In 2008, when the outlook for junior commodity stocks was as its bleakest, two major new mineral discoveries were made.
Regis Resources (ASX: RRL) made gold discoveries at its Duketon project and saw its share price rocket from $0.06 in October 2008 to $5.87 in October 2012. Now Regis is trading at $3.46.
Extract Resources was just another uranium penny stock before its discovery in Namibia, which eventuated in a $2.2 billion takeover from Taurus Minerals.
In 2009, it heralded the birth of another mining major. At the height of global equity turmoil, Sandfire Resources (ASX: SFR) was a $0.05 stock struggling for cash and drilling holes in outback Western Australia.
Numerous giant copper intersections transformed it rapidly into a development company with a $1.6 billion market capitalisation and a share price of $9. Currently Sandfire is worth around $880 million.
For the next major discovery we had to wait until July 2012, when Mark Creasy's Sirius Resources' (ASX: SIR) uncovered a giant nickel sulphide system in the Fraser Ranges of W.A.
Sirius single-handedly brought the speculative mining sector back to life and was rewarded with a $1 billion market cap and accompanying $5 price tag by March 2013. The company has pulled-back to about half this value now
There are two ASX-listed micro-cap explorers with large scale mineral targets, both in W.A.
Antipa Minerals (ASX: AZY) kicked off a diamond drilling program at the Calibre deposit at its Citadel project to further investigate an 800 metre long, 600 metre wide, 600 metre deep magnetic and electromagnetic conductivity anomaly.
Citadel is located in Paterson Province, W.A., 1350 kilometres northeast of Perth. The Paterson Province is highly prospective, yet under-explored.
It hosts multiple large-scale mineral structures, all within 150 kilometres of Antipa's Citadel and North Telfer projects - Newcrest Mining's (ASX: NCM) Telfer/O'Callaghan gold-copper/tungsten-base metal mines, Aditya Birla's Nifty copper operation and Mitsubishi's Kintyre uranium deposit.
Only a fraction of Citadel's mineralised body has been drill tested so far, with 6 holes intersecting gold-silver-copper-tungsten zones up to 225 metres thick.
AZY's new campaign starts in late June/early July - but it may be prudent to take a position before official confirmation as anticipation of the next big discovery could send the share price north of the $0.10 mark.
Core samples and assay results will be released progressively throughout the program.
A recent share placement to sophisticated investors at $0.065 raised $1.5 million, with the company's cash balance to $2.6 million at the end of June 2013. Antipa's share price has since fallen to $0.041, for a paltry market capitalisation of just $8 million.
Given the potential size of the orebody, the multiple large high grade deposits within close proximity, and the known mineralisation already discovered at Citadel, the chances of AZY hitting very thick zones of high grade material are reasonable.
Redstone Resources (ASX: RDS) has several tenements totalling 780 square kilometres in the West Musgraves, a massive nickel-copper region in W.A.
Of particular interest is Tollu, lying 50 kilometres east of BHP Billiton's (ASX: BHP) Nebo-Babel, a major nickel-copper sulphide deposit. Drill intersections at Nebo include 106.5 metres at 2.4% nickel and 2.7% copper, containing a resource of 2 million tonnes nickel-copper with an in-ground value of $25 billion.
Tollu's shallow intersections of +1% copper extend over a 2 kilometre long, 1 kilometre wide area, with mineralisation to 400 metres and open at depth. The next step for Redstone is deep diamond drilling to examine the anticipated higher grade material below 400 metres.
RDS has received a $200,000 grant towards the cost of drill testing Tollu from the Western Australian government. A drilling date has not been set, but commencement is likely around October.
With only $0.75 million in cash (March 2013 is the latest announced), some form of capital raising is expected and required. But the stock has fallen far enough now that any issue of new shares is likely to be close to the current $0.053-$0.07 trading range, which values RDS at around $10 million.
The share price is likely to languish until a concrete program is announced, and there is some negative sentiment towards management over a legal dispute concerning ownership of Tollu. This dispute has been settled and ownership is confirmed to be 100% RDS.
These stocks bear average risk and return characteristics.
The views expressed herein represent the views of the blogger.
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