Tough markets mean depressed share prices, and in mining markets haven’t been tougher than they are now for a good few years.
Still, that’s not something that’s likely to knock Nick Mather off his stride. As a serial entrepreneur in the mining, oil, gas and other sectors, he’s seen bull and bear markets come and go and still made a pretty penny for shareholders along the way.
Perhaps his biggest success was Arrow Energy, which was eventually sold to Shell and Petrochina for US$3.5bn. But he’s had a hand in several others too, and his current interests include Armour Energy in oil and gas, and IronRidge Resources and SolGold (LON:SOLG) in mining.
Those last two are particularly interesting, given the depressed state of the mining markets. After all, it’s not every entrepreneur that could get an iron ore listing away on AIM at a time when iron ore prices were falling through the floor and the sector was overwhelmed by negative sentiment.
And as far as SolGold is concerned, Mather is absolutely convinced that the company is going to be a success. Partly that confidence is based on the drill results that have been coming out of SolGold’s flagship Cascabel copper-gold project in Ecuador.
The standout number, from the fifth hole that the company drilled, is 550 metres at 1.05% copper and over one gram per tonne gold. That, says Mather, is a “world class” drill result.
But that’s by no means the end of it. Drilling remains ongoing and the results are continuing to come in strong.
The latest core coming up from hole 11 shows good visual indications of copper and gold from depths comparable to where the mineralisation has been intersected in the previous holes, so expect interesting news flow when the results from the assay lab come back.
In the meantime, the most recent results, from hole 10, showed 220 metres grading 0.94% copper equivalent from a depth of around 660 metres, although for technical reasons drilling had to stop some way short of the high grade zone that other holes have demonstrated begins at around 900 metres.
The strategy now is to delineate an 85 million tonne high grade zone and move towards generating a maiden inferred resource within 12 months. To that end a second drill rig has now been deployed to site, and is likely to take overall drilling to around 18,000 metres this year.
How will all this be paid for, given that markets are so tough? That’s a question that Mather reckons has been unsettling the market for some time.
But it shouldn’t. “There is a continual fear in the market about whether we’re going to be able to keep the project funded,” he says.
“But I can assure you I am very confident that we will be able to keep the company funded. Personally I’m very happy to keep throwing money at this company. My average is considerably higher than where the share price is now. I consider it good buying at these levels.”
That confidence is based entirely on a belief in the geology at Cascabel, supported by the views of Steve Garvin, who was recently appointed chief technical adviser at Cascabel.
“Steve Garvin is one of the world’s best authorities on copper-gold mineralisation,” says Mather simply. “We’re very confident that this work is leading to a very large copper-gold discovery.”
Indeed, the previous technical team at SolGold, which originally identified the opportunity at Cascabel, has had several major discoveries to its name already. Which is why Mather feels able to speak with confidence of a discovery comparable to Oyu Tolgoi in Mongolia and Indonesian giants Grasberg and Tujuh Bukit - some of the most famous mines of recent years.
“We have one of the world’s most spectacular copper-gold discoveries,” says Mather. And he’s not alone in thinking that. “The people who run major company exploration and acquisition programmes understand what these results mean, and I can tell you that they’re very excited. There’s a plethora of major mining companies coming over to see us.”
In that light, perhaps what investors should be worried about isn’t that Cascabel might not get funded, but that it might get taken out too early, before the real value gets added. Mather’s probably too canny to let that happen, but if the drill results keep coming in as strongly as they have been it’s clear there’ll be no shortage of suitors knocking on his door over the next year or two.