trending graben. The Tolukuma mineralisation is hosted within these volcanics and sediments. Pliocene deformation created NW- and NE-trending vertical tensional fractures with minimal displacement.
At the Tolukuma deposit, the Kagi Metamorphics appear to be in fault contact with the Mt Davidson Volcanics, which host the mineralisation. These volcanics include intermediate to basic pyroclastics (such as fine ash flow tuffs, feldspathic crystal tuffs, and lithic tuffs) and lavas, predominantly hornblende-feldspar porphyritic andesites, with occasional basaltic components. Narrow porphyritic andesite-to-basalt dykes are common throughout the area.
Gold mineralisation is contained within several sub-vertical quartz vein zones in the Mt Davidson Volcanics. These are primarily aligned along two 115° striking faults, spaced 500 meters apart, as well as within a north-trending dilational zone connecting the two structures. Vein thickness ranges from 1 to over 10 meters, averaging 2 to 3 meters.
The southern fault and dilational zone form the Tolukuma vein, which hosts the majority of the high-grade gold (>5 g/t Au). In contrast, the northern fault, known as the 120 vein, typically has lower and more variable gold grades. High-grade mineralisation (>5 g/t Au) is present over a vertical interval of up to 275 meters.
The veins primarily consist of quartz, which, when strongly mineralised, appears as a white saccharoidal variety with abundant pseudomorphs after carbonates. Pyrite is common, with lesser amounts of base metal sulphides (typically <1%). Other vein minerals include clay, manganosiderite, adularia, albite, and leucoxene. Adularia is often found in association with quartz. The veins are categorized into simple and banded veins, vein breccias, brecciated veins, and hydrothermal breccias.
Alteration around the veins includes early pervasive propylitisation, while phyllic (illite-quartz-pyrite) and argillic (illite-smectite) haloes extend tens of meters outward into the host rocks.
The drill indicated resource quoted in 1988:
1.07 Mt @ 22.0 g/t Au at a cut-off of 4 g/t Au.
Reserves and resources quoted in 2003:
(from Durban Roodepoort Deep Ltd, website):
Proven and Probable Reserve:
160,000T @ 15 g/t Au for 2.4 t Au
Measured, Indicated, and Inferred Resource:
300,000T @ 29.9 g/t Au for 9.0 t Au
4.0 Corporate Details
The company's IPO appears to have had a very turbulent path. Looking at the announcements during that IPO timing, the company had to submit three Supplementary Prospectus. I used to be told that one was already too many Supplementary Prospectus. Anyway, I don't know the reason, and it is no longer a point of discussion at this time of writing this review.
Tolu Minerals was finally admitted and quoted on the ASX on the 9th of November 2023.
At the writing of this review, Tolu Minerals Limited has a market capitalisation of AUD103M which gives them approximately 113,186,813 shares on issue. That is not a bad start since being admitted into the ASX.
Some Key News Release:
Date | Announcement |
21 January 2025 | |
20 January 2025 | |
02 December 2024 | |
14 November 2024 | |
24 October 2024 | |
09 September 2024 | |
25 June 2024 | |
29 April 2024 | |
19 April 2024 | |
29 January 2024 | |
13 November 2023 | |
09 November 2023 |
According to the presentation released on the 2nd December 2024, Tolu Minerals has raised AUD67M since the IPO, and the last raise in October 2024 put AUD26.7M into the bank. Clearly, the potential for producing gold bars is motivation for the investments with a rising global gold price.
5.0 Samso Concluding Thoughts
The gold sector is currently attracting significant attention, particularly in the small-cap segment. As we all know, the lower end of the market, often referred to as the "speculative" end of the ASX, is widely regarded as the most dynamic part of the industry. It's worth remembering that following 2020, the small-cap sector raised nearly AUD 2 billion within just 18 to 24 months—a wave of activity I haven’t witnessed in over 30 years of experience, both as a geologist and a member of the investing community.
The critical question now is whether TOK can bring the project into production, given the longstanding challenges that the Papua New Guinea mining industry has faced over the decades. Drawing from my experience with PNG's mineral sector, one of the key lessons I've learned is that there are figurative minefields to navigate at every turn.
I’ve been aware of the Tolukuma Gold Mine for some time. As mentioned in previous discussions, I’ve always wondered why this project has not been further developed. Despite its history of mining operations and promising grades, this question had never been fully explored. When the project reappeared on my radar in 2022, it again piqued my interest. Based on my experience, I doubted whether the Tolu Minerals story would progress. The concern for me comes from my previous experience with the cost of working in the
It’s encouraging to see that I may be mistaken. The progress Tolu Minerals Limited has achieved since its listing is a promising development. While there’s still considerable work ahead, the company’s solid funding support suggests that the light at the end of the tunnel is shining brighter this time. Whether this will ultimately lead to gold bar production for current investors remains the ultimate test, but the rising gold price is certainly adding to the optimism.
As I’ve previously stated, timing is crucial, and Tolu Minerals investors are certainly benefiting from that right now. The recent merger between Northern Star Resources Limited (ASX: NST) and De Grey Mining Limited (ASX: DEG) clearly demonstrates that the gold sector is heading in the right direction.
Whether Tolu Minerals can pull everything together and make this project a reality is yet to be seen. However, one thing I’ve learned over the decades in the mineral resources sector, is that having money in the bank is paramount. The best grades and projects won’t come to fruition without the necessary financial backing. From my experience working inside ASX companies, all the talk in the world is only as valuable as the size of your bank balance.
Please do your own research, and happy investigating!
References:
Tolu Minerals Limited
About Rick Rule
Rick Rule is a prominent investor and entrepreneur, best known for his expertise in natural resources and precious metals investing. He has over four decades of experience in the resource sector and is considered one of the leading figures in mining, oil, gas, and energy investments.
Key Highlights about Rick Rule:
Background:
Rick Rule has built a reputation as a savvy and disciplined investor with a deep understanding of the resource sector's cyclical nature.
He is particularly well-known for investing in junior mining and exploration companies, often identifying opportunities overlooked by others.
Professional Career:
Sprott U.S. Holdings: Rick was formerly the President and CEO of Sprott U.S. Holdings, a subsidiary of Sprott Inc., a global leader in resource investments. At Sprott, he managed significant portfolios and built relationships with institutional and retail investors worldwide.
He has been involved in numerous successful resource and mining ventures, often working with junior companies to unlock value for shareholders.
After leaving Sprott, he continued his involvement in the resource sector through personal investments and speaking engagements.
Links: https://sprottusa.com/managed-accounts/sprott-rule-managed-account/
Investment Philosophy:
Rick Rule is known for his contrarian approach to investing, often seeking opportunities during downturns in the resource market when assets are undervalued.
He places a strong emphasis on due diligence, focusing on companies with strong management teams, high-quality assets, and the ability to survive industry cycles.
He is a vocal advocate of precious metals, particularly gold and silver, as a hedge against economic uncertainty and inflation.
Public Speaking and Education:
Rick frequently speaks at conferences, webinars, and other forums about resource investing and economic trends. He is well-respected for his insights into the global economy, commodities markets, and financial trends.
He often emphasizes the importance of understanding the risks and rewards of investing in natural resources, particularly in the volatile junior mining sector.
Philanthropy:
Beyond investing, Rick Rule is also involved in philanthropic efforts, particularly in areas related to education and resource stewardship.
Current Activities:
Rick continues to participate in the resource sector as a private investor, focusing on precious metals, uranium, and other natural resources.
He is known for conducting “portfolio rankings,” where he invites investors to submit their resource investments for review, offering advice and insights.
Rick Rule's ability to navigate the complex and often volatile resource markets has earned him a loyal following among investors. His expertise, combined with his willingness to educate others, has made him a respected figure in the industry.
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.
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